Formation of the Moscow-Baku-Tehran gas axis

According to Energy Press; Russia and Iran have reached an agreement on the route of the gas pipeline passing through Azerbaijan, and negotiations are in the final stages of determining the supply price. During the visit of Iranian President Masoud Pezhikian to Moscow, the Russian side unexpectedly announced that the partners of the strategic contract had reached an agreement on the transfer of large volumes of Russian gas to Iran through the Republic of Azerbaijan. The volume of these exports will be 55 billion cubic meters per year. After the end of the negotiations, Russian Energy Minister Sergei Sviliev announced that the Russia-Iran gas pipeline project had been signed and would pass through the Republic of Azerbaijan.
Strategic goals of the agreement
In addition to commercial goals, the Russia-Iran gas contract also has a political motive and is a move to send a clear message to the West. The Strategic Partnership Agreement between Russia and Iran, signed on January 17, also focuses on energy cooperation. Russian President Vladimir Putin has put forward plans for gas exports from 2 to 55 billion cubic meters per year. The existing pipeline between Azerbaijan and Iran can only carry 2 billion cubic meters.
Iran has been facing domestic gas shortages during the winter months for the past three years, and experts believe 5 billion cubic meters is enough to cover the shortfall. However, the volume proposed in the deal is much more than that. It is in line with broader goals, including working with Iran as a transit hub to access markets in Pakistan, India and beyond.
To deliver 55 billion cubic meters per year, several new pipelines would need to be built, requiring billions in investment. Historically, Russia has relied on 10 pipelines through Ukraine to transport 160 billion cubic meters of gas to Europe. Therefore, a similar scale of infrastructure is essential for the success of the deal.
The deal also represents Russia’s strategic response to the reduction in gas exports to Europe due to sanctions. While Moscow seeks to export its gas to China, the current pipelines have a limited capacity of 50 billion cubic meters per year. Moreover, China is wary of investing in expensive infrastructure and negotiating favorable terms. The deal could serve as a bargaining chip to gain leverage over Beijing while finding alternative markets.
The deal may be driven by Russia’s desire to maintain export levels amid sanctions rather than real economic logic. It is not yet clear how Iran intends to use Russian gas. Will it facilitate sanctions evasion or simply act as a transit route? Experts believe that the Russian-Iranian gas deal is less about meeting energy needs and more about a strategic partnership. It also reflects the circumvention of Western sanctions, which still leaves significant economic and logistical challenges unresolved.
Choosing the Azerbaijan route
The Russian gas pipeline to Iran is being built through Azerbaijan with a capacity of 2 billion cubic meters per year, with the possibility of expanding to 55 billion cubic meters. For Russia, this line is a project for the future. The initial pumping volume is 2 billion cubic meters, which is a little more than 1% of gas supplies to the European Union until 2022. For example, this volume is less than what Russia supplies annually to Moldova or Bulgaria. For example, 55 billion cubic meters is the capacity of the two exploded Nord Stream lines. But we still have to reach these volumes.
Of course, Russia can supply the initial 2 billion cubic meters to Iran even without laying new pipelines, but to reach such high capacities as 55 billion cubic meters, it cannot be accessed without building new gas pipelines.
Russia is connected to Azerbaijan through its old gas pipeline with an installed capacity of 13 billion cubic meters. Previously, reverse supplies of Azerbaijani gas to Russia were carried out through it.
There is also a transport corridor – through Azerbaijan to Iran, which was built during the Soviet Union. Today, Azerbaijani gas is sent through it to the Islamic Republic, and in return, Iran supplies gas to the Nakhchivan Autonomous Republic (swap mechanism). However, with the planned construction of the Igdir-Nakhchivan gas pipeline, this region of Azerbaijan can be supplied via Turkey, and therefore there will be no need for swaps with Iran.