SOCAR, Transneft still interested in Baku-Novorossiysk project
By Gulgiz Dadashova
Azerbaijan's state energy company SOCAR and Russian oil pipeline monopoly Transneft -- the operator of the Baku-Novorossiysk pipeline's Russian section - are still interested in the continuation of oil pumping via the pipeline.
Recent media reports argue that both sides seek to extend Azerbaijani oil supplies via this route based on mutual interests.
In early 2013, Russian Prime Minister Dmitry Medvedev has signed an order to revoke the intergovernmental agreement, which envisaged transportation of 5 million tons of Azerbaijani oil per year via the Baku-Novorossiysk pipeline for $15.67 per ton.
Azerbaijan has repeatedly cited the possibility of amending the standing agreement, whose suspension date is approaching.
Intense negotiations on this issue are currently underway. SOCAR has applied to Transneft for extending the transit agreement, Russian media reported.
Azerbaijan is currently exporting oil via the Baku-Tbilisi-Ceyhan, Baku-Supsa, and Baku-Novorossiysk pipelines, as well as a railway. Thus, if the transportation of oil via Baku-Novorossiysk fails, oil can be directed to the other two oil pipelines.
Azerbaijani oil is being shipped from the Novorossiysk port under the name of the Russian export blend, Urals.
Urals -- a mix of heavy and high-grade oil of the Urals with light oil of western Siberia supplied through the Baku-Novorossiysk pipeline and the Druzhba pipeline system -- is traded on world exchanges at a price of $4 or $5 per barrel lower than the Azerbaijani crude.
As Azerbaijan has no direct access to the open seas, it is in need of more pipelines. So, maintaining oil transportation via the Baku-Novorossiysk pipeline meets Baku's interests in terms of diversification of routes.
The Baku-Novorossiysk pipeline (also known as the Northern Route Export Pipeline) is a 1,330-kilometer oil pipeline, which runs from the Sangachal Terminal near Baku to the Novorossiysk terminal at the Black Sea coast in Russia.