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Ukraine signs Transbalkan Gas Deal with Azerbaijan SOCAR

Naftogaz, the state-owned Ukrainian oil and gas company, has signed a first agreement with Azerbaijan’s SOCAR for importing a small amount of natural gas from Azerbaijan via the Transbalkan route.

"For the first time, a test shipment of gas is being delivered through the Transbalkan route along the Bulgaria-Romania-Ukraine corridor," Naftogaz said in a statement on its website.

The Ukrainian company stated that the agreement was only for a small amount of gas and did not give a time frame.

In a statement, Serhiy Koreteskyi, CEO of Naftogaz was quoted as saying: "This is a small but strategic important step which paves way for long-term collaboration."

In May, Ukraine announced that its energy regulator approved a mechanism for gas imports that would avoid high transit fees on gas imported through the Transbalkan Pipeline from Greece to Ukraine.

Since a series devastating Russian missile attacks this year that significantly reduced the domestic gas production, Ukraine has been facing a severe gas shortage.

Ukraine imports its gas via Slovakia, Hungary and Bulgaria. However, due to the higher transit fees, it has not yet used this southern route. Gas from LNG terminals located in Greece is also transported through Bulgaria, Romania, and Moldova.

Svitlana Grynchuk, the new Ukrainian Energy Minister said that this is another example of successful energy diversification. This is a crucial factor for ensuring reliable heating preparations and smooth operation.

She said that the route was "extremely significant" for Ukraine as it provided access to liquefied natural gas at Greek LNG terminals and Turkish LNG Terminals, Azerbaijani pipeline gas and Romanian pipe gas, as well as potentially Bulgarian offshore oil and gas.

According to a Ukrainian industry source, Ukraine carefully tracks the origin of its gas in order to avoid Russian fuel being delivered.

The source said, "This is Azerbaijani Gas. It is controlled." The source stated that we will continue to develop the cooperation.

Energy experts in Ukraine have expressed concerns that Russian gas may be present in the gas supplied from the south.

ExPro, a Ukrainian analysis company, said earlier this month that Ukraine had more than 9 billion cubic meters (bcms) of gas stored underground as of 17 July. It plans to accumulate approximately 13 bcms for the winter heating season of 2025/26.

The report noted that reserves were down 13.9% compared to the same period in last year, and at their lowest level for the past 12 years. (Reporting and writing by Anna Pruchnicka, Pavel Polityuk and Max Hunder. Editing and proofreading by Toby Chopra and David Holmes.

(source: Reuters)