Hungary and Slovakia are closing in on an agreement with Azerbaijan to supply natural gas to Europe following the completion of a transit agreement between Russia and Ukraine. About this reported the Bloomberg agency.
Companies from Hungary and Slovakia are close to signing a contract to supply 12 to 14 billion cubic meters of gas a year from Azerbaijan, according to people familiar with the matter.
According to the commercial agreement, the Azerbaijani state energy company Socar will supply gas to Suja on the Russian-Ukrainian border. Hungarian MVM Zrt. and Slovak Slovensky Plynarensky Priemysel AS will further transport gas to Europe.
For this purpose, it is planned to use the same network of gas pipelines through which Russian gas now flows through Ukraine to the European Union.
This supply will effectively replace the volumes that Europe currently receives under the current transit agreement. The contract would require a so-called swap agreement between Azerbaijan and Russia, as Azerbaijan does not have sufficient export capacity to fully replace existing supplies.
The price of gas in Europe for December fell by 8,1% on news of progress in negotiations, but then partially recovered. The deal, which is not yet final, could help stabilize gas prices after recent market fluctuations.
However, the European Commission has previously stated that there is no threat to the region's energy security after the completion of the transit agreement. Slovakia and Austria are among European countries that continue to import Russian gas through pipelines.
Any commercial agreement will require political support from the Ukrainian authorities so that the operator of the gas transportation system of Ukraine can reserve the necessary capacity.
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