Economy

The controversial Russia-Azerbaijan fuel deal has raised questions for the EU.

Azerbaijan has begun importing fuel from Russia underneath a deal that may allow Baku to fulfill its home demand however which raises severe questions on its latest settlement to extend exports to Europe.

Russia’s state fuel producer and exporter Gazprom introduced on November 18. that it began supplying fuel to Azerbaijan’s state-owned fuel firm SOCAR on November 15 and can provide a complete of 1 billion cubic meters of fuel by March 2023.

Neither Azerbaijan’s Power Ministry nor SOCAR responded to Eurasianet’s questions to verify the deal, the main points of which stay unclear.

In a ___ Assertion To the Azerbaijani information company APA, SOCAR stated it has lengthy cooperated with Gazprom and that the 2 firms are “making an attempt to enhance their infrastructure by organizing the mutual trade of fuel flows.”

The deal was signed simply forward of the mid-winter peak demand interval, as Azerbaijan tries to keep up provides to its home fuel prospects in addition to meet its export commitments with Georgia and Turkey, in addition to with Europe. Can even attempt to cater to the just lately expanded commerce.

Exports to Europe by means of the Southern Fuel Hall have been scheduled to succeed in 10 billion cubic meters this 12 months, however A Memorandum of Understanding was signed with the European Union in July.Baku agreed to extend exports to 12 billion cubic meters.

The rise was meant to assist Brussels offset the lack of Russian fuel provides, which Moscow reduce in retaliation for EU sanctions following Russia’s invasion of Ukraine.

Whereas the deal has been nicely acquired in each Brussels and Baku, it has by no means been made clear the place the additional fuel will come from.

Issues with the dedication surfaced in early September when Azerbaijan’s Power Minister Pervez Shahbazov introduced That Azerbaijan will export solely 11.5 billion cubic meters to Europe this 12 months gave no indication as to why the export goal had shrunk.

Even the place this extra modest further quantity will come from is unclear.

A supply near the consortium that owns Azerbaijan’s huge Shah Deniz fuel discipline, which at present provides all of Azerbaijan’s exports, confirmed to Eurasianet that no new export contracts have been signed and that the sector at present produces solely 10 billion A contract has been entered into to provide cubic meters of fuel. Agreed first.

Now, the information that Azerbaijan will import fuel from Russia this winter might unencumber Baku fuel and allow it to satisfy its dedication to Brussels to make use of Russian fuel to provide its home market. retains

EU sanctions in opposition to Russia don’t apply to Azerbaijan, which is free to import as a lot Russian fuel because it needs.

However the brand new settlement runs counter to the political intent of the July deal, which particularly agreed to extend the amount of fuel flowing to Europe from Azerbaijan to assist the EU cut back its dependence on Russian fuel.

Lengthy-term implications

The truth that a number of the imports from Azerbaijan are being facilitated with Moscow’s assist means that Brussels’ efforts at diversification could also be futile, and never simply within the brief time period.

Below the deal signed in July, Baku additionally agreed to double exports by means of the Southern Fuel Hall to twenty billion cubic meters a 12 months by 2027 – greater than the present pipeline community can carry.

This enhance might be costly and time-consuming to appreciate, requiring the addition of recent compressors to present pipelines in addition to heavy funding in Azerbaijan’s fuel fields to supply the required fuel.

To this point, no funding selections have been made to develop the three pipelines that make up the Southern Fuel Hall that transports Azerbaijani fuel to Europe, whereas questions stay about the place the ten billion cubic meters of fuel a 12 months will come from. will come

BP confirmed earlier this 12 months that the Shah Deniz fuel discipline, which it operates, is just not able to supplying all the further 10 billion cubic meters.

Azerbaijan has another small fuel fields, however they aren’t anticipated to supply sufficient to fulfill Baku’s Brussels deal, both, elevating the likelihood that fuel should be sourced from different nations within the area.

It revived long-held hopes that Azerbaijan might ship fuel from its Caspian neighbor, Turkmenistan, which boasts the planet’s sixth-largest fuel reserves.

Relations between Baku and Ashgabat have improved considerably in recent times, ending Tripartite Fuel Alternate Settlement with Iran in December 2021, underneath which Turkmenistan pledged to provide 1.5 to 2 billion cubic meters of fuel yearly to northeastern Iran and the identical quantity of fuel from northwestern Iran to Azerbaijan.

Broadly hailed as a uncommon and noteworthy instance of regional cooperation, the deal was seen as a possible short-term supply of further fuel for Europe.

Nonetheless, the present standing of the settlement is unclear. Azerbaijan’s sudden must import Russian fuel has raised suspicions that the deal could also be falsified. Deteriorating relations between Baku and Tehran.

There are different choices to ship Turkmen fuel to Europe. Turkish authorities confirmed this in July. Ankara was three choices. For the supply of Turkmen fuel from Azerbaijan to Europe by means of the Southern Fuel Hall.

One in all these choices is taken into account a A US-backed challenge Piped fuel is at present being flared from a few of Azerbaijan’s Caspian oil fields, the place it may be exported.

However with no progress reported on any of the attainable choices, it’s more and more doubtless that – as with its pledge to ship 12 billion cubic meters of fuel to Europe this 12 months – Azerbaijan will comply with by means of on its pledge to double exports. could fail to take action. 20 billion cubic meters by 2027.

Through Eurasianet.org

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