Azerbaijan Ready to Strengthen Its Role After the Halt of Russian Gas Transit via Ukraine

Azerbaijan is positioning itself as a key energy partner for Europe amidst growing challenges in the natural gas market following the cessation of Russian gas transit through Ukraine. The disruption, marking the end of a decade-long transit route, is expected to heighten competition in the global liquefied natural gas (LNG) market and drive up prices for alternative energy sources.

The transition to halting gas transit through Ukraine was anticipated after months of geopolitical tension, but it leaves Europe in need of replacing about 5% of its gas supply. Ukrainian President Volodymyr Zelensky stated that Ukraine remains committed to supporting alternative energy supplies, including those from the United States, to stabilize the European market. “This marks a significant blow to Moscow, which once heavily relied on energy exports to Europe,” Zelensky said.

In response, Azerbaijani President Ilham Aliyev underscored his country’s potential role in bridging the gap. In a New Year’s address, Aliyev highlighted Azerbaijan’s strategic partnership with Europe, particularly through the Southern Gas Corridor, which includes the Trans-Adriatic Pipeline (TAP).

“Azerbaijan is ready to ensure uninterrupted energy supplies to Europe,” Aliyev stated, emphasizing the country’s ongoing commitment to energy diversification and resilience. Gas exports from Azerbaijan to Europe have grown significantly in recent years, with plans to further expand capacity to meet rising demand.

The halt in Russian gas transit comes as European gas prices have surged by over 50% in anticipation of the disruption. Analysts warn that limited LNG supplies may further strain markets, as Asian demand, particularly from Japan and South Korea, competes with European needs.

Scott Darling, Managing Director at Haitong International Securities, noted that the market remains tight, with the risk of rising spot LNG prices persisting until 2025.
“In this context, Azerbaijan’s reliability as an energy supplier becomes even more critical,” he added.

Neighboring Moldova has also accelerated its energy transition in response to reduced Russian gas supplies. The country now sources up to 62% of its electricity from Romania, supplemented by domestic production and renewable energy. Moldovan officials have urged consumers to conserve electricity amidst concerns about rolling blackouts.

This shift highlights a broader regional move away from Russian energy resources, aligning with Europe’s efforts to diversify supply.

Azerbaijan’s ability to meet increased demand will depend on investments in infrastructure and partnerships. The European Union has expressed interest in further integrating Azerbaijan into its energy strategy, recognizing the country as a key supplier for energy security.

“Azerbaijan’s strategic location and resources make it uniquely positioned to meet Europe’s energy needs while contributing to regional stability,” Aliyev said. The government is expected to announce new measures to enhance export capacity later this month.

As the energy market landscape continues to evolve, Azerbaijan’s role as an energy hub is gaining greater prominence, boosting its influence in European and global energy markets.