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Tuesday, January 09, 2007

Azeris stop oil exports to Russia

Ilham AliyevBBC News, Azerbaijan By Matthew CollinThe state oil company in Azerbaijan says it has stopped pumping oil to Russia amid a dispute between the two countries over energy prices.
Several former Soviet republics have been angered by the decision of Russian state-backed company Gazprom to sharply increase the cost of the gas it sells. Azerbaijan refused to pay and said it would cut oil exports to Russia. Officials said they would use the oil they used to supply to Russia to fuel Azerbaijan's power stations. The Azeri state oil company announced it had suspended supplies to Russia after Gazprom insisted on doubling the price of gas. Officials in Azerbaijan said the Russian price rise was unacceptable. However, an international company which uses the same Azeri pipeline is still pumping oil to Russia.
Western allies
Azerbaijan is rich in oil, has large gas reserves and supplies energy to Europe, although it still has to import some gas to satisfy its own needs. Gazprom has said it is simply halting subsidies to former Soviet republics. But the Azeri President Ilham Aliyev has accused the Russian company of commercial blackmail. Azerbaijan's neighbour, Georgia, also initially refused to pay Gazprom's increased price. It said it was being punished by Moscow for its pro-Western direction. But after failing to sign a deal to ensure supplies for the winter, Georgia gave in and made an agreement with Gazprom. Georgia and Azerbaijan are both allies of the US, although Azerbaijan has tried to maintain friendly links with Moscow. Both countries are actively seeking alternative sources of energy to reduce their dependence on Russia - and to make sure that in future, they are not as vulnerable to Gazprom's price increases.

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