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Wednesday, November 22, 2006

Gazprom leans on Azerbaijan

21 November 2006 - Upstream onLine - Russian gas monopoly Gazprom has told Azerbaijan it may cut by two thirds the volume of natural gas exports to the ex-Soviet republic, the head of Azerbaijan's state oil company said today. The reduction would mean Azerbaijan would have no spare fuel to sell to neighbouring Georgia, which faces having its Russian gas supplies cut off, state oil company President Rovnag Abdullayev told the ATV television station. "We had an agreement with the Russian Federation for 2007 for 4.5 billion cubic metres, but they have informed us of the possibility of giving us 1.5 billion cubic metres of gas," Abdullayev told the station, Reuters reported. He said with Russian imports at that level the country could meet its own needs from domestic sources, including the new BP and Statoil-led Shakh Deniz field, which is now coming on stream. But Abdullayev said: "In that, case we would not be able to give Georgia additional volumes from Shakh Deniz." He did not give a reason for the possible reduction. Gazprom could not immediately be reached for comment. The Russian giant has been negotiating with Azerbaijan and other ex-Soviet republics to bring the price they pay for Russian gas nearer to European prices. Gazprom has told Georgia it will cut off gas supplies if a new supply contract is not agreed for 2007. The Russian monopoly says it wants Tbilisi to pay $230 per 1,000 cubic metres instead of the $110 it pays now. Gazprom says the proposed increase is commercial but Georgian ministers have linked it to a bitter political row with Moscow, which accuses Georgia's pro-Western government of being unfriendly towards Russia. Tbilisi has been urgently casting around for alternative gas supplies and was eyeing Shakh Deniz as one of the most promising sources. Local media have speculated that Moscow may pressure Azerbaijan to prevent it baling out Georgia with extra gas.

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