Azerbaijan's state oil company SOCAR and Russian energy giant Gazprom today signed an agreement on increasing Azerbaijani gas supplies in 2011-2012.
The agreement was signed during Russian President Dmitriy Medvedev's official visit to Azerbaijan, Novosti-Azerbaijan reported.
"Gazprom and SOCAR have signed an addendum to the current contract on the sale of Azerbaijani natural gas, under which purchases will go up to 2 billion cubic metres per year from 2011 and even higher in 2012," Gazprom's information department said in a press release.
"This completely meets our basic contract which sets no upper limit for the volume of gas supplies from Azerbaijan. The geographical proximity, lack of transit zones and presence of an existing gas transport infrastructure make an increase in gas cooperation between Azerbaijan and Russia the most commercially beneficial option for both partners," Gazprom Chief Executive Alexey Miller said in the Gazprom press release.
In October 2009, Gazprom Export and SOCAR signed a long-term contract on the purchase and sale of Azerbaijani natural gas. The contractual terms of this document provide for the annual supply of 0.5 billion cubic metres of gas in 2010-2015.
The companies later agreed to double this volume to 1 billion cu.m per year. Under today's agreement, supplies go up to 2 billion cu.m next year.
The cost of the gas is determined by a price formula.
Gas suitors
Gazprom CEO Miller said earlier that Gazprom was ready to buy up all Azerbaijan's gas, remarks that have been echoed by the Iranian embassy in Baku, as Tehran is keen to increase its imports of Azerbaijani gas.
European companies, too, are vying to buy Azerbaijan's gas. The Austrian company in the Nabucco gas pipeline consortium, OMV, is holding talks with Azerbaijan on gas supplies for the planned pipeline, an Austrian minister announced in Baku yesterday.
Cooperation not competition?
Russia does not intend to get in the way of alternative energy projects, but does intend to try to attract its partners to greater cooperation, President Dmitriy Medvedev told a joint press conference with the Azerbaijani president in Baku today, according to Interfax-Azerbaijan.
The Russian leader has previously denied that the planned Nabucco pipeline to supply gas from the Caspian region and Middle East to Europe would be a rival to Gazprom's South Stream project, which is also intended to supply gas to southern and eastern Europe.
"The Russian position has always been that we cannot and should not hinder any projects. This is inadmissible. We should show the privileges of cooperation," Medvedev said in Baku today.
"May the projects that are interesting to our partners win," Medvedev said. "We are not forcing anything on anyone, but these projects must make economic sense. This is the basis for our economic relations."
"We make money on energy. This is OK. But of course, we must balance our capacities against our desires," the Russian leader said.
President Ilham Aliyev said that Azerbaijan had enough gas to last for many decades to come, as proven reserves were around 2,000 billion cubic metres and potential reserves around 5,000 billion.
The Azerbaijani president said that gas cooperation with Russia was "open and sincere, a sector strengthening our relations".
"We don't see our work in the gas sector as an opportunity for unfounded competition. We are working not on the basis of political concerns but economic practice," Aliyev said.
News.Az