AzMeCo and Gasprom signed contract to deliver gas to Azerbaijan

On September 11, 2015 Azerbaijani AzMeCo company signed the contract to buy about 2 billion cub.m. of gas a year from Gasprom Export company, reads information posted on Gasprom Export web site.

The contract was signed in Baku in presence of Alexander Medvedev, Deputy chairman of Gasprom Board, and State Oil Company of Azerbaijan (SOCAR) Vice President for Marketing and Investments Elshad Nasirov, Yelena Burmistrova, General Director of Gasprom Export, and Nizami Piriyev, chairman of AzMeCo Board.

“This is a mid-term contract for purchase-sale of about 2 billion cub.m. of gas a year. Natural gas supplies will guarantee loading 100% capacities of the Garadag methanol plant. The gas supplies to the consumer in Azerbaijan are planned to begin in the near future,” says the same source.

Aleksei Miller, Gasprom President, said earlier that Gasprom could deliver several billion cub.m. of gas a year to Azerbaijan.

AzMeCo was established in 2007 and was put into operation in December 2013. The production capacity of the plant is 720,000 tons of methanol a year. Till now AzMeCo company produced 193,000 tons of methanol, of which 191,000 tons have been sold.

AzMeCo President Nizami Piriyev was arrested in May 2015 by the law enforcement agencies for failure to pay off the debt to the International Bank of Azerbaijan (IBA). IBA has allotted credit for the methanol plant construction to the amount of $300 million. EBRD has allotted additional $120 million. This year the methanol plant worked with interruptions, because of lack of stable gas supplies from SOCAR. SOCAR said that AzMeCo did not discuss the volume of gas supplies with it during the plant construction. In order to solve the problem, in June 2015 AzMeCo agreed to buy gas from the Russian gas monopoly. SOCAR was not opposed to use of its infrastructure for gas deliveries.

AzMeCo company did not disclose information about purchasing price of Russian gas at the Azerbaijani-Russian border and the agreement with SOCAR on the gas transportation to the plant (distance 220 km).

Turan found out from the market participants that Gasprom could sell gas at the price of about $190 per 1000 cub.m. However, it is hard to say if AzMeCo’s products are profitable with such a price, because it previously bought gas from SOCAR at the price of maximum $130 per 1000 cub.m.

* Azerbaijan imported gas from Russia since October 2009 till the end of December 2006. Between 2010 and 2013 Azerbaijan supplied Russia with natural gas.-0—