Iran offered Azerbaijan a new plan of gas cooperation

Iran has expressed an intention to buy gas in Azerbaijan as well as to consider the possibility of storing its gas in the underground gas storages of the country.

Mujtaba Khosrovtaj, Deputy Minister of Industry, Mines and Trade of Iran, said at the end of last week in Baku that this issue has been discussed during his meeting with Rovnag Abdullayev, President of State Oil Company of Azerbaijan (SOCAR).

Iran also considers the possibility of setting up a joint venture with SOCAR for operations n the third countries, such as Russia. Hosrovtaj added that cooperation in field of petrochemistry is a priority for Iran.

SOCAR and National Iranian Gas Export Company (NIGEC) have already had a short-term contract for gas deliveries signed several years ago. Iran was also ready to buy several billion cub.m. of gas a year from Azerbaijan on a long-term basis, but the talks were unsuccessful.

Today Azerbaijan supplies gas to Iran as swap operations to supply Nakhchivan Autonomous Republic (NAR), which is in blockade caused by the Armenian aggression. The daily volume of deliveries exceeds 1 million cub.m.

Iran is going to amend the gas swap with Azerbaijan, said Hosrovtaj.

“Demand in gas goes down in Iran in summer, but increases in winter. We offer to store the exported gas in the gas storages of Azerbaijan and supply it to Iran in winter,” offered Deputy Minister of Iran.

Azerbaijan and Iran are connected with 1474.5-km-long Gazi-Magomed-Astara-Bind-Biand gas pipeline, of which 296.5 km are located in Azerbaijan. The pipeline was put into operation in 1971, but several years ago SOCAR has upgraded it, including the Astara gas compressor station.—0—

Iran’s proposal to buy Azerbaijani gas on the commercial basis is interesting for Azerbaijan at first glance,  the Caspian Barrel Oil Studies Centre told Turan.

The analysts of the Centre believe that at present Iran would like to involve western energy companies into cooperation. The main goal of the Iranian officials in the current conditions is to take advantage of the situation: it could possibly get its share at the European gas market against the background of the conflict between the EU and Russia.

“Iran has started working in different directions not waiting for lifting of the western sanctions. Iran’s proposal could have negative consequences for Azerbaijan” Caspian Barrel believes. The Centre said according to SOCAR’s administration, in 2014 the volume of tank gas in the country will grow (17.2 billion cub.m. in 2012, 17.9 billion cub.m. in 2013 and over18 billion cub.m. in 2014). However, the growing volume of gas production in summer cannot be stored at the underground gas storages. The technical capacity of Garadag and Galmag underground gas storages will not allow doing that.

On the other hand, Iran offers Azerbaijan importing its gas on the basis of long-term contracts. If SOCAR agrees to that, it could lose very important deals in Europe and give its place to “another players.”

At present the gas pipeline between Turkey and Greece has been already connected and in 2-3 years or even earlier the interconnector between Greece and Bulgaria could be launched. EU also considers construction of interconnectors with Bulgaria in  various directions. In this case the Azerbaijani gas deliveries could start even before launching of the Southern Gas Corridor and commencing of production on the Shah-Deniz-2 project.

Therefore, SOCAR must have free volume of natural gas, mentioned the Caspian Barrel Centre.—0—