After meeting with Aliyev, Zelensky proposed using Ukrainian infrastructure for the transit of Azerbaijani gas to Europe

Ukrainian President Volodymyr Zelensky has suggested utilizing Ukraine's gas infrastructure to facilitate the transit of Azerbaijani natural gas to Europe, signaling a potential geopolitical shift in regional energy flows as Kyiv aims to bolster its role as a key energy transit hub beyond 2024.

During a meeting with Moldovan President Maia Sandu, Zelensky emphasized the urgency of political agreements to finalize contracts, referencing discussions with Azerbaijani President Ilham Aliyev at the World Economic Forum in Davos. "We can use our infrastructure for the transit of Azerbaijani gas," Zelensky stated, referring to Azerbaijan’s annual gas production of 40 billion cubic meters, of which approximately 25 billion cubic meters are available for export.

Zelensky reaffirmed Ukraine's commitment to ending its reliance on Russian gas transit, declaring, "We will not allow the Russians to profit." Instead, Ukraine seeks to strengthen ties with Azerbaijan and Europe to meet its energy needs.

The proposal reflects a strategic pivot in Kyiv's approach to energy transit, including the transportation of Azerbaijani gas through a swap arrangement with Russia. Under a December 2024 plan, Russia would supply gas to Ukraine branded as "Azerbaijani gas," while Azerbaijan would purchase gas from Russia labeled as "Russian gas," using the same infrastructure.

"In essence, gas flows would remain unchanged: EU traders would buy gas from Azerbaijan, which would in turn purchase gas from Russia," noted an October report by the European think tank Bruegel.

Previously, Zelensky dismissed the idea of funding Kremlin aggression through gas revenues. "We do not want to participate in a game where another country gets gas from Russia and then transits it. This perpetuates the financing of this war," Zelensky told the Financial Times.

Three Scenarios for Azerbaijani Gas Transit

Direct Transit via Russia and Ukraine

This route faces geopolitical and logistical challenges, including transit risks through conflict zones and potential resistance from Moscow, which might demand high transit fees or compensation.

Swap Agreements Between Russia and Azerbaijan

In this scenario, Russian gas, rebranded as Azerbaijani, could reach the EU via Ukraine, while Azerbaijani gas is redirected to Turkey or Russia’s domestic market. However, pricing and compensation mechanisms remain contentious.

Expansion of the Southern Gas Corridor Infrastructure

Long-term investments in pipeline infrastructure could enable Azerbaijan to supply gas directly to Europe, bypassing Russia. However, this option requires significant time and financial resources.

Analysts view the swap option as the most feasible in the short term.

For Azerbaijan, increasing gas exports to Europe aligns with its strategic goals of diversifying energy partnerships and strengthening its presence in European markets. Agreements with EU countries like Hungary and Slovakia underscore growing interest in Azerbaijani energy supplies.

For Ukraine, facilitating Azerbaijani gas transit would help maintain its role as a transit hub, generate transit fees, and preserve connections to European energy markets. However, this strategy carries risks, including potential Russian retaliation and infrastructure vulnerabilities.

The European Union, aiming to end its dependence on Russian gas imports by 2027, sees Azerbaijani gas as a critical component of its energy diversification strategy. However, addressing the short-term gap caused by the expiration of transit agreements between Ukraine and Russia remains a major challenge, particularly for Central European countries like Slovakia.

While Russia does not oppose proposals for Azerbaijani gas transit through its territory, it remains focused on retaining its shrinking market share in Europe. Analysts suggest Moscow might view the rebranding of Russian gas as Azerbaijani as a pragmatic compromise, albeit with limited strategic benefits.

Despite shared interests among Ukraine, Azerbaijan, and the EU in advancing energy cooperation, achieving these ambitions will require overcoming complex political, technical, and financial obstacles. In the short term, swap deals between Azerbaijani and Russian gas may serve as a temporary solution, though their impact on reducing Europe’s dependence on Moscow is likely to be limited.