Thursday, July 25, 2024

EU and Ukraine ask Azerbaijan to facilitate Russian gas transit, says official

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The European Union and Ukraine have asked Azerbaijan to facilitate discussions with Russia regarding a gas transit deal that is set to expire at the end of this year, an Azeri presidential advisor told Reuters on Thursday.

“Yes we were approached by the EU and Ukraine to play a role in the gas transit. We are working on that as a facilitator,” Hikmat Hajiyev, a presidential advisor, said.

While the EU has cut most of its Russian gas imports, some central European countries still depend on gas from Russia via a pipeline that crosses Ukraine. Austria still receives most of its gas through this route
Ukraine said it would not extend the five-year transit contract that still transmits close to 15 billion cubic metres (bcm) per year of Russian gas to Europe, a fraction of the 150 billion bcm of piped gas that flowed in 2022.

The deal expires at the end of December. Hajiyev declined to provide more details on how Azerbaijan might facilitate an alternate contract to take Russian gas to Europe.

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The EU’s imports of Russian liquefied natural gas (LNG) have also increased to compensate for the loss of piped gas accounting for 18 bcm last year, according to the EU’s energy regulator ACER.

The EU has been trying to diversify its imports of gas and signed a deal to double imports of Azeri gas to at least 20 bcm a year by 2027 but Hajiyev warned the infrastructure and financing were still not in place to facilitate this expansion.

“We need more money to invest in fields and additional investment is needed in the pipelines but the banks are not investing because it’s gas,” Hajiyev said, referring to limits major banks place on fossil fuel investments in favour of renewable sources.

German utility Uniper has been involved in talks to find a solution to keep gas supply flowing through Ukraine to southeastern Europe, Bloomberg reported on Monday.

Uniper Vice President Michael Hilmer said on Wednesday the company was seeking to negotiate increasing gas supplies from Azerbaijan in light of an energy partnership between Azerbaijan and the European Commission signed in 2022 that aims to double gas export capacity via the Southern Gas Corridor.

“Everybody in the EU says we need gas but imagine Azerbaijan makes its own investment and then the EU later says there is no need for it,” Hajiyev said.

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