In trying to quit Russian energy, the EU traded one dictator for another

For years, the European Union (EU) has relied on Russia to provide the oil and gas it needs to power industries and heat homes. Last year, 40% gas that the Europeans burned came from Russia, and the block disbursed $108 billion in the Kremlin.

But Russia’s invasion of Ukraine in February forced the EU to radically revise its energy strategy to wean itself off Russian oil and gas, in a bid to shed its dependence on the Kremlin. and to deprive it of energy revenues to finance its war. Over the past six months, the bloc has begun phasing out Russian oil and gas imports and looking for alternative suppliers. In December, the EU will ban imports of Russian crude oil, and by next February it will ban Russian petroleum products (although pipeline products are excluded from the bans). The EU is also committed to eliminate all Russian gas by the end of the decade.

But all that Russian oil and gas needs to be replaced to keep industries running and people to keep heating their homes.

Along with several other countries, the EU now hopes that Azerbaijan, a relatively small country sandwiched between the Caucasus Mountains and the Caspian Sea Sea, will become an important alternative to Russian energy. European Chancellor Ursula Von der Leyen called Azerbaijan a “reliable, trustworthy… [and] crucial energy partner » which could double its gas exports to the EU in no time “a few years” as Europe tries to rapidly diversify away from Russian energy.

But experts say there are major problems with betting big on Azerbaijan. The country currently does not have the supply or capacity to deliver what it said it could deliver. And in an effort to distance itself from one autocratic regime, Europe is throwing itself into the arms of another – a strategy that could backfire on the post-Soviet state. close links with Russia.

A new chapter for European energy

In the search for new sources of fuel, Europe has made all sorts of arrangements over the past year with suppliers like Norway and Algeria.

Norway is now the EU country leading gas supplier and pledged to deliver “as much gas as possible” to bloc countries; its gas exports to the EU are up 8% year-on-year. Meanwhile, EU Mediterranean countries have courted Algerian gas; the North African country is expected to increase its gas exports to Italy, for example, by 20% to 25 billion cubic meters this year.

Last July, the EU and Azerbaijan signed a new businessmarking what von der Leyen said at the time was a “new chapter [the EU’s] energy cooperation with Azerbaijan, a key partner in our efforts to move away from Russian fossil fuels.

Brussels presents the agreement as one which “will contribute significantly to the security of supply in Europe”, according to the European Chancellor. The MoU promises to double Azeri gas exports to at least 20 bcm by 2027, which would equate to around 6% of EU gas demand, but experts have cast doubt on the Azerbaijan’s ability to keep that promise.

Although its contributions are relatively small, the recruitment of Azerbaijan as a key energy partner is attractive to the EU due to its perceived stability and the potential scalability of Azeri gas projects and pipelines.

Azerbaijan, a country bordering Iran, Turkey, Georgia and Russia, transports its gas to Europe via the Trans-Adriatic Gas Pipeline (TAP), the final leg of the 3,500 kilometer Southern Gas Corridor (SGC), which was announced in 2013 and started operating in late 2020.

The country’s oil and gas production is jointly operated by its state oil company SOCAR and foreign partners, BP being the most remarkable. The government is unique in that it has not sought to revise the terms of its production sharing agreement with international companies, making it a ‘fairly reliable’ energy partner for the EU, John Roberts, non-resident senior researcher at the Atlantic Council’s Global Energy Sector and a member of the United Nations Economic Commission for Europe’s Gas Expert Group, said Fortune. “His approach has… been that when things are going well, toughen the terms of the next production sharing deal. [But] when they are hard, relieve them,” he said.

Gas flows from Azerbaijan to the EU have increased over the past eight months. By the end of this year, the bloc is expected to import 11.6 billion cubic meters of Azeri gas, a 40% growth of 8.2 bcm last year. And Azerbaijan’s TAP is intended to be scalable, meaning it can double its gas transit capacity to the 20 billion cubic meters outlined in the deal, said Tom Purdie, senior gas analyst and EMEA gas analyst. to commodity services firm S&P Global Commodity Insights. Fortune. Azerbaijan’s gas volumes are not enough to replace Russia’s, the total of which 150 bcm per year– but work with other measures to remove Russian energy from the EU’s energy mix, he noted.

And some optimists think the deal could be bigger than just natural gas. Closer cooperation between Brussels and Baku could help convert the post-Soviet state into a “key European partner”, moving it beyond Russia’s sphere of influence, Ilayda Nijhar, a political risk analyst focused on Russia and the former Soviet states, wrote for global affairs think tank ODI in August. As Russia increasingly isolates itself, Azerbaijan has become most important in the Kremlin as a trade link with Iran and Asia.

imperfect partner

Yet Azerbaijan is far from the reliable partner that von der Leyen promotes – nor does it have the necessary gas, infrastructure or funds to expand its infrastructure to respect its agreement with the EU, say some experts.

The EU’s agreement with Azerbaijan effectively offers “zero relief” to EU citizens “this winter or next… and probably not the next either,” Bowden said. This mainly serves to show EU citizens that policy makers are “doing something”, he said.

He explains that TAP gas comes from two projects in Shah Deniz, Azerbaijan’s largest natural gas field; operators are now ramping up production to its maximum output.

Meanwhile, the country’s two biggest potential sources – a third development at Shah Deniz and another at Azeri’s Chiraq Guneshli gas field – are “technically complex…and when deals are made, it will take many years to put them together.” online,” according to Roberts. At the same time, Azerbaijan’s domestic gas consumption is increasing. The French energy giant Total is planning a new project which will produce 1.5 billion m3 of gas, but which is intended for domestic consumption.

“There is no immediate prospect of large-scale gas developments…by 2027,” Bowden said. Any major gas project – if it materializes – will not happen until 2030, making it impossible for the EU and Azerbaijan to meet the conditions set out in their July agreement, he said.

Azerbaijan also lacks funds to increase production and infrastructure and needs to “invest heavily” to deliver more gas to Europe, said Gubad Ibadoghlu, senior visiting fellow at the London School of Economics (LSE) and senior analyst for social and economic studies in Azerbaijan. Center for Economic Research, says Fortune. And the high cost of transporting Azerbaijani gas to Europe previously inhibited gas flows to the mainland.

Azerbaijan could, in theory, buy gas from countries like Turkmenistan, Iran and Russia to meet its domestic needs, and in turn sell its own gas to Europe. But it would still need to improve and expand its infrastructure, and the sanctions make it “impossible” to buy from Russia, he said.

Trading one strong man for another

Along with arguments about whether or not the Azerbaijan deal is feasible, critics say that in an effort to distance itself from Putin’s Russia, Europe has simply traded one authoritarian for another.

The EU’s new energy deal shows that it is “rooting itself more [Azerbaijan’s] despotic regime” and Continue ignoring the human rights violations and corruption taking place under the regime of Azerbaijani President Ilham Aliyev, Gligor Radečić, a gas activist at CEE Bankwatch, a network of non-governmental organizations focused on the environment, said Fortune.

Aliyev, who ruled the Caspian country for 19 years, keep paying a “vicious crackdown on critics and dissenting voices. Independent activism, critical journalism and opposition political activity have been virtually extinguished,” according to advocacy group Human Rights Watch (HRW). Just in September, Armenia accused Azerbaijan of attacking its territory – the recent conflict killed nearly 300 soldiers – a claim that Aliyev’s government has denied, but that the The United States doomed as “illegal and deadly”.

This dictatorship could also be bad for business. Azerbaijan is a “poor partner” for the EU in terms of quality and stability, Ibadoghlu said. “In Azerbaijan, the ruling family makes its own decisions. They can back off or postpone [cooperation] at any time due to Russian influence,” potentially leaving the EU in a bind, he said.

Philippe Dam, HRW’s Europe and Central Asia director, warns that Europe has missed a major opportunity to put human rights at the top of its agenda with its partnership with Azerbaijan. The EU-Azerbaijan deal benefits the government, but does not “guarantee any protection of human rights”, Dam said. Fortune.

“A country that suppresses its own people…is not reliable enough to engage with the EU,” he said.

The EU was left with few good options. With gas storage sites across the EU now 95% full, the bloc could still face a shortfall of 30 billion cubic meters of gas next summer, underscoring the urgent need to call on d other suppliers or significantly reduce gas consumption, depending on new analysis of the International Energy Agency. The bloc’s best bets for gas suppliers are Russia, Azerbaijan, Algeria and Norway – and except for the latter, all are authoritarian states that will use gas exports as a political weapon, Radečić said.

But the bloc’s diversification strategy as a whole — which includes supplying the global liquefied natural gas (LNG) market — could “replace Russian gas volumes if all goes well,” Bowden said. Azerbaijan is not a “one-size-fits-all solution” for the EU, but one partner among many, he noted.

It is now up to investors and banks to step in to finance the expansion of pipelines and the exploration of new gas fields in Azerbaijan. As Ibadoghlu said: “If they don’t, Azerbaijan will not achieve its goal of becoming a reliable gas supplier for Europe by 2027.”

About Larry Noble

Check Also

COP27: Island nations want China and India to pay for climate damage

SHARM EL-SHEIKH (Reuters) – High-polluting emerging economies, including China and India, should contribute to a …