By Sobir Kurbanov and Eldaniz Gusseinov
By early July 2026, Ukraine’s General Staff assessed that long-range drone strikes had disabled close to 43 percent of Russia’s oil refining capacity, and on July 6, drones reached the Omsk plant, the country’s largest refinery. The campaign has pushed Russia into fuel rationing across more than 50 regions and into restrictions on fuel exports. For Central Asia, the exposure runs through a dependence on Russian petroleum products that several governments built over two decades. Kyrgyzstan and Tajikistan, which import almost all of their fuel and rely on Russian suppliers for most of it, are already recording shortages and sharp price increases.
BACKGROUND:
The vulnerability reflects policy choices made since the 2000s, when several Central Asian governments sought stable fuel supplies through long-term arrangements with Russian companies. In Kyrgyzstan and Tajikistan, Gazprom Neft and affiliated firms built dominant positions across the import, storage, wholesale, and retail markets for gasoline, diesel, and aviation fuel, reaching up to 90 percent in some segments. A weaker version of the same pattern developed in Uzbekistan. Privileged market access was expected to secure reliable supply at favorable prices and to draw investment into fuel infrastructure. In practice it narrowed competition and left the importing states dependent on a single supplier and a single source country for critical goods. Energy security in these markets became tied to conditions in Russia over which local governments have little influence.
In Dushanbe, diesel has become hard to find. Asia-Plus reported that it disappeared from several filling stations, including outlets run by Gazpromneft-Tajikistan, while others limited sales to 20 liters per customer. Prices moved within days, with AI-92 gasoline rising from 10.40 to 11.30 somoni per liter and diesel from around 11 to over 13 somoni. In Kyrgyzstan, Radio Azattyk recorded compressed gas at 45 soms per liter and a typical taxi fare climbing from about 1,200 to 1,700 soms, which cut driver incomes and raised household transport costs.
Kyrgyzstan drew roughly 90 percent of its gasoline imports from Russia well before the campaign began. In the first five months of 2026 Russian suppliers delivered more than 251,000 tons of gasoline, 235,100 tons of diesel, and 48,150 tons of aviation fuel, according to trader estimates cited by Nezavisimaya Gazeta. Tajikistan’s Ministry of Energy and Water Resources reported imports of more than 1.2 million tons of petroleum products and liquefied gas from Russia in 2025, above 70 percent of the total. Domestic output offers no substitute: Tajikistan produced 2,109 tons of gasoline and 3,111 tons of diesel in 2025.
IMPLICATIONS:
Bishkek was the first capital to ask for help, approaching Kazakhstan, Belarus, Azerbaijan, Uzbekistan, and Turkmenistan about possible deliveries as Russian supply grew uncertain. The Kyrgyz government maintains that reserves are adequate, yet the Association of Oil Traders has reported shortages of AI-95 and AI-98 and estimated that stocks cover 30 to 45 days at current consumption. It has removed price regulation on AI-95, letting prices adjust rather than risk empty pumps, and has opened talks with Chinese suppliers.
On July 8, the Tajik government stepped up its oversight of the fuel market, announcing stronger price monitoring for fuel and liquefied gas and setting up an intergovernmental working group under the Ministry of Economic Development and Trade, joined by the ministries of energy, finance, and transport and by the antimonopoly, customs, and tax services. Reuters reported that Tajikistan holds roughly 60 days of fuel reserves and that imports reached 922,000 tons in the first half of 2026, 11 percent above a year earlier. Officials acknowledge that replacing Russian volumes will take time.
Uzbekistan is better diversified, yet the disruption has reached its aviation sector. Uzbekistan Airways reduced frequencies and cancelled flights to Russia because of a shortage of aviation kerosene, after Moscow banned jet fuel exports from June through November 30, 2026, and against an already tight global jet fuel market that followed the Iran conflict. The economist Otabek Bakirov has argued that reliance on Russian petroleum products is becoming a macroeconomic vulnerability and has called for diversified sourcing.
Kazakhstan holds the most complex position and increasingly functions as the region’s shock absorber. It runs three refineries and produces its own crude, but scheduled maintenance has narrowed its margin, with Shymkent in repair from March 27 to April 25 and Atyrau from June 26 to July 15, and Pavlodar due later in the year. Kazakhstan still imports around 1.2 million tons of petroleum products a year from Russia under the EAEU indicative balance, and the analyst Olzhas Baidildinov puts Russian supply at roughly 40 percent of Kazakh aviation fuel demand. As Russian retail prices climbed well above Kazakh levels, the price gap turned cross-border arbitrage into a domestic problem. Reuters reported on June 24 that Russia was in talks with Kazakhstan over about 50,000 tons of AI-92 gasoline, though Energy Minister Yerlan Akkenzhenov said no formal request had arrived and that any supply would depend on domestic conditions. Kazakhstan has kept its road-export ban on gasoline and diesel in force until November 21, 2026, including to EAEU states, and the Energy Ministry has proposed extending it to May 22, 2027. The interior ministry has placed 59 posts near border crossings and, since the start of 2026, has recorded 255 vehicles fitted with concealed fuel tanks.
After the June 24 strike on the Orenburg gas processing plant, which handles Karachaganak’s raw gas under a long-standing joint arrangement, Kazakhstan cut liquid hydrocarbon output at the field from 34,000 to 25,000 tons per day, since the associated gas cannot be processed elsewhere at short notice. Around one-third of the country’s commercial gas is processed in Russia, so a strike on a plant inside Russia lowers output at a field inside Kazakhstan. The exposure runs through processing infrastructure as much as through fuel trade.
For Kyrgyzstan and Tajikistan the effect will not stay in the fuel sector. Higher gasoline and diesel prices feed into transport, food, construction, and agriculture, and fall hardest on lower-income households in the region’s least buffered economies. The search for alternatives has begun, with Turkmenistan, Azerbaijan, Iran, and China all under discussion, but substitution is a matter of rebuilding a supply chain rather than signing a contract. New suppliers require transport and storage arrangements, customs and certification procedures, and payment mechanisms, and several routes run longer and across more borders than the Russian one they would replace. Officials expect the alternatives to cost more.
CONCLUSIONS:
The strikes have turned a long-accumulating dependence into an immediate economic security problem. The exposure was structural before the war reached Russia’s refineries, and the campaign has made its cost visible across transport, aviation, and household budgets in the region’s least diversified economies. Kyrgyzstan and Tajikistan face the sharpest adjustment, Uzbekistan a narrower one centered on aviation, and Kazakhstan the task of shielding its own market while neighbors and Russia itself compete for its fuel. The outcome will turn on how fast these states can stand up alternative supply chains, since every substitute route carries higher cost and new logistics. China’s refining capacity and its proximity through Xinjiang make it the most plausible large substitute, which raises the prospect of exchanging dependence on one neighbor for dependence on another. The governments that widen their supplier base and strengthen competitive fuel markets soonest will be best placed to absorb the next shock, whatever its origin.
AUTHOR’S BIO:
Sobir Kurbanov is an international development expert and fellow at Nightingale Int. with over 20 years of experience in partnership-building, complex market reforms, program management, and teaching policy reform, public sector economics, and industrial policy across Eurasia. His expertise spans macroeconomic management, public sector governance, private sector development, trade, investment climate, infrastructure, and IF4D portfolio management, with a strong track record of working with bilateral and multilateral donors (SECO, DFID, USAID, IMF, WB, EU, UN), governments, CSOs, and think tanks, and leading cross-functional teams to advance evidence-based policy solutions.
Eldaniz Gusseinov is co-founder and Head of Research at Nightingale Int. and a non-resident fellow at Ibn Haldun University’s Haydar Aliyev Center for Eurasian Studies.
By Emil Avdaliani
Georgia has opted for a multi-investor model to develop the Anaklia port, shifting China from a prospective co-owner to one potential participant among several. This approach reduces the risk of dependence on a single external power while placing greater financial and managerial responsibility on the Georgian state. The geopolitical implications for Georgia, the wider region, and the development of the Middle Corridor could be substantial. First, China’s withdrawal is expected to facilitate the ongoing rapprochement between Tbilisi and Washington. Second, the decision is likely to strengthen Georgia’s growing ties with Central Asian countries, which view Anaklia as both an investment opportunity and an export gateway to the EU.
BACKGROUND:
The Anaklia deep-sea port project has become a symbol of Georgia’s transit ambitions. Located near the mouth of the Enguri River and the Russian-occupied region of Abkhazia, the port could accommodate larger vessels than Georgia’s existing facilities and strengthen the country’s role in the Middle Corridor linking China and Central Asia with Europe. However, financing difficulties and geopolitical competition have delayed the project for decades.
The idea predates Georgia’s restoration of independence in 1991. A small pier was built at Anaklia in the 1960s, and plans for a deep-water port were developed during the final years of the Soviet Union but never implemented. The project remained under consideration during Eduard Shevardnadze’s presidency but gained serious attention only after the 2003 Rose Revolution, as part of the proposed city of Lazika.
After Georgian Dream came to power in 2012, the Lazika project was postponed but later revived. In 2016, the government selected the Georgian-U.S. Anaklia Development Consortium, founded by TBC Holding and initially partnered with US-based Conti International, to develop and operate the port. Construction began in 2017, with plans to eventually handle around 100 million tons of cargo annually.
International lenders sought stronger state guarantees, while the government argued that the consortium had failed to secure sufficient financing. Conti International’s withdrawal further undermined the project, prompting the government to terminate the agreement in 2020. The consortium later sought around US$1.5 billion in arbitration, but an International Chamber of Commerce tribunal rejected the claim in July 2024.
In 2022, the government announced a public-private model, retaining 51 percent while allocating 49 percent to an international investor. In May 2024, it selected a Chinese-led group involving China Road and Bridge Corporation and Qingdao Port International as its private partner. The decision reflected Georgia’s deepening strategic partnership with China, signed in 2023 and expanded in 2026, and Beijing’s growing interest in the Middle Corridor following the war in Ukraine. Chinese participation offered construction capacity, access to funding, and connections to Asian cargo owners.
IMPLICATIONS:
Yet the agreement with the Chinese consortium was never finalized. In July 2026, Georgia replaced the single-investor structure with a landlord model, under which the state will own and develop the core maritime infrastructure, road and railway connections, while foreign companies will lease and operate individual terminals. The Georgian government plans to invest about US$1.1 billion and remains open to partners from China, Central Asia, Azerbaijan, and Western countries.
Internationally, the landlord model is widely used for major ports, balancing state control with private-sector efficiency. Governments retain critical infrastructure including dredging, navigation channels, and port land, while specialized operators compete to develop container, bulk, liquid cargo, and logistics facilities.
Anaklia is one of the few locations capable of accommodating vessels significantly larger than those served by Georgia’s existing ports at Poti and Batumi, which face geographic and infrastructural constraints. A deep-sea port at Anaklia could thus transform Georgia’s position within Eurasian logistics, from a transit state dependent on neighboring ports into a regional maritime gateway for direct intercontinental shipping.
Russia’s invasion of Ukraine has increased Anaklia’s importance by shifting Eurasian trade away from routes through Russia and strengthening the Middle Corridor. linking China, Central Asia, the Caspian Sea, the South Caucasus, and Europe. Rising cargo flows through Kazakhstan, Azerbaijan, and the Baku-Tbilisi-Kars railway have increased demand for Black Sea capacity, making Anaklia critical to Georgia’s ability to capitalize on this shift in Eurasian trade.
Anaklia’s development aligns with expanding connectivity across the South Caucasus. The port could complement the Trump Route for International Peace and Prosperity (TRIPP) and Armenia’s efforts to reduce trade dependence on Russia. An Armenia-Azerbaijan peace agreement, partly contingent on a planned 2027 Armenian constitutional amendment addressing Azerbaijani territorial concerns, could deepen regional integration and increase both countries’ interest in Anaklia. Armenian Prime Minister Nikol Pashinyan has shown determination to push for the amendment. Renewed conflict could isolate Armenia and undermine TRIPP, further increasing Anaklia’s importance as the singular pathway through the Caucasus for the U.S. and Europe.
Tbilisi’s decision reflects Georgia’s geopolitical balancing between China and the West. Although Beijing has framed its involvement as commercial, Western governments increasingly view major ports through the lens of strategic competition. Experience from port developments in Piraeus, Gwadar and Hambantota has heightened concerns about long-term political leverage associated with critical infrastructure investments. Chinese involvement in Anaklia therefore added to Georgia’s tensions with the EU and the U.S., already strained since 2022 by Tbilisi’s refusal to join Western sanctions against Russia.
By replacing the concession model with multiple international operators, Georgia has diversified its options for Anaklia while facilitating a potential normalization with the U.S. and the EU. Tbilisi-Washington relations have recently shown signs of improvement, including exchanges of official visits. The Chinese consortium’s removal can be expected to accelerate this process and potentially lead to a bilateral cooperation framework similar to those Washington has pursued with Armenia and Azerbaijan.
China’s withdrawal may also be tacitly welcomed by Moscow, which views Anaklia as a strategic competitor to Novorossiysk, currently the eastern Black Sea’s only deep-sea port. Russia views major Western-supported infrastructure projects in Georgia through a geopolitical prism and Russian analysts have linked Anaklia to NATO logistics, military mobility, and greater Western commercial presence in the region. The landlord model could ease such concerns by preventing control by any single geopolitical actor. Nevertheless, the strategic reality remains unchanged: Anaklia’s contribution to the Middle Corridor would still weaken Russia’s influence over Eurasian trade.
The multiple-investor model is also set to deepen Georgia’s growing engagement with Central Asia. Central Asian states will likely become more engaged in investing in Georgia’s transport and logistics infrastructure with a particular focus on the Anaklia port in the coming months. This trend was reinforced by a series of high-level visits in June–July 2026. Prime Minister Irakli Kobakhidze visited Kazakhstan, Kyrgyzstan, and Tajikistan, while the presidents of Uzbekistan and Turkmenistan visited Georgia. These meetings expanded cooperation in trade, investment, and connectivity, with Anaklia and the Middle Corridor featuring prominently. All meetings emphasized the role of Anaklia and the Middle Corridor, whereas especially Kazakhstan and Uzbekistan expressed interest in investing in the port.
CONCLUSIONS:
Ultimately, the Anaklia port has become a strategic instrument through which Georgia seeks to redefine its geopolitical role between Europe and Asia. The decision to replace the Chinese-led single-investor model with a landlord structure reflects an understanding that strategic infrastructure in today’s geopolitical environment must maximize geopolitical resilience. If implemented successfully, the landlord model could transform Anaklia into more than Georgia’s first deep-sea port. It could become the principal maritime gateway of the Middle Corridor, a logistics hub connecting Europe with Central Asia, and a symbol of Georgia’s ability to leverage geography without becoming strategically dependent on any single external power. In an era increasingly defined by competition over connectivity, supply chains, and transport corridors, that strategic flexibility may prove to be Anaklia’s most valuable asset.
AUTHOR’S BIO:
Emil Avdaliani is a research fellow at the Turan Research Center and a professor of international relations at the European University in Tbilisi, Georgia. His research focuses on the history of silk roads and the interests of great powers in the Middle East and the Caucasus.
By Erlan Benedis-Grab
Under Viktor Orbán, Hungary’s engagement with the Organization of Turkic States (OTS) served both practical and ideological purposes. Budapest used its observer status to deepen ties with Turkey, Azerbaijan, Kazakhstan, Uzbekistan, and Kyrgyzstan, while presenting Hungary as a bridge between East and West and as a sovereign, eastern-rooted alternative to mainstream Europe. However, Prime Minister Peter Magyar has signaled a clear rhetorical break from this approach, placing Hungary’s future firmly within the European Union and rejecting Orbán’s foreign-policy symbolism. Yet a full retreat from the OTS is unlikely. As the EU expands its own engagement with Central Asia through energy, connectivity, and trade initiatives, a Tisza-led government would more likely reframe Hungary’s Turkic ties in pro-European and pragmatic terms, while subjecting Orbán-era agreements and patronage networks to greater scrutiny.
BACKGROUND:
New Hungarian PM Peter Magyar’s declaration that “Turkic councils may come and eastern dictators may go, but Hungarians envision their future in the European Union” has turned Hungary’s engagement with the OTS into a test case: will a Tisza-led government actually abandon Hungary’s Turkic and Central Asian ties, or preserve them while stripping away Fidesz’s ideological framing?
When Orbán’s government returned to power in the early 2010s, it introduced the strategy of “Eastern Opening.” Although officially framed around economic diversification, the policy also carried a political-symbolic function. As Orbán’s conflicts with Brussels deepened over rule of law, sovereignty, and migration issues, the Eastern Opening gave Budapest a way to signal that Hungary had options beyond the EU mainstream. The strategy initially centered on Russia and China, but over time Budapest expanded its outreach to Turkey, Azerbaijan, and other OTS states. In this sense, ties with these non-EU states became instruments of political marketing: they allowed Orbán to present Hungary as a state capable of maneuvering between power centers rather than simply aligning with Brussels.
These ties reached a new stage in 2018, when Hungary was granted observer status in the Organization of Turkic States (OTS). Hungary occupies an unusual position in the organization because, unlike its core members, Hungarians do not speak a language that is part of the Turkic family; rather, Hungarian is classified as a Finno-Ugric language.
Its observer status, therefore, reflects not linguistic or cultural ties but a political and historical narrative embraced by Orbán. That narrative was shaped in part by Fidesz's interpretation of Hungarian Turanism, a contested nationalist narrative that claims Hungarians are of Turkic origin and are closely linked to modern Turkic nation-states. For Orbán, this fits into a broader civilizational vision of Hungary as a sovereign, national, Christian-conservative state with historical ties to the East, standing apart from liberal EU political and cultural norms. In this framing, “sovereignty” means that the Hungarian nation has the right to define its own political and cultural path, even when that path conflicts with the EU; “Christian-conservative” refers to Fidesz’s presentation of Hungary as a defender of Christian identity against liberal values.
Hungary gained further prominence in 2025, when it hosted an informal summit of the OTS in Budapest. The meeting placed special emphasis on Hungary’s role as a “meeting point between east and west”. The signed Budapest Declaration also aligned with several of Hungary’s priorities. It praised Hungarian efforts to develop relations between the OTS and the EU, called for political and security cooperation, emphasized energy corridors, and reaffirmed commitment to strengthening regional connectivity through the Middle Corridor. The Budapest summit represented the fullest institutional expression of Orbán’s eastward diplomatic agenda.
Hungary was neither a Turkic state nor a full OTS member, yet the summit placed Hungary in a central symbolic and diplomatic role within an organization whose identity Orbán had used to support his civilizational claims.
Beyond its ideological function, Eastern Opening also helped to provide the political framework for substantive, if limited, economic engagement in strategic sectors, including energy, finance, and infrastructure. Hungary’s outreach to OTS states reflected Budapest’s broader effort to diversify supply away from Russia, including through investment in Azerbaijan’s Shah Deniz gas field, expanded cooperation with Kazakhstan’s KazMunayGas, and emerging Caspian green-energy infrastructure linking Azerbaijan with the Black Sea region.
This economic cooperation has also been visible in the financial sector. Hungary’s OTP Bank acquired a controlling stake in Uzbekistan’s Ipoteka Bank, giving a major Hungarian firm a direct institutional foothold in Central Asia. In Kyrgyzstan, Budapest helped establish a joint Hungarian-Kyrgyz Development Fund, with activities across manufacturing, mining and metallurgy, infrastructure, agriculture, trade, technology, and IT. Still, critics argue that the Eastern Opening never fundamentally shifted Hungary’s trade structure. Throughout Orbán’s tenure, Hungary’s imports from the EU have consistently been above a ⅔ share of the country’s total imports. Hungary’s engagement with the OTS also serves the interests of the organization’s member states. Budapest is valuable to them because it gives the organization a foothold inside both the EU and NATO. It also allows Turkic and Central Asian states to present their cooperation with Hungary as part of a broader European-facing agenda.
Magyar repeatedly used “Turkic councils” in the lead-up to the 2026 election to target one of the key elements of Orbán’s foreign policy strategy: the Eastern Opening, especially Budapest’s deepening energy, transport, trade, and diplomatic ties with Turkic and Central Asian states. By contrasting Hungary’s permanent future in the EU with the temporary character of “Turkic councils” and “eastern dictators,” Magyar framed the OTS less as a useful diplomatic channel than as evidence of Hungary’s drift away from Europe under Orbán.
Tisza’s program makes this critique explicit by rejecting Orbán's premise that Hungary should be a bridge between the east and the west. It declares that “Hungary’s place is in Europe; Hungary will no longer be a ferry-country”. The program also attacks the doctrine behind that posture, describing Orban's connectivity agenda as “currying favor back and forth” and as inadequate for the modern world. Most explicitly, it states “The Eastern and Southern Opening has brought neither prosperity nor security — only new dependencies and uncertainty. We choose the West instead of the East". Brussels interpreted Magyar’s victory in similar terms. Von der Leyen wrote that Hungary had “chosen Europe” and had returned to its “European path.”
Yet Magyar has not placed the same special emphasis on Hungary’s place in the Turkic world.The key issue, therefore, is not whether Magyar rejects Orbán’s symbolism, but whether he would dismantle the practical relationships built under Orbán.
IMPLICATIONS:
Magyar’s government would likely seek to distance Hungary from Orbán’s illiberal and civilizational framing of that engagement, but it would still inherit a set of diplomatic, energy, and financial ties that serve Hungarian interests.
Hungarian government-aligned institutions and publications repeatedly regarded ties as ideologically meaningful. The Hungarian Institute of International Affairs, Danube Institute, and the Hungarian Conservative linked Hungary’s OTS engagement to strategic goals such as energy, connectivity, and defense cooperation, based on the foundation of shared historical ties.
Orbán's language had antagonized Brussels in the past. In 2024, for example, the EU publicly stressed that Orbán’s participation in the informal OTS summit in Shusha was only bilateral and that Hungary’s EU Council presidency gave him no mandate to represent the EU. Additionally, over Turkey-related issues, Hungary had previously blocked an EU statement criticizing Turkey’s 2019 military operation in Syria, and later joined Turkey in delaying Finland and Sweden’s accession to NATO. So, while Magyar is intent on rejecting Orbán’s ideological framing, a full retreat from pragmatic engagement appears unlikely. Turkey remains a fellow NATO member and an unavoidable actor in the Black Sea. Azerbaijan, Kazakhstan, and Uzbekistan are also increasingly relevant to EU-Central Asia engagement, as the EU is trying to reduce its dependency on Russia.
In recent years, the EU has significantly expanded its engagement with Central Asia, especially after Russia’s full-scale invasion of Ukraine. Since adopting its 2019 Central Asia strategy, the EU has moved from broad regional dialogue toward a more concrete agenda, driven by increased European interest in energy security, critical raw materials, and alternative transport corridors. High-level EU–Central Asia meetings in Astana in 2022 and Cholpon-Ata in 2023 were followed by the 2023 Joint Roadmap for Deepening Ties, which set out practical areas for cooperation. The first EU–Central Asia summit in Samarkand in April 2025 then upgraded relations to a strategic partnership, a crucial milestone for EU-CA relations. What Magyar may do, however, is put institutional pressure on individual agreements between Hungary and Central Asian states. Anti-corruption and accountability for Orbán-era patronage are central to Tisza’s political agenda, and some of Hungary’s Central Asian deals were developed within the broader environment of state capture that characterized Orbán’s rule.
For example, OTP’s (Nationwide Savings Bank) acquisition of Uzbekistan’s Ipoteka Bank and MOL’s (Hungarian Oil and Gas Public) strategic cooperation with Kazakhstan’s KazMunayGas. OTP is formally private, but its CEO, Sándor Csányi, is widely viewed as close to Orbán. Likewise, MOL, though publicly listed, remains exposed to state influence: Mathias Corvinus Collegium (MCC), Orbán’s key ideological institution, received a 10 percent stake in MOL, and chairman Zsolt Hernádi has also maintained close ties to Orbán. Magyar’s meeting with Hernádi and his criticism of these links suggest that a Tisza government would put these arrangements under state scrutiny. Many partnerships may survive, but the Orbán-linked networks that shaped some OTS ties would likely weaken.
CONCLUSIONS:
Hungary’s engagement with the Turkic world is therefore unlikely to disappear under a Tisza-led government, but its meaning would likely change. Under Orbán, the OTS served both practical and ideological purposes: it opened channels in energy, finance, and diplomacy, while also reinforcing Fidesz’s civilizational narrative of Hungary as an eastern-rooted, sovereign alternative to liberal Europe.
Thus, Magyar’s statements on Hungary’s European future signal a rhetorical break. Hungary’s trade with OTS states remains limited, but selected ties in energy, banking, and connectivity still serve strategic interests that the new government will be eager to leverage. In that sense, the door is closing on Hungary’s “Eastern Opening”. Hungary’s Turkic policy is poised to shift from identity politics towards a more even-handed pro-European agenda.
AUTHOR’S BIO:
Erlan Benedis-Grab is a researcher at the Central Asia-Caucasus Institute. He holds a dual B.A. in Economics and Central Eurasian Studies at Indiana University Bloomington, and his research focuses on Central Asia, International Trade, and Energy Politics. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .
By Vali Kaleji
Russia and Iran are moving closer to implementing a long-negotiated natural gas agreement. Officials from both countries have confirmed that Azerbaijan has been selected as the preferred transit route for Russian gas exports to Iran, a route that recalls Iran's natural gas exports to the Soviet Union through the same corridor in the 1970s. The project will constitute part of the broader geopolitical and geoeconomic reconfiguration of Eurasia following the Ukraine war, in which Russia seeks to redefine its energy export routes while Iran seeks not only to reduce its domestic natural gas imbalance but also to strengthen its geoeconomic and transit position within regional energy networks.
BACKGROUND:
Energy cooperation between Iran and Russia dates back to the Soviet era. In January 1966, Iran and the Soviet Union signed a gas agreement under which Iran exported 10 billion cubic meters (bcm) of natural gas annually from its southern gas fields to the Soviet Caucasian republics through a pipeline terminating at Astara, now on the Iran–Azerbaijan border. In return, the Soviet Union agreed to build the Isfahan Steel Plant and the Arak Machine Manufacturing Plant. The pipeline became operational in 1970, but gas exports ceased in 1980 following the Islamic Revolution and the Iran–Iraq War. Although exports briefly resumed in 1989, the collapse of the Soviet Union in 1991 ended this framework of cooperation.
Rather than expanding energy ties with the Russian Federation, Iran subsequently developed cooperation with the newly independent states of Central Asia and the South Caucasus, including gas imports from Turkmenistan, oil swap arrangements with Kazakhstan and Azerbaijan, gas exports to the Nakhichevan Autonomous Republic, and the Iran–Armenia Gas-for-Electricity Swap agreement.
Despite UN sanctions, Iran and Russia reached an “oil-for-goods” agreement in 2014 under which Russia would purchase Iranian oil in exchange for Russian goods and equipment. The arrangement lost momentum after the 2015 Joint Comprehensive Plan of Action (JCPOA) enabled Iran to increase oil exports and regain access to international markets.
The U.S. withdrawal from the JCPOA in 2018 and the reimposition of sanctions, combined with Western sanctions on Russia following its invasion of Ukraine, created new incentives for bilateral energy cooperation. In July 2022, the National Iranian Oil Company (NIOC) and Russia’s Gazprom signed a US$ 40 billion memorandum of understanding covering joint investment in oil and gas projects, including gas pipelines and swap arrangements. In June 2024, Gazprom and the National Iranian Gas Company (NIGC) signed an agreement on Russian gas supplies to Iran, with Tehran aiming to import up to 20 bcm annually. During 2025, negotiations focused on pricing, financing, volumes, and transportation routes. Azerbaijan emerged as the preferred transit corridor, with Russian gas expected to enter Iran through the Astara border crossing, replicating the route used during the Soviet era. Russian Energy Minister Sergei Tsivilev confirmed this route in January 2025. Russia has proposed an initial supply of about 2 bcm annually, potentially expanding to 55 bcm in later phases.
During a meeting with Iranian Oil Minister Mohsen Paknejad on 13 July, Tsivilev also emphasized that the main provisions of the contract had been settled, and that the agreement would be finalized in the near future.
Azerbaijan has taken a cautious position. Unlike Russia and Iran, whose officials have repeatedly commented on the project, Baku has largely refrained from public statements regarding the proposed Russian gas exports to Iran. This silence may reflect the fact that Azerbaijan has become one of the EU's key natural gas suppliers, particularly since the outbreak of the Ukraine war, and does not wish to create the impression that it is serving as a new export route for Russian gas under the current sanctions regime. Azerbaijan may also prefer to avoid taking a public position until the commercial and legal arrangements of the project have been finalized.
From a technical and operational perspective, two key pipelines could potentially facilitate gas supplies from Russia to Azerbaijan and Iran. The 200km Novo-Filya (Russia) – Baku Gas Pipeline was built during the Soviet era, with a capacity of 10 bcm per year. It runs along the Caspian Sea coast and can operate in reverse mode, forming part of the larger Mozdok-Hajigabul gas pipeline system. The 1,474.5km Hajigabul (Azerbaijan) – Astara – Abadan (Iran) Gas Pipeline is another Soviet-era construction, connecting Azerbaijan to Iran. It has a capacity of 10 bcm per year but is currently inactive.
To enable significant Russian gas supplies, substantial investments in modernizing the entire pipeline system would likely be necessary. By mid-2026, imports have not yet begun, as negotiations continue over commercial terms, infrastructure development, Iran’s role in gas swaps and re-exports, and transit arrangements with Azerbaijan.
IMPLICATIONS:
The most immediate implication of the prospective Russian gas exports to Iran is its contribution to mitigating Iran’s gas imbalance in the country’s northern regions during the cold autumn and winter seasons. Although Iran possesses the world’s second-largest natural gas reserves after Russia and, in 2025, its total annual natural gas production exceeded 280 bcm, equivalent to approximately 7 percent of global natural gas production. The rapid growth in domestic consumption, the deterioration of parts of its infrastructure, two decades of extensive economic sanctions, and a lack of foreign investment in the development of gas fields and refinery capacity have created a structural imbalance between gas production and consumption. As a result, in recent years Iran has faced a daily gas shortage of 200–300 million cubic meters (mcm) during peak consumption periods. During the recent U.S. and Israeli war against Iran, parts of the South Pars gas facilities and processing plants were targeted, resulting in the loss of approximately 230 mcm of gas production capacity and further exacerbating the country’s energy imbalance.
The gas imbalance in northern Iran is particularly acute during the cold autumn and winter seasons because most of the country’s oil and gas resources, as well as its refineries, are located in the southern regions. Hydrocarbons must therefore be transported by pipeline to Iran’s densely populated northern provinces, a process that is both costly and associated with energy losses. At the same time, Iran has not developed the oil and gas resources of the Caspian Sea for a variety of reasons. Under these circumstances, gas imports from Russia, as well as Turkmenistan, enable Iran to increase gas supplies to its northern regions during the cold autumn and winter months.
A second implication, strongly emphasized by supporters of the project in Iran, is the use of surplus Russian gas, after meeting demand in the northern regions, to increase Iran’s gas exports to Iraq, Turkey, Armenia, Pakistan, and Oman, thereby strengthening Iran’s position as a regional energy hub. The realization of this objective, however, will largely depend on a final agreement between Iran and the U.S., the lifting of UN sanctions, and the removal of unilateral U.S. sanctions against Iran.
A third implication is the deepening of strategic interdependence between the two countries. Alongside the expansion of close political relations, the conclusion of the 20-year Comprehensive Strategic Partnership Agreement between Iran and Russia, the strengthening of bilateral and multilateral economic and trade cooperation within the Eurasian Economic Union (EAEU), the International North–South Transport Corridor (INSTC), and military-defense cooperation, energy will constitute a new dimension in Tehran–Moscow relations. Nevertheless, competition between Iran and Russia in the regional gas market, particularly in the South Caucasus and especially in Armenia, cannot be overlooked in the context of routing Russian gas exports to Iran through Azerbaijan. In fact, rather than routing the pipeline through Georgia and Armenia, both of which are consumers of natural gas, Russia has opted for Azerbaijan, a producer and exporter of natural gas, in order to ensure that Gazprom’s long-term commercial interests are not threatened.
A fourth implication is the strengthening of Azerbaijan’s role and position between Iran and Russia in both transit—the International North–South Transport Corridor (INSTC)—and energy, through the export of Russian gas to Iran. This development has been shaped by a number of factors, including sanctions on both Iran and Russia, the Free Trade Agreement between Iran and the Eurasian Economic Union (EAEU), the changing geopolitical environment resulting from the war in Ukraine, the recent U.S. and Israeli war against Iran, and Iran’s growing energy imbalance. Although the fluctuating nature of Iran’s and Russia’s relations with Baku could affect the sustainability of Russian gas exports to Iran, the re-export of part of the imported gas from Iran to Pakistan, a close partner of Azerbaijan, could disincentivize Baku from disrupting or suspending Russian gas transit to Iran.
CONCLUSIONS:
Whereas Iran exported natural gas to the Soviet Union in the 1970s, this trend has reversed over the past six decades. If implemented, Russian gas exports to Iran would form part of the broader geopolitical and geoeconomic reconfiguration of Eurasia following the Ukraine war. Russia seeks to redefine its energy export routes, while Iran aims to reduce its domestic gas imbalance and strengthen its geoeconomic and transit role within regional energy networks. However, the project’s success will depend on political cooperation between Tehran and Moscow, Azerbaijan’s role as the main transit route, international sanctions, its economic viability, and developments in global energy markets.
Within Iran, opinions on Russian gas imports remain divided. Supporters argue the project would reduce winter gas shortages in northern Iran, increase gas exports to neighboring countries, and reinforce Iran’s position as a regional energy hub. Critics, however, view Russia as Iran’s principal competitor in regional and global gas markets, noting that discounted Russian oil and gas have already displaced Iranian exports, particularly in China and India. Russia has similarly expanded its share of Iran’s steel export markets through lower prices. Consequently, if Iran–U.S. negotiations lead to sanctions relief and expanded Iranian energy exports, Russia may already have secured a significant portion of Iran’s potential export markets.
AUTHOR’S BIO:
Vali Kaleji, based in Tehran, Iran, holds a Ph.D. in Regional Studies, Central Asian and Caucasian Studies. He has published numerous analytical articles on Eurasian issues for the Eurasia Daily Monitor, the Central Asia-Caucasus Analyst, The Middle East Institute and the Valdai Club. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .
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