SOCAR and Gasprom Presidents again discussed Russian gas import to Azerbaijan

The working meeting of Aleksei Miler, chairman of Board of Gasprom company, and Rovnag Abdullayev, President of State Oil Company of Azerbaijan (SOCAR), took place in Saint Petersburg on December 25, 2015, reads information posted on the web site of Gasprom.

According to the same source, the participants have discussed the bilateral cooperation in the gas industry. Russian gas export to Azerbaijan was a focus of the meeting. In particular, they have discussed the possibility of increase in the deliveries considering growth of natural gas consumption in the republic.

According to Turan, Aleksei Miller and Rovnag Abdullayev had the first meeting during the Economic Forum in Saint Petersburg in June 2015, during which they discussed resumption of Russian gas import by Azerbaijan.

After that Aleksei Miller said in his interview to RIA Novosti that “Azerbaijan’s economy has been growing and demand in gas has been increasing as well.” Therefore, the companies considered beginning of Russian gas export to Azerbaijan since the end of 2015.

A little later Abdullayev told local press that SOCAR has no problems with supplying the country and other consumers with natural gas. It is private consumer – Azerbaijan Methanol Company (AzMeCo), who has recently broken into the market as one of the biggest gas consumers – has problems. It consumed a little over 100 million cub.m. of gas a year, but this volume could reach 600-700 million cub.m. Abdullayev added that the volume of gas consumption has not been negotiated with SOCAR during design and construction of the plant. However, SOCAR was not opposed to supply of the plant with the gas by the third party. Thus, there was an idea to resume Russian gas import to Azerbaijan, which was suspended from January 1, 2007.

On September 11, 2015 Gasprom Export and AzMeCo signed the contract on purchase-sale of 2 billion cub.m. of gas a year. The Russian gas export to Azerbaijan started on September 28, 2015. However, gas export was suspended on October 20 at the request of AzMeCo company. A total of 100 million cub.m. of gas has been delivered. AzMeCo explained that production of methanol is not profitable with imported gas.

The deal between these two companies looked very strange. At first, for some reason Gasprom Export did not post any information about its contract signed with AzMeCo company in September 2015. Secondly, could it be true that specialists of AzMeCo company failed to properly calculate cost price of their product?

Thirdly, why did the talks on Russian gas import were conducted by SOCAR’s President, instead of AzMeCo administration? SOCAR is involved in this deal as the gas transportation structure, which ensures Russian gas transportation to AzMeCo plant. If AzMeCo really needed Russian gas so badly (we were made sure that Russian gas was not needed in 2015), then talks on gas purchase should have been conducted by AzMeCo President Nizami Piriyev. He is not a stranger to the Russian “gas circles”, because since 2003 Piriyev was in charge of the Russian oil and gas company StroiTransGas Oil.—0—