European officials are negotiating to keep gas flowing through the pipeline through Ukraine, and one option may be for European companies to buy and pump gas from Azerbaijan into Russian pipelines, Bloomberg reports.
Details
"Europe has tried to abandon Russian gas, but several Eastern European countries continue to receive it through the pipeline that crosses Ukraine. The agreement covering this transit agreement expires at the end of this year. And in the face of a raging war, most market observers expect that gas supplies will eventually stop," the newspaper writes.
But, as noted, "representatives of the European government and companies are negotiating with colleagues in Ukraine on how to ensure gas supply next year, according to people familiar with this issue." According to some sources, one of the options that was discussed is for European companies to buy and pump gas from Azerbaijan to Russian pipelines leading to Europe. And he points out that such an agreement will allow Europe to avoid difficulties associated with buying Russian gas at a time when it is trying to limit Moscow's revenues.
European base gas prices fell 2.2% on Tuesday after Bloomberg reported on the talks.
"The idea is gaining momentum, as it becomes clear that Ukraine will be in favor. Transit revenues in 2021 totaled about.1 billion... There are also concerns that pipelines that are not used may become military targets or become neglected, and restoration will be expensive," the newspaper notes.
"There are two factors that we should always keep in mind, "Alexey Chernyshov, head of NJSC Naftogaz, told Bloomberg. "One of them is that Ukraine has an incredible gas transit and storage infrastructure that needs to be used, and Ukraine is inclined to use this infrastructure because it offers many advantages.
He ruled out any plans that involve cooperation with Russia's Gazprom, and said that gas supplies from Azerbaijan "may have some future.
Azerbaijan's state-owned energy company Socar did not respond to requests for comment. The country's Energy Ministry, which has repeatedly sought to increase exports to Europe, could not immediately comment on the situation, the newspaper writes.
"The plan to use Azerbaijani gas could theoretically benefit Russia if it was organized as a swap that allowed Moscow to send its gas to other places. Russia is struggling to find enough new customers for fuel, as its infrastructure is set up for supplies to Europe, and China is making a tough deal. The idea of swaps is not alien to oil and gas markets and is used in cases where it is physically impossible to deliver fuel from one place to another. Azerbaijan is already using its pipeline to Europe at full capacity," the publication says.
As noted, "negotiations are at an early stage, and people familiar with this issue expect to make decisions only by the end of this year, when the end of the deadline – and the beginning of the European winter – will increase the pressure." Many details that will have to be agreed, and it is not clear whether the deal will be concluded, the publication notes. And he adds that events on the battlefield can also be a factor.
"According to some sources, the gas giant Uniper SE, nationalized by Germany, participated in the discussions... A Juniper spokesperson declined to comment. A representative of the German Ministry of Economy said that the government is negotiating within the EU," the publication added.
Slovakia is reportedly one of the key countries that could benefit from such a deal, and the country's prime minister Robert Fico spoke about such a possibility last month after a trip to Azerbaijan, without disclosing details.
"Now the Coordination of economic and price conditions depends on negotiations between companies such as Russia's Gazprom, Azerbaijani, Ukrainian companies and others, "he told reporters in May. "If they do, Slovakia will be able to import gas from Azerbaijan, while some of it will remain in Slovakia, and some will go to other countries.
A government official declined to comment further. The Ministry of energy of Austria, another country that will benefit, did not respond to requests for comment, the newspaper notes.
At the same time, it is indicated that Russia still supplies about 15 billion cubic meters of gas to Europe via Ukraine per year, mainly to Slovakia and Austria, where Russia is still the dominant supplier. In Austria, Russian gas covers more than 80% of Austrian consumption for five consecutive months. Europe also imports Russian LNG by sea, and despite frequent disputes over whether this should be done, it has never imposed sanctions on Russian gas, the newspaper notes.
"The European Commission, the executive body, believes that the bloc will be able to withstand the suspension of Russian transit through Ukraine without serious security risks. Its plan is to rely on alternative suppliers and implement its ambitious climate strategy, including more renewable energy sources and energy savings," the publication notes.
Some member states, as indicated, are less optimistic and fear a repeat of the energy crisis. "This aligns them with the interests of Ukraine," the publication notes.
"I am doing everything possible to find a solution according to which the Ukrainian Gas Transmission System will continue to work, because this is a big asset, and someone must be a customer," Chernyshov said. "Otherwise, it will lead to losses.
Група Нафтогаз на 10% збільшила видобуток газу29.05.24, 21:03