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the wealthy Gulf states. Given the recent positive dynamics
in this field, it is safe to note that Azerbaijan’s Ministry of Energy became an influential governmental body in charge of green energy strategy, particularly intensive negotiations with foreign stakeholders.
In this vein, on June 4, the Minister of Energy Parviz Shahbazov, alongside the AzerEnerji Open Joint Stock Company, announced the laying of the foundations of the
445 MW Bilasuvar solar power plant, 315 MW Neftchala solar power plant, and 240 MW Absheron-Garadagh wind power plant in partnership with the United Arab Emirates (UAE). Consequently, unlike previous years, when SOCAR was the only state-owned company with unlimited influence and power in
MACRO ADVISORY
all energy-related projects, the Azerbaijani authorities have gradually enabled the emergence of relatively new state bodies to oversee the country’s renewed energy strategy.
The strategy of diversification of energy management would pay off well as it significantly cut down SOCAR’s duties, allowing it to focus more on gas exports to Europe. This seems to be a rational choice as Azerbaijan revealed plans to increase the transit of volume of natural gas up to 12bn cubic metres (bcm) by the end of 2024.
Fuad Shahbazov is a Chevening FCDO scholar at the University of Durham School of Government and International Affairs (SGIA).
Moscow is playing a long gas game Chris Weafer CEO of Macro-Advisory
Eighteen months have passed since the EU banned the import of Russian crude oil and refined products and Moscow has successfully managed to replace what was its biggest export market, Europe, with new customers in Asia and elsewhere. Having overcome obstacles such as the price cap sanctions and the need to make bi-lateral payment mechanisms more efficient, Russia is again exporting maximum oil volumes and while earning less from these exports, it is enough to support the budget and the economy.
The Kremlin has now switched its attention to the gas market. It wants to replace the almost lost European market with new customers in Asia and to diversify the export infrastructure with both new pipeline routes and with a much bigger content of more valuable LNG and LPG.
The reason why the focus has been mostly on the oil market since late 2022 is because that was a relatively easier fix. It required hundreds of small and mostly independent, or more accurate, opaquely owned oil tankers, the so-called “ghost tanker fleet,” and flexible price setting. Achieving the same result with gas will not be so easy, or so quick. It will take between five and ten years, even assuming all goes as hoped, to replace the lost European volumes. But this is what President Putin wants to do before the end of what may be his last term as President in 2036.
The scale of the task is clear when one considers that while in 2021 Russia exported 167bn cubic meters (bcm) of natural gas to Europe, last year that volume had collapsed to 45bcm
of which 28.3bcm went to EU member states.
In total, Russia exported 203.5bcm of natural gas in 2021
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(18.7bcm to Belarus, 8.4bcm to other CIS states and 9.1bcm to Turkey). Last year that total was less than 100bcm. Deputy Prime Minister (DPM) Alexander Novak, who is also Putin’s point man for OPEC+ and on geo-energy policy, said that the aim is to rebuild, and expand, gas export volumes steadily over the next decade to a target of 314bcm of natural gas, and close to 100mn tonnes of LNG (equivalent to 135bcm), by 2050, up from 34mn tonnes last year.
The main challenges to achieve these ambitious targets
are a combination of sanctions and geography. The more immediate target is to sell more gas to neighbouring China and to the countries in Central Asia which are connected to the Soviet-era pipeline network, and which can be repaired and expanded relatively easily. The big new prize for the Kremlin is the Indian market which Putin has several times referred to as having much greater gas export potential for Russia than Europe had at the peak.
Unlike oil, Russia’s gas exports to Europe are not affected by direct sanctions. It was a Russian initiative to shut off the Nord Stream 1 (NS1) pipelines before the newly constructed, but not yet in use, Nord Stream 2 (NS2) pipelines and one of the NS1 pipes were blown up. Russian gas to Europe now transits via the Turkish Stream 2 (TS2) pipeline snaking up the Balkans from the Black Sea-Turkey (Turkish Stream 1 – TS1) route and also uses the remaining Ukraine pipeline transit to customers in Slovakia, Czechia, Hungary and Moldova. TS2 carried just over 20bcm and the Ukraine route carried just under 15bcm last year.
Exports to Europe are expected to stay around the 45bcm level for the foreseeable future. The contract between