Russia has imposed a ban on gasoline exports: Will it become more expensive in Azerbaijan?

The Russian government's decision to impose a six-month ban on the export of gasoline starting from March 1 has stirred concerns within Azerbaijan's energy sector. With Azerbaijan heavily reliant on gasoline imports, particularly from Russia, questions arise about the potential impact of this ban on domestic fuel prices and the country's broader energy strategy.

Russian officials cite increased domestic demand for fuel, attributed to upcoming field work, as the rationale behind the export ban. However, the move raises apprehensions about potential disruptions to the supply chain and the subsequent repercussions on countries reliant on Russian gasoline imports, including Azerbaijan.

Unlike AI-92 gasoline, Azerbaijan does not domestically produce AI-95 and AI-98 variants, further exacerbating concerns about potential shortages and price hikes. The closure of the Baku oil refinery for repair and modernization work, slated for completion by 2027, underscores the country's current dependence on imported gasoline.

Data from the State Statistics Committee reveals Azerbaijan's heavy reliance on Russian gasoline imports. In 2023, the country imported 86,036.95 tons of "Premium Euro-95" gasoline, with the majority sourced from Russia. Additionally, imports of AI-98 gasoline witnessed a notable increase, highlighting Azerbaijan's vulnerability to disruptions in the global gasoline market.

Despite these problems, Azerbaijani government officials have not yet given an official response to the ban. However, Chairman of the Milli Majlis Committee on Natural Resources, Energy and Ecology Asim Mollazade, in an interview with Turan, expressed optimism about Azerbaijan's ability to diversify its energy sources and mitigate the consequences of the ban.

Mollazade's sentiments are shared by economist Zohrab Ismail, who emphasizes the need for Azerbaijan to reduce its dependence on imported fuel. Ismail, in an interview with Azadlig Radio, notes the discrepancy between oil production in Azerbaijan and its dependence on imported gasoline, explaining this trend by striving for short-term profits rather than long-term sustainability.

Looking ahead, Ismail emphasizes the importance of investing in domestic gasoline production to enhance energy security and reduce vulnerability to external supply shocks. Despite ongoing efforts to upgrade production facilities, Ismail notes the protracted nature of the process, urging for expedited action to capitalize on Azerbaijan's potential as a net exporter of gasoline.

The Russian ban on gasoline exports serves as a wake-up call for Azerbaijan to reassess its energy policies and prioritize self-sufficiency in fuel production. By diversifying energy sources and investing in domestic refining capacity, Azerbaijan can mitigate the impact of external disruptions and chart a more sustainable path towards energy security and economic resilience. However, the challenges ahead require decisive action and a concerted effort to break free from the cycle of dependency on imported fuel.