Controversial ‘swap deal’: Russian gas may flow to Europe rebranded as Azerbaijani

Russian gas could keep flowing into Europe next year under a controversial “swap deal” in which the Kremlin’s fossil fuels would be rebranded as Azerbaijani, The Telegraph writes.

Despite the war, Moscow still pays Kyiv £634 million a year to transmit gas to Europe via Ukraine. However, this agreement is set to expire at the end of next month.

In Azerbaijan, which is currently hosting the Cop29 climate summit, talks are under way that would see its state energy company, Socar, step in as a middleman when the transit deal ends.

Under the proposed scheme – one of several being considered – gas from Gazprom, Moscow’s gas giant, would be rebranded as Azerbaijani, with equivalent volumes of Baku’s gas labeled as Russian.

The scheme would mean that European companies could sign contracts with Azerbaijan for Russian gas, but wouldn’t have to deal with Russians.

Both the EU and Ukraine are adamant they will not renew the current deal with Russia.

“It’s very difficult to say what the most likely deal will be, but ultimately it is Ukraine who decides. Ukraine has to sign a transit agreement,” said Ugnė Keliauskaitė, an energy research analyst at Bruegel.

Azerbaijani President Ilham Aliyev also said he had been approached by Ukraine and the EU for assistance in maintaining gas transit via Ukraine.

“Europe still does not have the ability, or political will, to move away from Russian gas before 2027,” said Thierry Bros, a professor at Sciences Po Paris and a contributor to Natural Gas World. “Putin still has the ability to create volatility and push prices higher.” Bros believes Russia may delay a deal in order to exert pressure on Europe, or push up prices.