EU seeks oil deal with Azerbaijan as euro drops below dollar amid soaring inflation

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The European Union is reportedly seeking an oil deal with Azerbaijan as it attempts to distance itself from Russia amid its war in Ukraine. 

The European Commission, the executive arm of the EU, has proposed a plan to member nations that would aid the continental alliance by increasing natural gas imports as well as supporting the expansion of an existing pipeline, first reported Reuters after it obtained draft documents of the plan. 

The plan would not only help the EU as it aims to cut Russian oil dependence by 90 percent by the end of 2022 but could help Europe amid a record high inflation rate. 

Ships are loaded and unloaded at the port of Brunsbuettel, Germany, Tuesday, March 1, 2022. The area is under discussion as a site for a new LNG (Liquefied Natural Gas) terminal. (Frank Molter/dpa via AP / AP Newsroom)

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The proposal, which still needs to be approved by European nations, reportedly said it would "aspire to support bilateral trade of natural gas, including through exports to the European Union, via the Southern Gas Corridor, of at least 20 billion cubic meters of gas annually by 2027, in accordance with commercial viability and market demand."

Last year the Trans-Adriatic pipeline – the final network in the Southern Gas Corridor pipeline – reportedly brought in 8 billion cubic meters of natural gas from Azerbaijan to Europe.

If agreed to, the proposal would look to expand this network with the backing of European and Azeri funding.

E.ON, Europe’s largest operator of energy networks, rejected demands to shut down the Nord Stream 1 gas pipeline as part of sanctions against Russia for invading Ukraine, the company told Rheinische Post newspapeR. (AP Photo/Dmitry Lovetsky, File / AP Newsroom)

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The proposal reportedly said there would be "long-term, predictable and stable contracts" to ensure security for gas producers, it also said their expanded partnership would need to align with EU goals surrounding climate change. 

Both the EU and Azerbaijan would need to establish parameters to curb greenhouse gas emissions in their supply chains and would examine future hydrogen trade possibilities. 

The EU energy commissioner Kadri Simson is scheduled to visit Azerbaijan later this month.

FILE – Wind turbines stand at a wind park in Marsberg, Germany, June 15, 2022. The European Union’s decision to include natural gas in a list of activities considered sustainable could derail progress in reducing greenhouse gas emissions. (AP Photo/Martin Meissner, File / AP Newsroom)

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The proposal comes at a time when the EU has seen a significant spike in inflation, a result of the post-COVID pandemic recovery and surging fuel costs amid the war in Ukraine. 

For the first time in 20 years, the value of the euro dropped below the U.S. dollar on Wednesday, valuing $0.998 on the foreign exchange market, according to the BBC.

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