Given Russia’s restricted access to European markets, new routes and partners are gaining strategic importance. For Iran, the focus is on balancing its domestic energy needs while seeking to position itself as a regional energy hub. Against this backdrop, Azerbaijan emerges as a critical transit center in the Caspian basin.
In 2024, Iran’s ambassador to Moscow, Kazem Jalali, announced that most technical issues concerning the transit of Russian gas via Azerbaijan have been resolved, with pricing remaining the only outstanding matter.
Earlier, Russian President Vladimir Putin stated that his country could supply Iran with up to 55 billion cubic meters (bcm) of gas annually, with an initial phase involving 2 bcm.
This reflects not only an energy partnership but also a deepening political alignment between Moscow and Tehran.
Azerbaijan has already established itself as a vital energy corridor connecting Europe and Asia through projects such as the BTC (Baku-Tbilisi-Ceyhan), TANAP (Trans-Anatolian), and TAP (Trans-Adriatic) pipelines.
In the new initiative, Azerbaijan stands to gain:
Economic benefits (transit revenues, investment inflows).
Geopolitical weight (becoming indispensable for regional energy security).
Diplomatic leverage (strengthening its multi-vector policy with both Russia and the West).
With access to Europe largely closed, alternative routes for Russia are essential. Iran and Azerbaijan are natural partners in this context.
To address winter energy shortages in its cold northern provinces, Iran will be able to balance domestic demand and strengthen its role as a potential energy hub.
Moscow and Tehran both stand to gain by creating a trade corridor beyond Western sanctions and enhancing their geopolitical influence.
However, a number of obstacles remain:
1. Pricing disputes: No final agreement has been reached between Moscow and Tehran.
2. Infrastructure limits: Existing pipelines cannot handle large volumes without new investments.
3. Legal and environmental risks: Caspian Sea resource management remains a sensitive issue.
4. Western pressure: The US and EU may seek to constrain the project through political and economic means.
If the project is successful, 10-15 bcm of annual transit is achieved for Azerbaijan, which consolidates its role as a key energy bridge; Iran resolves internal energy shortages and gains hub status, while Russia secures new market revenues.
However, a number of obstacles stand in the way. Pricing and legal disputes can stall the project. Western sanctions reduce investment interest. As a result, the project could fail to materialize fully, with limited benefits for all sides.
Another scenario is on the table: Only 2-5 bcm of transit is implemented in the near term. Here, Azerbaijan gains limited economic benefit but retains its reputation as a reliable partner, and Iran partly alleviates shortages but cannot fully realize its export ambitions.
Azerbaijan’s role in the Russia-Iran gas corridor will be decisive. This initiative is not just an energy project but a strategic choice capable of reshaping the balance of power in the South Caucasus.
If successful, Baku will increase both its economic and diplomatic leverage, Iran will strengthen domestic stability, and Russia will diversify its energy diplomacy.
The only question that still needs to be answered is how the US administration and the EU governments will react to this scenario.
The writer is a Middle East scholar and commentator on the region.