SOCAR Becomes Operator of Azerbaijani Section of Baku-Novorossiysk Pipeline

Oil&Gas Materials 6 February 2008 14:04 (UTC +04:00)
SOCAR Becomes Operator of Azerbaijani Section of Baku-Novorossiysk Pipeline

Azerbaijan, Baku, 6 February / corr Trend S.Aliyev, V.Sharifov / The State Oil Company of Azerbaijan Republic (SOCAR) and Azerbaijan International Operating Company (AIOC) signed an agreement on transference of the operational duties of the Azerbaijani part of Baku-Novorossiysk Pipeline. According to the agreement, the new operator of the pipeline will be SOCAR, a source stated at SOCAR on 6 February.

"The cooperation [with AIOC] on transferring the equipment of [the Azerbaijani part of the pipeline] has been competed," the same source stated.

Annually, SOCAR pumps 2-2.5mln tons of Azerbaijani oil produced in on- and offshore fields through its own funds, as well as the oil produced in the onshore fields by the joint ventures and companies operating with foreign capital, via the Baku-Novorossiysk pipeline at the price of $15.67 per ton. AIOC transports high-gravity oil which is produced in the Azeri-Chirag-Gunashli field also via the Baku-Novorossiysk, as large consignments of its oil are pumped via the Baku-Tbilisi-Ceyhan (BTC) pipeline.

Currently the SOCAR does not transport oil via Baku-Novorossiysk due to the issue that the Russian pipeline monopolist Transneft offered to annul the existing transportation agreement with Azerbaijan on oil pumping via the Baku-Novorossiysk pipeline in order to revise the conditions of the agreement.

The transportation agreement between Transneft and the AIOC, which produces light oil from the Azeri-Chirag-Guneshli fields and operates the Baku-Novorossiysk pipeline, was concluded in 1997. The issue of re-signing the agreement was raised by Transneft when in 2007 AIOC, guiding the terms of the agreement, informed Transneft of its rights and obligations in the agreement to SOCAR.

SOCAR, which owns the Baku-Novorossiysk pipeline, said that the AIOC and SOCAR do not see any necessity for a re-signing of the existing transportation agreement with Transneft. SOCAR is prepared to pump oil via the Baku-Novorossiysk route based on the agreement reached with the Russian company, which allows for the consideration of Transneft's proposals to instigate some changes to the document.

Due to the complicated situation with Transneft, SOCAR is obliged to begin export of oil by rail to Batumi from the Dubendi terminal (which is located in 47km in the north).

"Currently technical preparation is continuing for the oil transportation by rail to Batumi. We plan to send a tanker with an 80,000 ton capacity from the Georgian port," a source stated at SOCAR.

Last time the SOCAR exported oil from Dubendi was in 1999. The SOCAR uses the platform, managed by Dubai Middle East Petrol, to load oil onto the railway cisterns in the terminal.