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Russia is ready to supply gas to Azerbaijan: is there a new energy alliance on agenda?

A meeting of the presidents of Russia and Azerbaijan. Baku, June 13, 2015. Photo: press office of the Kremlin

Will there be a new gas alliance between Azerbaijan and Russia? This is the question the Azerbaijani news portal Haqqin.az is asking.

Europe strong relies on Caspian gas but Azerbaijan does not yet have enough capacities for meeting all of the Europeans’ needs. Quite unexpectedly, Azerbaijan’s key rival, Gazprom, has lent a helping hand in the matter. Last month CEO of the Russian company Alexey Miller announced plans to supply gas to Azerbaijan in view of the growing needs of the Azerbaijani economy.

Even though Azerbaijan has a lot of gas, its gas project, particularly, Shah Deniz, are moving very slowly. The key reason, according to Russian oil and gas expert Eldar Kasaev, is that the Azerbaijani have no free funds. Their economy is strongly dependent on oil. Gas prices in their turn depend on oil. So, now that oil prices are falling, gas project are stalling.

They in Baku do not share this opinion and claim that the Shah Deniz project is actively developing. According to Haqqin.az, this project is Europe’s key hope for lower gas dependence on Russia. Nobody doubts that sooner or later Azerbaijan will start supplying gas to Europe but the quantity that country can afford for the time being is just 10bn c m a year and the earliest it can do it is 2022.

But this is too little for Europe as in 2030 it will need 100bn-150bn c m a year. In this light, Russia’s help may come quite handy.

Not too long ago most of experts believed that gas might spoil Russian-Azerbaijani relations. Today the Europeans’ idée fixe is to reduce its dependence on gas Russia.

But they can’t just refuse to buy gas from Russia. They first need to find something instead. But the problem is that there are no serious alternatives to Russian gas.

The key hope of Europe is TANAP. Naturally, Azerbaijan is not against selling their gas on a long-term basis. The only problem is that this turns it into Russia’s rival. There are many proofs that the EU is trying to set the Russians and the Azerbaijanis by ears and to turn gas into a tool for pressuring both nations.

But Azerbaijan is acting very wisely and is not doing Europe’s bidding.

Russian gas supplies to Azerbaijan will turn Russia and Azerbaijan into partners. Now the sides are forming a working group to consider prospects of their energy cooperation.

In any case, this will be good for all parties: Azerbaijan will no longer rack its brains where to find gas for TANAP, Russia will get access to one more long-term route, while the EU will be able to diversify its gas imports and to tell its citizens, “Look, now we are supplying you with ‘friendly’ Azerbaijani gas rather than ‘hostile’ Russian gas.”

This combination will be good for all but Haqqin.az does not advise its readers to be too enthusiastic here – for they should keep in mind that they live in a world where it is much easier to be enemies than to be friends.

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