What Is Gazprom Looking for in Azerbaijan?

Baku / 06.10.17 / Turan: The Board of Directors of Gazprom has agreed the issue of opening a representative office of JSC Gazprom in Azerbaijan, the company said.

Answering Turan's request about the reasons for the resumption of the activities of the representation of the Russian gas monopoly, local experts linked this event to the fact that in the near future an agreement on deliveries of Russian gas to Azerbaijan is possible. In particular, the economist Natig Jafarli considers this event to be a landmark event. According to the expert, the missing gas volumes under the previous agreements on the supply of blue fuel to Turkey and Georgia, as well as the needs of the methanol plant AzMeCo in the amount of 800 mcm of gas per year, can be replenished with the purchase of Russian fuel.

"In recent years, gas production in our country is falling. Due to the sale of gas in the Georgian and Turkish areas, as well as the growing domestic needs, the existing volumes are clearly not enough. Besides, it is almost two years before the implementation of the second stage of development of the Shah Deniz field. During this time, we will necessarily need additional volumes, and it is possible that the deficit will be replenished with Russian gas. Proceeding from this, SOCAR and Gazprom can sign an agreement on the supply of Russian gas to Azerbaijan," Jafarli said, explaining the recent decision of the Russian gas giant to return to the local market.

At the same time, the Director of the Petroleum Research Center Ilham Shaban believes the resumption of the activities of Gazprom's representation in our country may be caused by plans for further cooperation in this area, not necessarily related to the purchase and sale of "blue fuel". Say, it could be a joint venture to provide services or equipment for the industry and much more. According to the expert, our countries have hardly cooperated in the gas sphere for two years, since Iran sells gas to Azerbaijan on more favorable terms. The lack of volumes in the amount of 1 bcm from 2016 has been filled with purchases from this country, and since 2014 the supplies of Azerbaijani gas to Dagestan have ceased.

As for Russia's participation in the TAP, it is possible after 2020, since the initial capacity of the gas pipeline is calculated at 10 bcm, intended for pumping volumes within the Shah Deniz-2 project. However, in the future, after the expansion of TAP to 20 bcm, 10 bcm of spare capacity of the expandable part fall under the action of the third energy package of the European Commission and can be provided for pumping Russian gas up to 5 bcm, Shaban said.

Meanwhile, according to some experts, there is a close connection between the return of Gazprom to Azerbaijan and the recent visit of Russian President Vladimir Putin to Turkmenistan, which is discussing with the EU the possibility of transit of its own gas to Europe via the Trans Adriatic pipeline. The combination of circumstances raises many open questions at the point of intersection of the gas interests of the three countries - Azerbaijan, Turkmenistan and Russia. The interest of the northern neighbor in transporting surplus of own gas, using the infrastructure capabilities of TAP and TANAP, is obvious. At the same time, Russia is not satisfied with the possibility of transit of Turkmen gas through the Southern Gas Corridor, bypassing its territory. Thus, on the agenda of unspoken discussions there may be a question of "planting" Gasprom"s fuel on the Azerbaijani pipe. -0-