Baku-Novorossiysk is of interest on acceptable terms
Azerbaijan, Baku, May 15 / Trend /
Trend news agency expert Seymur Aliyev
Russia's termination of the contract on oil transportation via the Baku-Novorossiysk pipeline, concluded with Azerbaijan in 1996, will require a new agreement in case of necessity. Some basic conditions of the previous document will be changed.
The State Oil Company of Azerbaijani Republic is the operator of the pipeline on the territory of the Republic. It transports oil extracted from its own fields, as well as oil from joint ventures and operating companies working onshore in Azerbaijan, through this route today.
Azerbaijan has seven export oil and gas pipelines. Hydrocarbons are supplied through them to the regional and international markets.
Besides Novorossiysk, oil from Azerbaijan is delivered to the Georgian Black Sea port of Supsa, and from there to the Mediterranean coast of Turkey via the Baku-Tbilisi-Ceyhan pipeline. Both routes can fully meet the needs of pumping Azerbaijani oil. This means the Baku-Novorossiysk route is a condition of diversifying oil supplies, but not the only route upon which Azerbaijan entirely depends.
Today the Russian side claims that Azerbaijan does not fulfil the agreement on oil transportation volumes through this route. An agreement dated 1996 stipulated the pumping of five million tons of oil a year. However, in reality around two million tons a year were pumped.
Azerbaijan has repeatedly stated about the possibility of changing the existing agreement which would increase the transportation volumes.
At present the agreement clearly stipulates that only oil of Azerbaijani origin can be transported via the Baku-Novorossiysk pipeline. Cancelling the point will create an opportunity to transport oil via this pipeline from other countries such as Kazakhstan or Turkmenistan, transited through Azerbaijan today.
Currently, the cost of pumping a ton of oil (from the Azerbaijani-Russian border to the tanker) is $15.67 per ton. However, while increasing the transportation volume the cost could decline which could also be an incentive to increase the volumes.
However, such a route as the Baku-Tbilisi-Ceyhan has a number of advantages over any other in supplying the raw materials to the Black Sea. This oil pipeline allowed the solving one of the most important challenges facing the owners of raw materials and its carriers. BTC allowed a bypass of the Turkish straits of Bosporus and Dardanelles, greatly overloaded today and having high environmental requirements. Moreover, the BTC partners have their own Ceyhan terminal with its modern infrastructure in the Mediterranean receiving VLCC and ULCC super tankers while Novorossiysk has been heavily loaded by the oil of other producers.
This means the preserving of oil transportation via the Baku-Novorossiysk pipeline is of interest for Azerbaijan in terms of diversification, but not vital under unacceptable conditions.