Experts: Russia and Azerbaijan are close to the political rapprochement

Mon 05 October 2015 11:43 GMT | 16:43 Local Time

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"Azerbaijan's economy is growing, as well as domestic demand."

Last week, Russia started to supply gas to Azerbaijan - an average daily volume of supplies reaches 6 mln cubic meters.

"Imports of Russian gas will meet the additional needs of Azerbaijan in this energy due to economic growth and the increase in domestic consumption," the statement of "Gazprom" says, Oxu.Az reports citing

Experts explain why the Republic has decided to buy an additional "blue gold" from its northern neighbor, although it is known that Azerbaijan itself is very rich in both oil and gas. The best known two gas fields of the republic are the Shah Deniz and Azeri-Chirag-Guneshli.

It should be noted that in late June, the head of the Russian gas holding company, Alexei Miller said that Azerbaijan made an order to Gazprom for several billion cubic meters a year. "Our Azerbaijani colleagues filed us the request to begin the deliveries of Russian gas to Azerbaijan as soon as possible," Miller said.

"Azerbaijan's economy is growing, as well as domestic demand. The matter is about the beginning of deliveries on the basis of medium-term contract in the amount of several billion cubic meters of gas per year. Shipments may start before the end of this year," he warned.

In September, a contract of sale for a period of five years with the possibility of extension was signed. The agreement provides for the supply of up to 2 bn cubic meters of gas per year.

"The supply of natural gas by "Gazprom" will provide a guaranteed 100% load of capacity of the Karadag methanol plant," "Gazprom" stated in its press release in September.

Deputy Director General for the gas problem in the Russian National Energy Security Fund Alexei Grivach also did not see anything special in new supplies.

He reminds to portal "Moscow - Baku" that no further as the year before the gas has been supplied from Azerbaijan to Russia, the fact that a reverse flow has just started is a quite commonplace in gas business.

Indeed, the two energy powers - Russia and Azerbaijan - in recent decades repeatedly have been buying and selling "blue gold" to each other. Thus, "Gazprom" have already started to supply gas to Azerbaijan in 2004.

Five years later, "Gazprom" has signed a sales contract with SOCAR on the supply in the opposite direction - to Russia. These deliveries started in 2010, and an addendum to the contract was signed in 2012.

In 2013, shipments reached 1.4 billion cubic meters, but last year fell to 0.21 billion cubic meters, and this year completely stopped.

Experts explain: Baku reduced its deliveries to the North for the reason that it sharply boosted its deliveries to the West, in particular through the pipeline to Turkey.

"This is due to the fact that the Turkish contract signed by Azerbaijan in the late 90s, is now reached full capacity. It is approximately 6 billion cubic meters," Grivach said.

Experts agree with Miller - the rapid growth of Azerbaijan's economy caused a rise in domestic consumption.

Domestic needs of Azerbaijan in the gas is 10 bn cubic meters per year.

In recent years, the volume of gas production in Azerbaijan is about 5.5 bn cubic meters per year. By the way, the share of gas in the energy balance of the country is about 45%.

"In general, the gas that is produced in Azerbaijan, enough for the needs of both pupulation and producers of all sorts," the economist Azer Mehtiyev said in an interview with "Moscow-Baku" portal.

However Mehtiyev accuses many representatives of Azerbaijani business in a weak planning. According to him, they did not expect such a rapid development and expansion of their business.

"Many private companies did not timely appeal to SOCAR on their future needs, didn't warn that they will have additional requirements. Now an additional amount needed," the economist said.

In addition, according to the expert, such a contract on the supply is more political rather than economic step.

"These supplies are aimed at rapporochment of Azerbaijan and Russia politically - said Mehtiyev. - This factor is more important."




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