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Thursday, October 12, 2006

Azerbaijan mulls stopping Russian gas imports if price too high

BAKU, October 12 (RIA Novosti) - Azerbaijan may stop imports of Russian natural gas in 2007 and seek alternatives if prices offered at upcoming talks are unacceptably high, the country's energy minister said Thursday. Since last year, Russian energy giant Gazprom has been pushing for 'market prices' on the gas it sells to its ex-Soviet neighbors, which had previously been sold gas at preferential rates - in some cases, several times lower than the European level. "If the price for natural gas is too high, Azerbaijan would refuse to buy it [from Russia]," Natik Aliyev said adding that the country has many alternative sources of gas supplies. Under an agreement signed in December 2003, Gazprom is to supply Azerbaijan with 4.5-5.5 billion cubic meters of natural gas annually until the end of 2008. In 2006, Azerbaijan will receive 4.5 billion cu m of gas at a price of $110 per 1,000 cu m. The average price for EU countries is $240 per 1,000 cu m. The next round of talks between Azerbaijan and Gazexport, the Russian gas monopoly's export arm, on setting the volume and price for Russian gas supplies to the Caspian country in 2007 is scheduled for November. Aliyev said hydrocarbon-rich Azerbaijan could import gas from Iran and also increase domestic production significantly once its Shakh-Deniz field in the Caspian Sea, with estimated reserves of around 1,000 billion cu m, comes on stream in December. Azerbaijan's annual domestic gas consumption totals 15-16 billion cu m. The country currently produces around 6.5 billion cu m of natural gas per year. Iran has proven natural gas reserves of around 28 trillion cubic meters, the world's second largest reserves behind Russia. In 2005, gas production in the country totaled 86.6 bln cu m.

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