Why Did Head of Gazprom Hold Talks with President of SOCAR on Sunday?

Baku/03.07.17/ Turan: Alexey Miller, Chairman of the Management Committee of PJSC Gazprom, held talks with the President of SOCAR Rovnag Abdullayev in St. Petersburg yesterday.

According to the press service of Gazprom, the speech, in particular, was about supplies of natural gas to Azerbaijan.

It should be noted that Azerbaijan imported Russian gas in the period from October 2000 to December 2006. Then the supplies were stopped in connection with the launch of the giant gas condensate field Shah Deniz. A third of the produced gas from this field is supplied to the domestic market of Azerbaijan.

Gazprom appeared in the Azerbaijani market in 2004. Prior to this, Russian gas was supplied by the private company Itera.

The delivery of Russian gas to Azerbaijan was resumed only in the fall of 2015. Then, Gazprom Export (a Gazprom subsidiary) supplied only 108 mcm of Russian gas for the needs of the Azerbaijan Methanol Plant (AzMeCo).

It should be noted that the Gazprom press service, under the official announcement of the meeting of Miller and Abdullayev, placed reference information on the agreement between Gazprom Export and AzMeCo (currently SOCAR Methanol, which was established in November 2016), signed September 11, 2015. According to the document, it has a long-term character and the Azerbaijani side has the right to import annually up to 2 bcm of natural gas.

Judging by the background information, at the meeting, Miller and Abdullayev talked about supplying the methanol plant with raw materials.

According to the results of the first five months of this year, SOCAR Methanol produced 70,252.7 tons of methanol. According to the General Director of the enterprise Elnur Mustafayev, this year the plant plans to produce 250 thousand tons of methanol.

The annual production capacity of SOCAR Methanol is about 700 thousand tons. To achieve these indicators, it is necessary to supply the plant with natural gas in a volume of about 450-500 mcm.

Note that in 2016 Azerbaijan imported small volumes of natural gas (296 mcm), but not of Russian origin. In the first quarter of this year, imports almost remained at the same level, despite a slight increase in production in the country.

* According to Turan estimates, since 2000 Azerbaijan has imported 25.8 bcm of Russian gas for about $ 1.67 billion.