SOCAR, Russian Transneft start commercial negotiations on oil transportation

Photo: SOCAR, Russian Transneft start commercial negotiations on oil transportation  / Oil&Gas

Azerbaijan, Baku, July 8 / Trend E. Ismayilov /

The State Oil Company of Azerbaijan (SOCAR) and Russian Transneft started the commercial negotiations on oil transportation through the territory of Russia after the termination of the intergovernmental agreement, ITAR-TASS reported on Monday with reference to official representative of the Russian company Igor Demin.

"After a three-year break, the negotiations are successful," Demin said.

According to him, the issue of oil quality (transit) has not been raised in the negotiations, but it is impossible to talk about maintaining the quality of Azeri Light oil because of the small transportation volumes. But oil can be transported by batches to maintain the quality. This will greatly increase the cost of transportation.

The Azerbaijani side suffers losses while transporting oil via Russia because Azeri Light crude oil is exported from Novorossiysk under URALS brand by mixing with lower quality oil.

Oil supplies via the Baku-Novorossiysk pipeline will be continued in accordance with the agreement by late 2013.

Russian Prime Minister Dmitry Medvedev signed a decree to terminate the agreement on the transit of Azerbaijani oil via the Baku-Novorossiysk pipeline with Azerbaijan in May.

Azerbaijan International Operating Company (AIOC) became the operator of the Baku-Novorossiysk pipeline till late 2007. It then transferred these functions to SOCAR.

SOCAR tranships oil from its own fields and from joint ventures and companies operating onshore in Azerbaijan, through Novorossiysk.

SOCAR exported 2.06 million tons via the northern pipeline Baku-Novorossiysk in 2012 compared to 1.99 million tons in 2011.

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