Controversial talks surrounding a gas-swap scheme, potentially allowing continued Russian gas flows to Europe, have taken place at the COP29 climate conference in Azerbaijan. The proposed deal, brokered by Azerbaijan, involves replacing expiring contracts with Russian gas giant Gazprom with new agreements with Azerbaijanâs state energy company, Socar. This would ostensibly supply central European nations with Azerbaijani gas should Russian supply routes through Ukraine be disrupted â a disruption scheduled for the end of December.
Azerbaijan possesses substantial Caspian Sea gas reserves, significantly exceeding the UKâs remaining North Sea resources. However, the lack of sufficient pipeline capacity to directly transport significant volumes of Azerbaijani gas to Europe presents a critical issue. The proposed solution involves a rebadging exercise: Russian gas would continue flowing, but labelled as "Azerbaijani", with an equivalent amount of Azerbaijani gas similarly relabelled as "Russian". This would allow European nations to technically fulfil contractual obligations without directly engaging with Russia.
Energy analyst Jacob Mandel of Aurora Energy Research highlights the impracticality of the plan: "Thereâs not really a feasible way for Azeri gas to go through Russia into Ukraine and then to Europe. Itâs not physically possible. Contractually it would be Azeri gas, but physically it is of Russian origin." This perspective is echoed by Oleh Savytskyi of the Ukrainian environmental group Razom We Stand, who warns the deal would serve as "a Trojan horse to sneak Russian influence into Europe".
This controversial deal casts a long shadow over the already troubled COP29 conference. The event, which has seen walkouts, boycotts, and the looming threat of US withdrawal from the Paris Agreement, aims to address global warming and facilitate the transition away from fossil fuels. A key focus is securing a new $1.3 trillion fund for developing nationsâ decarbonisation efforts. Yet, Azerbaijan, having secured potentially $8 billion in fossil fuel deals since assuming the COP presidency, continues to actively promote its oil and gas resources. President Aliyev, in his opening address, referred to the nation's resources as "a gift from God," asserting Azerbaijan shouldn't be blamed for supplying a market in need.
The significant presence of Russia at COP29 further fuels concerns. With 900 delegates â double the number at COP28 â including senior energy executives openly marketing fossil fuels, the conference appears to be facilitating the promotion of Russian energy interests. Alexander Nazarov of Novatek, Russiaâs second-largest gas producer, even stated that despite the global commitment to transition away from fossil fuels, demand for Russian gas would remain strong.
Despite sanctions imposed following the 2022 invasion of Ukraine, Russian gas has continued flowing to central Europe (Slovakia, Hungary, and Austria) via a trans-Ukrainian pipeline, a five-year contract expiring at the end of December. Austria's supply was pre-emptively cut by Gazprom. While EU and Ukrainian politicians oppose the contractâs continuation, the proposed gas-swap aims to circumvent this opposition. Discussions between Azerbaijani President Aliyev and Slovakian President Pellegrini indicate an initial supply via Turkey and Bulgaria, with longer-term hopes of utilising the Ukrainian route. Slovakia's state-owned energy company, SPP, has already announced a pilot deal with Socar, with the first gas delivery expected in December via the southern route. However, SPP also expressed support for continued transit through Ukraine due to cost-effectiveness.
Ukraine, having received $800 million in transit fees last year, insists it is not involved in the negotiations. Yet, Naftogaz CEO Oleksiy Chernyshov acknowledges the strategic importance of Ukraine's gas transport system and that "the gas business often works through swaps."
Critics, including Victoria Voytsitska, a former Ukrainian MP, and David Tong of Oil Change International, strongly oppose the swap deal, highlighting its potential to maintain Russian influence and underlining the moral objections to European reliance on Russian gas. The presence of 1,700 fossil fuel lobbyists at COP29, a figure highlighted by Corporate Accountability, has prompted calls for their exclusion from future conferences. Concerns run deep, with Papua New Guinea boycotting the conference and Argentina withdrawing its delegation. The deep divisions highlight concerns about the COP process itself, prompting calls for stricter criteria for future host nations. The conference's setting in Baku, a city built upon a vast oilfield, underscores the inherent conflict between the conference's aims and the host nation's economic interests.