Azernews.Az

BAKU – Azerbaijan’s state energy firm SOCAR and the National Iranian Gas Company (NIGC) on Wednesday signed an agreement on the exports of Azerbaijani gas to the neighboring country.

Under the five-year contract, the South Caucasus republic will sell 1 billion cubic meters of gas to Iran in 2011, with exports expected to increase in the coming years.

The gas supply contract was signed by SOCAR President Rovnag Abdullayev and NIGC Managing Director Javad Oji.

Azerbaijani officials did not disclose the price of fuel but said it complies with world market levels and is acceptable for Azerbaijan.

Abdullayev said the price of gas to be sold to Iran is not below that of fuel exported to Turkey and Russia, and is economically viable.

"Our gas export policy is known - it aims to sell gas for a high price, and we are pursuing this policy," he said.

The SOCAR president added that Azerbaijan has sufficient volumes of gas available for transporting it to Iran.

"This [reserves] enables us now to begin transporting gas to Iran while also delivering it to Russia, Georgia and Turkey."

Azerbaijan will start supplying gas to Iran on February 1. According to Abdullayev, all related technical issues have been resolved, as the existing infrastructure has been upgraded and construction of the Astara gas compressor station located on the two countries’ shared border completed.

The two countries are linked with the 1,474 kilometer Gazi-Muhammad-Astara (Azerbaijan)-Bind-Biand (Iran) pipeline that has annual capacity of 10 billion cubic meters. The Azerbaijan section of the conduit is 296 km long. The route is a section of the Gazakh-Astara-Iran pipeline, which was commissioned in 1971.

Azerbaijan and Iran have so far swapped gas, and such cooperation has been limited to supplying fuel to Azerbaijan’s enclave of Nakhchivan as well as short-term gas deliveries to Iran in winter.

Iran has repeatedly said it was ready to buy up to 5 billion cubic meters of Azerbaijani gas per year.

Baku and Tehran agreed to expand cooperation in gas supplies during talks between their presidents in the Azerbaijani capital last November.