In a report released by the non-governmental organization Global Witness, it has been revealed that the Russian energy giant Lukoil could rake in profits of up to $7 billion from its stake in a gas field in Azerbaijan over the next decade. This field, known as Shah Deniz, not only holds significance as one of the world’s largest gas-condensate fields but also serves as a crucial supplier to the European Union, a fact that has garnered attention amidst geopolitical shifts in energy dynamics.
The European Union, seeking to diversify its energy sources and reduce dependence on Russian gas, inked a deal back in 2022 to double its gas imports from Azerbaijan. This move was part of a broader strategy to decrease reliance on Russian energy supplies, particularly amidst strained EU-Russia relations. However, what the recent report exposes is the intricate web of international energy interests underlying such agreements.
Despite the operational management of the Shah Deniz field being in the hands of the British company BP, Lukoil holds a significant stake of 19.99 percent. This means that the profits reaped from the EU transactions could also flow into the coffers of the Russian giant, raising concerns about the unintended consequences of European energy policies.
The projected $7 billion windfall for Lukoil between 2024 and 2033, as estimated by Global Witness, underscores the financial stakes involved. This revelation casts a shadow over the EU’s efforts to pivot away from Russian energy, as it inadvertently bolsters a Russian entity’s financial interests.
Moreover, the report highlights Lukoil’s pivotal role in funding the Russian government, with substantial sums flowing from its operations in the EU back to Russia. These funds, amounting to $63.8 billion between 2015 and 2020 according to ResourceProjects.org, have reportedly been utilized in various capacities, including supporting military endeavors such as the conflict in Ukraine.
Despite Lukoil’s assertions of being a private entity with no state involvement, the financial ties unearthed by the report paint a complex picture of the energy landscape. While Lukoil may not be subject to EU sanctions, its significant role in profiting from Azerbaijani gas exports to Europe raises questions about the credibility of Azerbaijan as a viable alternative to Russian gas.