SOCAR: Oil transportation more advantageous on the commercial basis, than on the basis of intergovernmental agreement

SOCAR believes that revision of the rates of pumping of Azerbaijani oil via the Baku-Novorossisk oil pipeline by Russia is very normal, SOCAR President Rovnag Abdulayev told journalists.

SOCAR President reminded that at present the company transports oil via the Baku-Novorossisk pipeline on the commercial basis. In the part the oil transportation was based on the intergovernmental agreement between Azerbaijan and Russia.

“Frankly speaking, oil transportation on the commercial basis is cheaper, than that based on the intergovernmental agreement. Devaluation of ruble has reduced the cost of pumping for us as twice. Right now Russia plans to correct the rate and this is very normal,” added Abdullayev.

Abduallyev said that the Azerbaijani government considers the Baku-Novorossisk oil pipeline a strategic direction, “which must be always used.”

“In general, Azerbaijan has three routes to export its oil to the world markets and therefore, we have no problems with Azerbaijani oil export,” he added.

Russian Kommersant newspaper wrote earlier that Russian Transneft company has been looking for the funds to repair the Baku-Novorossisk oil pipeline and the oil base in Sheskharis (Novorossisk). The company has already requested the Federal Tax Council to increase the rate of Azerbaijani oil pumping via pipeline by 30%. Transneft explained that this direction has become more profitable in the region after devaluation of Russian currency. Because of devaluation pumping via the Russian pipeline costs Azerbaijan $10.20 per 1 ton, while via Baku-Tbilisi-Ceyhan (BTC) oil pipeline - $44.40 per 1 ton. Transneft is sure that rate increase will not cause reduction of volume of pumping. The Tax Council will consider this issue on April 7, 2015.

Azerbaijan has been transporting its oil via the Baku-Novorossiysk pipeline since 1997. According to the intergovernmental agreement, Azerbaijan paid a transit fee of $15.67 for transportation of 1 ton of its oil via the Russian territory.

In 2014 SOCAR has shipped 932,155 tons of oil from the Novorossiysk port.—0—

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