Why Azerbaijan doubles gas purchases from Russia
By Fatma Babayeva
A decision of the resource-rich Azerbaijan to double its gas purchases from Russia raised a question whether the deal is economic or political.
State oil company SOCAR made a proposal for the purchase of additional 3-5 billion cubic meters of natural gas from the Russian gas giant Gazprom.
Analysts view the move as Azerbaijan's intention to test how its two gas storage facilities - Kalmaz and Garadagh function.
Michael Krutikhin, an analyst in the energy industry and partner of Rusenergy said in his interview to Moscow-Baku that Azerbaijan has enough gas.
"Most likely, Azerbaijan's main purpose in this procurement deal is to test the new installed volumes of the gas storage facilities. It is a beneficial deal for Azerbaijan as the gas prices are cheap in the market now, and a lower price can be negotiated," said Krutikhin.
Azerbaijan has almost doubled the capacity of its two gas storage facilities. Earlier, their volume amounted to 2.5 billion cubic meters, then expanded to 3.5 billion cubic meters, and now stands at 5.5 billion cubic meters.
Krutikhin noted that it is practically impossible for Azerbaijan to test how its gas storage facilities function in new volumes as the country does not have such free volume of natural gas. Thus, the country needs to buy additional volumes of gas.
In this regard, Azerbaijan also made a proposal to Iran. Nevertheless, Iranian side needs to expand the infrastructure firstly, and Russian side has no objections to it either.
Aleksey Miller, head of Russian Gazprom previously related Azerbaijan's gas purchases from Russia with the country's economy growth and increasing domestic demand.
Alexei Grivach, deputy director of the Russian National Energy Security Fund also evaluated this deal as an ordinary business deal.
On the contrary, Azer Mehtiyev, expert based in Baku, believes this deal is a political rather than an economic step.
The gas deal is intended to bring Russia and Azerbaijan politically closer, he noted.
Gazprom supplies 2 billion cubic meters of natural gas per year to Azerbaijan since September 2015 in accordance with the five-year contract which offers possibility of extension.
The average daily volume of gas deliveries amounted to around 6 million cubic meters.
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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva
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