Gas transit through Ukraine: Why Putin uses Azerbaijan
Illustrative photo (Getty Images)
Russia seeks to secure the transit of "Azerbaijani" gas in order to maintain its market in the European Union. To achieve this, it is attempting to establish a joint project with Azerbaijan.
More about this in an RBC-Ukraine article "Russia aims to maintain gas transit to EU through Ukraine: What’s in it for Putin and Gazprom?"
The new project would involve Azerbaijan, which lacks sufficient gas for EU supplies, receiving gas from Russia to sell in the EU. However, it is unlikely that Azerbaijan could fully replace Russia in the market, says Leonid Unigovsky, CEO of the consulting company Naftogazbudinformatika.
According to him, the more advantageous option for Gazprom would be for an Azerbaijani company to act as an agent under Gazprom's authority. "Russians certainly won’t give up their contracts to SOCAR. I think the option under discussion now is for SOCAR to act on behalf of Gazprom and execute the agency agreement. This is entirely possible," said Unigovskyi.
If the EU and Ukraine approve the option of gas supply through Azerbaijan, Russia would gain the opportunity to simultaneously work on expanding supply routes through other channels, including TANAP, the Turkish Stream, and the Trans Adriatic Pipeline. "In other words, the goal might not be to maintain transit through Ukraine in the medium term, but rather to fulfill current contracts while also working on expanding these three routes for gas supplies to Europe for the future," Unigovskyi said.
He also suggested that Russia might offer financial support for the development of certain projects, including increasing the capacity of the Trans Adriatic Pipeline. "I think Russia is considering Azerbaijan in a broader, more significant strategic context given the current situation, not just as a means to supply the Ukrainian GTS with so-called Azerbaijani gas, but also to a new route for natural gas supplies to Iran and beyond through Azerbaijan’s territorial waters," the expert said.
The current transit agreement between Naftogaz of Ukraine and Russian Gazprom was signed at the end of 2019 for five years. Despite the ongoing war, Ukraine allows Russian gas to transit through its territory to countries such as Austria, Slovakia, Italy, and Hungary. Ukrainian authorities have repeatedly stated that they do not plan to extend the contract.
In July, Azerbaijani President Ilham Aliyev announced that he might export gas to the EU through Ukraine after the current transit contract expires.
