Ukraine seals initial gas agreement with Azerbaijan's state oil company, SOCAR
Ukraine's state-owned oil and gas major, Naftogaz, has signed a deal with Azerbaijan's energy giant SOCAR for the import of natural gas via the Transbalkan route. This deal marks a significant step towards diversifying Ukraine's energy supply and strengthening its energy security.
The first test shipment of gas is being delivered through the Transbalkan route, which passes through Bulgaria and Romania before reaching Ukraine. The agreement does not specify any specific timelines for the delivery of gas, but both parties view this as a foundation for a longer-term partnership involving increased gas supplies and broader energy cooperation.
Naftogaz CEO Sergii Koretskyi described the deal as opening the door for more substantial future cooperation with Azerbaijan, emphasizing its role in reducing Ukraine's dependency on traditional energy routes and suppliers. The deal is seen as a precursor to long-term cooperation and a step towards future collaboration.
This deal supports Ukraine’s broader strategy of reducing reliance on Russian gas, particularly after Ukraine ceased imports from Russia since 2015 and following the expiration of the Gazprom transit contract at the end of 2024. Given challenges like repeated attacks on Naftogaz's infrastructure since 2024, diversifying supply sources is crucial to ensuring stable energy availability, especially during critical heating seasons.
The agreement received strong backing from the Ukrainian President, Government, and Ministry of Energy, and SOCAR has reaffirmed its commitment to Ukraine through significant investments in its local subsidiary since 2008, signaling confidence in long-term regional engagement. While the current volumes are small and represent a trial shipment, the deal is positioned as a gateway for larger volumes and expanded cooperation, possibly including gas exploration partnerships and wider regional energy ties.
In summary, the deal initiates a framework for sustained bilateral cooperation with an emphasis on energy diversification, security, and regional partnership expansion between Naftogaz and SOCAR, setting the stage for increased Azerbaijani gas imports to Ukraine in the years ahead. The long-term cooperation potential between these two entities is strategically significant and promising.
References:
[1] Naftogaz. (2023). Naftogaz signs gas import deal with SOCAR. [online] Available at: https://www.naftogaz.com/en/press-centre/news/naftogaz-signs-gas-import-deal-with-socar
[2] Reuters. (2023). Ukraine signs gas deal with Azerbaijan's SOCAR. [online] Available at: https://www.reuters.com/business/energy/ukraine-signs-gas-deal-azerbaijans-socar-2023-03-20/
[3] Kyiv Post. (2023). Ukraine signs gas import deal with Azerbaijan's SOCAR. [online] Available at: https://www.kyivpost.com/ukraine-politics/ukraine-signs-gas-import-deal-with-azerbaijans-socar.html
[4] Euractiv. (2023). Ukraine signs gas deal with Azerbaijan's SOCAR. [online] Available at: https://www.euractiv.com/section/energy/news/ukraine-signs-gas-deal-with-azerbaijans-socar/
The first shipment of gas from Azerbaijan's SOCAR is being delivered via the Transbalkan route, marking a potential expansion of Ukraine's energy business with the finance sector playing a crucial role in securing this deal. The long-term cooperation between Naftogaz and SOCAR is poised to foster a significant shift in Ukraine's energy industry, reducing dependency on traditional routes and suppliers.
