[ad_1]
Azerbaijan has begun importing fuel from Russia beneath a deal which ought to allow Baku to fulfill its personal home demand however which raises critical questions over its latest settlement to spice up exports to Europe.
Russia’s state fuel producer and exporter Gazprom introduced on November 18 that it had begun supplying fuel to Azerbaijan’s state fuel firm SOCAR on November 15 and would provide a complete of as much as a billion cubic meters by March 2023.
Neither Azerbaijan’s Vitality Ministry nor SOCAR replied to questions from Eurasianet in search of affirmation of the settlement, particulars of which stay unclear.
In a assertion to Azerbaijani information company APA, SOCAR mentioned that it had lengthy cooperated with Gazprom and that the 2 firms “are attempting to optimize their infrastructure by organizing the mutual alternate of fuel flows.”
The deal was signed simply forward of the mid-winter peak demand interval, as Azerbaijan will probably be in search of to take care of provides to its home fuel clients whereas additionally assembly its export commitments to Georgia and Turkey, in addition to its lately expanded commerce with Europe.
Exports to Europe by the Southern Gasoline Hall had been scheduled to succeed in 10 billion cubic meters this yr, however beneath a brand new memorandum of understanding with the European Union signed in July, Baku agreed to extend exports to 12 billion cubic meters.
That enhance was meant to assist Brussels to offset the lack of provides of Russian fuel, which have been minimize by Moscow in retaliation for EU sanctions imposed following Russia’s invasion of Ukraine.
Whereas the deal has been extremely touted each in Brussels and Baku, it was by no means made clear the place precisely the additional fuel would come from.
Issues with the dedication emerged as early as September, when Azerbaijan Vitality Minister Parviz Shahbazov introduced that Azerbaijan would export solely 11.5 billion cubic meters to Europe this yr, giving no trace as to why the export goal had shrunk.
Even the place this extra modest further quantity will come from stays unclear.
A supply near the consortium which owns Azerbaijan’s big Shah Deniz fuel subject, which at the moment provides all the fuel Azerbaijan exports, confirmed to Eurasianet that no new export contracts have been concluded and the sphere is at the moment solely contracted to produce the ten billion cubic meters beforehand agreed.
Now, the information that Azerbaijan will import fuel from Russia this winter means that Baku intends to make use of the Russian fuel to produce its home market so as to unlock fuel and allow it to fulfill its dedication to Brussels.
The sanctions imposed by the European Union in opposition to Russia do not apply to Azerbaijan, which stays free to import as a lot Russian fuel because it needs.
However the brand new deal contravenes the political intention of the July settlement, which was agreed particularly to spice up the volumes of Azerbaijan fuel flowing to Europe in order to assist the EU cut back its dependence on Russian fuel.
Longer-term implications
The truth that a part of these imports from Azerbaijan are being facilitated with assist from Moscow means that Brussels’s efforts at diversification could also be in useless, and never simply within the brief time period.
Underneath the deal signed in July, Baku additionally agreed to double exports by the Southern Gasoline Hall to twenty billion cubic meters a yr by 2027 – the utmost that the prevailing pipeline community can carry.
That enhance will probably be costly and can take time to appreciate, requiring each the addition of recent compressors to the prevailing pipelines in addition to large investments in Azerbaijan’s fuel fields to supply the required fuel.
As but, no funding resolution has been taken to broaden the three pipelines which make up the Southern Gasoline Hall that transports Azerbaijani fuel to Europe, whereas questions stay over the place the extra 10 billion cubic meters per yr of fuel will come from.
BP confirmed earlier this yr that the large Shah Deniz fuel subject which it operates is incapable of supplying all the extra 10 billion cubic meters required.
Azerbaijan does have another small fuel fields, however manufacturing from these will not be anticipated to be ample to fulfill Baku’s enterprise to Brussels, both, elevating the prospect that fuel must be sourced from different nations within the area.
This revived long-standing hopes that Azerbaijan might transit fuel from its neighbor throughout the Caspian, Turkmenistan, which boasts the sixth-largest fuel reserves on the planet.
Relations between Baku and Ashgabat have improved significantly over latest years, culminating in a groundbreaking three-way fuel swap settlement with Iran in December 2021, beneath which Turkmenistan pledged to produce between 1.5 and a couple of billion cubic meters of fuel a yr to northeastern Iran and the same quantity of fuel can be equipped from northwestern Iran to Azerbaijan.
Extensively hailed as a uncommon and noteworthy instance of regional cooperation, that settlement had been considered as a potential short-term supply of additional fuel for Europe.
Nonetheless, the present standing of the deal is unclear. Azerbaijan’s sudden have to import Russian fuel raises the suspicion that that settlement could have fallen foul of deteriorating relations between Baku and Tehran.
Different choices for delivering Turkmen fuel to Europe exist; Turkish officers confirmed in July that Ankara was three choices for transiting Turkmen fuel delivered from Azerbaijan through the Southern Gasoline Hall to Europe.
A type of choices is believed to be a U.S.-backed venture to pipe fuel at the moment flared from a few of Azerbaijan’s Caspian oil fields onshore from the place it may very well be exported.
However with no information of any progress on any of the potential choices, the chance is rising that – like its dedication to ship 12 billion cubic meters of fuel to Europe this yr – Azerbaijan might also be unable to ship on its promise to double exports to twenty billion cubic meters by 2027.
By Eurasianet.org
Extra High Reads From Oilprice.com:
[ad_2]
Source link
