Baku, Azerbaijan, Sept. 17
By Maksim Tsurkov - Trend:
The information about possible Russian gas supplies to Azerbaijan appeared in June 2015 for the first time since 2007 and caused a lot of questions. In particular, the purpose of obtaining Russian gas by Azerbaijan was unclear if the country fully meets its domestic needs and even exports large volumes abroad.
Then, Gazprom representatives said in June that the company is ready to supply several billion cubic meters per year to Azerbaijan to meet the needs of the country. Then SOCAR (State Oil Company of Azerbaijan) explained that Gazprom will supply gas to AzMeCo's methanol plantbecause it was left without raw materials when it did not sign a contract with SOCAR on time.
The deal was formalized last week when the sides (Gazprom and AzMeCo) signed a contract to supply a total of about 2 billion cubic meters of gas per year. Gas will be supplied from September 20.
However, this issue was broadly discussed a few days ago when it was reported that the heads of SOCAR and Gazprom Rovnag Abdullayev and Alexey Miller met in St. Petersburg to discuss the Russian gas supplies to Azerbaijan. But the matter did not rest in with the methanol plant.
The situation was clarified by Abdullayev. He said that the sides agreed on temporary swap operations in gas supplies. Gazprom will supply 2 billion cubic meters of gas for their storage in the Azerbaijani underground gas storage facilities. It is necessary for Baku to provide the southern regions of Russia with gas in the future.
The agreement will be signed within 10-15 days and the first gas supplies will begin in October. The volumes of supplied gas are announced within 2 billion cubic meters.
Taking into account the volumes to be supplied to the methanol plant, it turns out that Gazprom will in the next few years export an average of about 4 billion cubic meters of gas a year to Azerbaijan.
These are the several billion cubic meters of gas per year, which Miller was talking about in the summer.
Such a deal is undoubtedly beneficial to both sides. SOCAR, first of all, will get an opportunity to test its Garadagh and Kalmaz underground gas storage facilities in terms of their capacity, which was brought to 6 billion cubic meters a year.
Aside from that the domestic consumption has grown, taking into account the high level gas supply in the country (90.4 percent), widely provided by SOCAR in recent years, as well as the high industrial production rates.
SOCAR has already had additional gas volumes that it could export to the southern regions of Russia. And now, such a possibility will be created with help of the Russian gas. Return deliveries are expected to start in 2017, and the existing infrastructure allows doing so.
SOCAR will also be able to minimize the volumes of extraction of associated gas from the Azeri-Chirag-Guneshli block and use it for injection to reservoirs. This will allow significantly increasing oil production at the field with help of the generated pressure.
Gazprom, in turn, will get an opportunity to distribute the surplus amounts of gas, which have accumulated due to various reasons.
Thus, the company will also solve the problem of gas supply to Russia's North Caucasus region in the future, which is very important for Moscow.
Moreover, it is possible that in the future, the growing market of Azerbaijan will serve as a good platform for Gazprom to sell some of its gas.
This, in turn, will allow Azerbaijan not to reduce the pace of industrial production and not to worry that Azerbaijan's own gas, contracted for deliveries to Europe via the Southern Gas Corridor, can be directed to domestic consumption.
Edited by CN
Maxim Tsurkov is a Trend commentator, follow him on Twitter: @MaksimTsurkov
