Fri Sep 20 06:30:00 UTC 2024: ## Ukraine Seeks Azeri Gas for Europe, But Deal Remains Uncertain

**Kyiv, Ukraine** – Ukraine is in talks with Azerbaijan to supply European markets with Azeri gas via its existing pipeline network, but a definitive agreement has yet to be reached. While both Ukraine and Russia are open to finding a solution, potentially involving a gas swap with Azerbaijan, the negotiations are complex and ongoing.

Ukraine aims to prevent Russian gas from traversing its territory, although there is an understanding that some gas marketed as Azeri could ultimately originate in Russia. The current transit deal with Russia is set to expire at the end of the year, prompting the search for alternative solutions to maintain gas flows to Europe.

The potential for a deal has led to a decrease in European benchmark gas prices, which fell by 6.1% on Thursday, hitting their lowest point since late July.

While Azerbaijan’s gas production is insufficient to fully replace Russian supplies, a swap deal involving Russian gas could be a possibility. RBC Capital Markets analyst Adnan Dhanani suggests Azerbaijan may take Russian gas for domestic consumption and export its own gas to the EU.

Energy Aspects Ltd., however, highlights limitations, noting that Azerbaijan’s domestic consumption will absorb much of the increased gas production expected in 2025, leaving only a small amount available for exports. Turkey’s pipeline infrastructure also has limited spare capacity.

The possibility of simply re-labeling Russian gas has faced opposition from both Ukraine and European leaders, as it would effectively bypass Ukrainian transit routes.

Russian President Vladimir Putin has expressed willingness to continue supplying gas to Europe, but has also outlined alternative export routes through Turkey if a deal cannot be reached.

These negotiations are crucial for Europe’s energy security, as several Eastern European countries rely on Russian gas transported through Ukraine. The outcome of the talks will determine whether these countries face a potential gas supply disruption at the end of the year.

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