No deal is currently on the table between Europe and Azerbaijan to keep gas flowing through Ukraine once a transit deal with Russia expires at the end of the year, despite reports a contract was nearing, CEO of Ukrainian state-owned oil and gas giant Naftogaz said.
“Over the next two months, before the deal is over, we might hear some manipulations and alternative ideas,” Oleksiy Chernyshov told the Kyiv Independent on sidelines of the Kyiv International Economic Forum on Nov. 7.
"There is no alternative model at this moment on the table," adding that Ukraine "is preparing for the full stop of gas transit by the end of the year" once the deal expires. Ukraine has maintained that it will not renew any transit deal with Russia after the contract is up.
As the contract's end approaches, Europe and Ukraine have been in talks with Azerbaijan to replace Russia as a supplier.
Bloomberg reported on Oct. 1 that energy companies from Hungary and Slovakia were nearing a contract for up to 12-14 billion cubic meters of gas from Azerbaijan per year, citing people familiar with the negotiations.
Later on Nov. 1, Slovakian state-owned gas importer SPP told Reuters that European firms were not close to an agreement with Azerbaijan to replace Russian gas flows through Ukraine, contradicting Bloomberg's report.
Ukraine currently transits Russian gas to the European Union as part of a deal signed with Russian state-owned gas giant Gazprom in 2019, which is set to expire in December 2024.
While Moscow cut much of its pipeline gas transit to Europe in 2022, Slovakia, Austria, and Hungary remain heavily dependent on Russian imports.
Gazprom supplied Slovakia with 89% of its gas consumed last year, Austria with 97% of its gas, and 47% of Hungary's, according to Sergiy Makogon, senior fellow of the Center for European Policy Analysis (CEPA) and former CEO of Ukraine’s Gas Transmission System Operator.
Countries that rely on Russian gas will face a challenge once transit stops through Ukraine and are likely to be more vocal in the future, Chernyshov said.
Russia-friendly Hungary already said last month that it wants to increase gas purchases from Gazprom next year.
Azerbaijani President Ilham Aliyev said on Sept. 6 that negotiations were underway with the EU, Moscow, and Kyiv to transport Azeri gas. Technically, it would be Russian gas just rebranded as Azeri gas, Makogon told the Kyiv Independent.
While Azerbaijan supplied Europe with around 12 billion cubic meters (bcm) of gas last year, Brussels and Baku’s goal is to ramp this up to 20 bcm annually by 2030. But Baku has no excess gas available in the near term and has been importing gas from Russia and Turkmenistan, Makogon said in a report for CEPA.
“The idea to transit Azeri gas instead of Russian gas is still alive and promoted by some people close to the President’s Office,” he told the Kyiv Independent.
Sonya Bandouil
