Russia clinches gas deal with Azerbaijan
Azerbaijan and Russia signed an agreement on Monday
outlining key terms of selling Azerbaijani natural gas to the
neighboring country. As part of the agreement, concluded during
Russian President Dmitry Medvedev`s working visit to Baku, Russia
will have the opportunity to deliver fuel imported from the
resource-rich South Caucasus republic to energy-thirsty European
markets as early as in six months.
The document was inked by Alexei Miller, Chief Executive of Russian gas giant Gazprom, and Rovnag Abdullayev, President of the Azerbaijani state energy firm, SOCAR.
Miller said his company will buy 500 million cubic meters of Azeri gas from 2010. He declined to be specific, but maintained that the price offered by Russia for Azerbaijani gas is the highest when compared to other customers.
"The price will be commercially attractive for Azerbaijan because we are neighbouring countries so there are no transit states between us," Miller said.
"We can therefore begin to buy the gas quickly. There is already a gas pipeline between us," Miller said, adding that the gas would be used for Russian domestic consumption.
Miller said the deal will also see Gazprom listed as a preferential buyer for gas from the second development phase of Azerbaijan`s enormous Shahdaniz offshore field.
"Among all potential buyers, preference will be given to Gazprom and the others will have to offer a more interesting price," Miller said.
The gas deal was signed at the conclusion of President Medvedev`s talks with his Azerbaijani counterpart, Ilham Aliyev.
President Aliyev said Azerbaijan plans to increase the volume of gas supplied to its northern neighbor.
"In the future, as soon as Azerbaijan`s gas production increases, we plan to increase the deliveries," he told a news conference with his Russian counterpart.
President Medvedev described cooperation between the two countries as "cooperation in a new format", while Azerbaijani-Russian relations are seen as "strategic relations."
"We are ready to do everything we can for these relations to develop further," Medvedev said.
However, there remains different approaches to Azerbaijani-Russian cooperation on gas supplies. Though some have warned of adverse consequences, the majority believes that, on the contrary, it will bring both political and economic gains to Azerbaijan.
Vafa Guluzada, Azerbaijani former state adviser and political analyst, believes the gas agreement will benefit Baku.
"In any case, Russia has failed to achieve what it wanted in full. Thus, Azerbaijan will not be selling all of the gas it produces to Russia. This is impossible anyway, because, by doing so, Azerbaijan would deal a major blow to its cooperation with the West. So, the country will sell part of its gas to Russia, while transporting the other part to Europe via Nabucco [pipeline]," Guluzada said.
According to the former state adviser, under no circumstances should Russia be allowed to become a monopoly. He warned that if Azerbaijan and Central Asian states export their gas only to Russia, becoming a monopoly would be inevitable, resulting in Russia`s having all of Europe under its powerful influence.
European importers, who are heavily dependent upon Russia for gas deliveries, are seeking alternative suppliers while Moscow, which is trying to further increase this dependence, aims to build two additional gas pipelines. To fill these conduits, it is looking to buy gas from neighboring Turkmenistan and Azerbaijan.
As for dividends that Azerbaijan will gain from the gas agreement, the analyst said the country has gained both economically and politically.
"This was a purely economic agreement. I don`t see any political factors here. Nevertheless, if Azerbaijan had not signed the deal, it could have made Russia more aggressive toward itself," Guluzada added.
The document was inked by Alexei Miller, Chief Executive of Russian gas giant Gazprom, and Rovnag Abdullayev, President of the Azerbaijani state energy firm, SOCAR.
Miller said his company will buy 500 million cubic meters of Azeri gas from 2010. He declined to be specific, but maintained that the price offered by Russia for Azerbaijani gas is the highest when compared to other customers.
"The price will be commercially attractive for Azerbaijan because we are neighbouring countries so there are no transit states between us," Miller said.
"We can therefore begin to buy the gas quickly. There is already a gas pipeline between us," Miller said, adding that the gas would be used for Russian domestic consumption.
Miller said the deal will also see Gazprom listed as a preferential buyer for gas from the second development phase of Azerbaijan`s enormous Shahdaniz offshore field.
"Among all potential buyers, preference will be given to Gazprom and the others will have to offer a more interesting price," Miller said.
The gas deal was signed at the conclusion of President Medvedev`s talks with his Azerbaijani counterpart, Ilham Aliyev.
President Aliyev said Azerbaijan plans to increase the volume of gas supplied to its northern neighbor.
"In the future, as soon as Azerbaijan`s gas production increases, we plan to increase the deliveries," he told a news conference with his Russian counterpart.
President Medvedev described cooperation between the two countries as "cooperation in a new format", while Azerbaijani-Russian relations are seen as "strategic relations."
"We are ready to do everything we can for these relations to develop further," Medvedev said.
However, there remains different approaches to Azerbaijani-Russian cooperation on gas supplies. Though some have warned of adverse consequences, the majority believes that, on the contrary, it will bring both political and economic gains to Azerbaijan.
Vafa Guluzada, Azerbaijani former state adviser and political analyst, believes the gas agreement will benefit Baku.
"In any case, Russia has failed to achieve what it wanted in full. Thus, Azerbaijan will not be selling all of the gas it produces to Russia. This is impossible anyway, because, by doing so, Azerbaijan would deal a major blow to its cooperation with the West. So, the country will sell part of its gas to Russia, while transporting the other part to Europe via Nabucco [pipeline]," Guluzada said.
According to the former state adviser, under no circumstances should Russia be allowed to become a monopoly. He warned that if Azerbaijan and Central Asian states export their gas only to Russia, becoming a monopoly would be inevitable, resulting in Russia`s having all of Europe under its powerful influence.
European importers, who are heavily dependent upon Russia for gas deliveries, are seeking alternative suppliers while Moscow, which is trying to further increase this dependence, aims to build two additional gas pipelines. To fill these conduits, it is looking to buy gas from neighboring Turkmenistan and Azerbaijan.
As for dividends that Azerbaijan will gain from the gas agreement, the analyst said the country has gained both economically and politically.
"This was a purely economic agreement. I don`t see any political factors here. Nevertheless, if Azerbaijan had not signed the deal, it could have made Russia more aggressive toward itself," Guluzada added.
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