Russia’s Gazprom signs major gas deal with Azerbaijan
Tue 30 Jun 2009
On Monday 29 June Russian gas giant Gazprom has signed a deal with the State Oil Company of Azerbaijan (SOCAR) to import natural gas from Azerbaijan and then pipe it to Europe. Gazprom will import 500 million cubic metres of Azeri gas already from 2010, for a record price of 350 USD per 1,000 cubic metres. Import levels are even expected to rise.
The move is being seen by observers as an attempt by Moscow to extend its grip on potential European energy supplies by trying to make the rival Western-backed gas pipeline project, the Nabucco pipeline, unfeasible. The billion Nabucco gas pipeline, backed by the EU and the U.S., is intended to link energy-rich Central Asia to Europe through Azerbaijan, Georgia, Turkey, Bulgaria, Romania, Hungary and Austria, bypassing Russia and Ukraine. Its construction has been tentatively scheduled to begin in 2010. According to Russian media, nevertheless, it was reported later on Monday that the inter-governmental agreement on the pipeline's construction could now be delayed.
During Russian President Dmitry Medvedev's visit to Baku on 29 June, the chief executives officers of the two companies, Alexei Miller and Rovnag Abdullayev, signed the contract on Azeri gas purchases. According to Miller, Gazprom “can offer to Azerbaijan very favourable conditions for gas purchases.” “We have quite good bargaining chips as compared with any potential (Western) rivals seeking to buy Azeri gas,” he said. Still, the point at issue is “relatively small gas supplies,” though “the gas purchases could be increased in the future.” Both the Russian President as Azerbaijan’s President Ilham Aliyev attended the signing conference.
Miller also said that his firm had been promised priority in buying gas from the second phase of the “Shakh Deniz” Caspian Sea field. This is seen as a potential key source of gas for the Nabucco pipeline.
Europe gets about 20% of its gas from Russia via pipelines in the Ukraine. Yet Russia’s transit disputes with its former Soviet neighbours –most recently in the winter with Ukraine when supplies to Europe were temporarily cut- have raised concerns that Europe is too dependent on the country for its energy. The Nabucco pipeline was widely seen as a means to diversify European gas supplies and in the future become less dependent on Russian energy sources.
Sources: Ria Novosti; Kommersant; ITAR-TASS; BBC
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