Socar eyes to sign new energy deal with Russia

BAKU - Reuters

The pipeline deal between Russia and Azerbaijan has terminated.

Azerbaijan is ready to discuss a new deal to pump its oil across Russia on acceptable terms, the head of Azeri state energy company SOCAR has said following the termination of a transshipment contract.

“The company will continue oil deliveries in case of economic suitability of new (contract) conditions for SOCAR,” Rovnag Abdullayev told reporters on May 15. “In case of economic unsuitability, deliveries won’t be implemented.”

Russia terminated a 1996 contract with Azerbaijan on May 14, as Azerbaijan failed to ship agreed quantities. The contract allowed Azerbaijan to pump oil through a 1,330-km pipeline from the capital, Baku to the Russian Black Sea port of Novorossiisk.

Under the agreement, Azerbaijan promised to ship no less than 5 million tons a year by 2002 through the pipeline, but it now pumps around 2 million tons annually.

Most Azeri oil is exported via the pipelines to Turkey and Georgia, operated by British company BP, with only a relatively small amount passing through Russia.