Workers walk past a gas storage tank at the bottleneck site of the Trans Adriatic Pipeline receiving terminal in Melendugno, Italy, Tuesday, May 22, 2018.
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LONDON – The EU is set to sign a new gas deal with Azerbaijan as officials scramble to secure future supplies amid growing fears of a Russian disruption.
European officials are bracing for a possible complete shutdown of gas supplies from Russia following Moscow’s invasion of Ukraine. Russia has been Europe’s most important source of natural gas for several years, but there is now a strong push from Brussels to change that.
Russia has denied it is using the gas as a weapon against the West, yet supplies have fallen by more than 60% in recent weeks. In addition, the shutdown of the Nord Stream 1 pipeline – a key transit point for Russian gas to Germany and beyond – for maintenance work has added to concerns that Moscow could end its gas supply to the bloc.
“You can expect a commitment to a significant increase in volumes in the coming years,” an EU official with knowledge of the deal, who did not want to be named because talks are still ongoing, told CNBC on Monday. with Azerbaijan.
European Commission President Ursula von der Leyen and Europe’s energy chief Kadri Simson are visiting Azerbaijan on Monday to finalize the deal. Von der Leyen will speak alongside the country’s president, Ilham Aliyev, at a press conference.
“Amid Russia’s continued weaponization of its energy supplies, diversifying our energy imports is a top priority for the EU,” the European Commission said in a statement Friday ahead of the trip.
Azerbaijan, which borders Georgia, Turkey, Armenia, Russia, Iran and the Caspian Sea, began exporting natural gas to Europe through the Trans Adriatic Pipeline in late 2020. At the time, Azerbaijan said it planned to send 10 billion cubic meters gas in Europe every year, mainly in Italy, but also in Greece and Bulgaria.
The International Energy Agency noted in March that Azerbaijan could play a role as Europe seeks to reduce its gas imports from Russia.
“Our analysis shows that intra-EU production and non-Russian pipeline imports, including from Azerbaijan and Norway, could increase over the next year by up to 10 billion cubic meters by 2021,” the IEA said.
However, some analysts are questioning Azerbaijan’s reliability as a supplier.
“It should be noted that Azerbaijan’s gas route to Europe passes through Russia’s sphere of influence,” said Gubad Ibadoghlu, senior visiting fellow at LSE, in a blog post in May.
But Europe is in a race against time to reduce its dependence on Russia. Overall, 12 EU countries have been directly affected by Russia’s cut in gas exports so far, and several others are no longer receiving gas from Moscow.
“Further decisions by Russia to arbitrarily cut off countries or companies cannot be ruled out. Since the beginning of the Russian occupation of Ukraine, we have known that a very serious disruption is possible and now appears likely,” Simson said. of the European Commission in a press. conference at the end of June.
Time to save energy
Europe’s efforts to seek alternatives to Russian hydrocarbons come with an additional caveat: it’s time to save energy.
The European Commission, the EU’s executive arm, is expected to outline on Wednesday a series of recommendations for corporations on how to cut energy use. The plan aims to raise awareness of what could be a difficult winter in the region if gas supplies are cut.
“We will soon come out with a plan where we will update our work on possible scenarios, look at ways to save energy proactively and provide guidance to reduce demand on the industry,” Simson said last week. over on Twitter.
