A highly touted deal between Baku and Brussels was meant to wean Europe off Russian gas. But is Azerbaijan now importing Russian gas itself in order to meet its obligations to Europe?
Azerbaijan has begun importing gas from Russia under a deal which should enable Baku to meet its own domestic demand but which raises serious questions over its recent agreement to boost exports to Europe.
Russia's Gazprom announced on November 18 that it had begun supplying gas to Azerbaijan's state gas company SOCAR on November 15 and would supply a total of up to a billion cubic meters through March 2023.
Neither Azerbaijan's Energy Ministry nor SOCAR replied to questions from Eurasianet seeking confirmation of the agreement, details of which remain unclear.
In a statement to Azerbaijani news agency APA, SOCAR said that it had long cooperated with Gazprom and that the two companies "are trying to optimize their infrastructure by organizing the mutual exchange of gas flows.”
The deal was signed just ahead of the mid-winter peak demand period, as Azerbaijan will be seeking to maintain supplies to its domestic gas customers while also meeting its export commitments to Georgia and Turkey, as well as its recently expanded trade with Europe.
Exports to Europe through the Southern Gas Corridor had been scheduled to reach 10 billion cubic meters this year, but under a new MoU with EU signed in July, Baku agreed to increase exports to 12 billion cubic meters.
That increase was intended to help Brussels offset the loss of supplies of Russian gas, which have been cut by Moscow in retaliation for EU sanctions imposed following Russia's invasion of Ukraine.
While the deal has been highly touted both in Brussels and Baku, it was never made clear where exactly the extra gas would come from.
Problems with the commitment emerged as early as September, when Azerbaijan Energy Minister Parviz Shahbazov announced that Azerbaijan would export only 11.5 billion cubic meters to Europe this year, giving no hint as to why the export target had shrunk.
Even where this more modest extra volume will come from remains unclear.
A source close to the consortium which owns Azerbaijan's giant Shah Deniz gas field, which currently supplies all of the gas Azerbaijan exports, confirmed to Eurasianet that no new export contracts have been concluded and the field is currently only contracted to supply the 10 billion cubic meters previously agreed.
Now, the news that Azerbaijan will import gas from Russia this winter suggests that Baku intends to use the Russian gas to supply its domestic market in order to free up gas and enable it to meet its commitment to Brussels.
The sanctions imposed by the European Union against Russia don't apply to Azerbaijan, which remains free to import as much Russian gas as it wants.
But the new deal contravenes the political intention of the July agreement, which was agreed specifically to boost the volumes of Azerbaijan gas flowing to Europe so as to help the EU reduce its dependence on Russian gas.