SOCAR expresses stance on termination of agreement on oil supply via Baku-Novorossiysk
The decision of the Russian government on termination of the agreement on transportation of Azerbaijani oil through the territory of Russia, dated January 18, 1996, is not a political but an economic issue, Azerbaijan's state oil company SOCAR reported on May 15.
The agreement states that if one party does not take the initiative to suspend the agreement, it is automatically extended for another year. According to this paragraph, Russia's decision is fully consistent with the terms of the contract. In the case of warning the opposite side on termination of the agreement six months prior to suspension, it is no longer active from January next year, the report says.
This issue was not a surprise to SOCAR. Both sides at various times have raised issues which have not been resolved, in particular, the issues of consistent quality of Azerbaijani oil during transportation through the territory of Russia and its storage at the port of Novorossiysk, oil quality bank, increasing the volume of oil transportation, issues related to the rate and mechanisms of change.
The decision of the Russian government will have no negative impact on the supply of Azerbaijani oil to the world market. Azerbaijan has achieved the creation of a reliable system of oil and gas pipelines and their diversification in the shortest possible time.
SOCAR appreciates the historic mission, which is performed by the Baku-Novorossiysk pipeline. In turn, the termination of an intergovernmental agreement on transportation of Azerbaijani oil via the Baku-Novorossiysk pipeline does not imply a complete halt in pumping Azerbaijani oil through the pipeline.
SOCAR supports the continuation of commercial negotiations with the Transneft Company, which manages the pipeline on its Russian section.
The statement of Transneft, released on May 15, said the rate of $15.67 per ton, as recorded in the contract, was calculated on the basis of transportation of no less than five million tons of oil a year, which is not provided by the Azerbaijani side. Shortfall of tariff revenue from the transportation of Azerbaijani oil in 2012 amounted to more than $47 million.
Termination of the contract is not a legal reason to stop the supply of Azerbaijani oil via the Baku-Novorossiysk route. There is an agreement between the economic entities, and the tariff for transportation must be approved by the Federal Tariff Service of Russia, the Russian company reported.