SOCAR: Operation of Baku-Novorossiysk pipeline in reverse mode beneficial for both parties

Oil&Gas Materials 7 December 2013 19:04 (UTC +04:00)

Istanbul, Turkey, Dec.7/
By Abbas Akhundov - Trend:

Operation of the Baku-Novorossiysk pipeline in reverse mode is beneficial for both Azerbaijani and Russian side, a senior official of SOCAR (the State Oil Company of Azerbaijan) told Trend, commenting on the issue of suspending Azerbaijani oil supplies on this route next year.

"Its advantage for Russia is that Russian oil will be delivered to the Mediterranean Sea to Ceyhan [through the Baku-Tbilisi-Ceyhan] for the first time either in purely physical terms or in the form of SWAP," SOCAR official said.

SOCAR official went on to note that SOCAR may increase the volumes of Azerbaijani oil pumping via the Baku-Novorossiysk pipeline to five million tons in case of preservation of its quality. Currently Azerbaijani oil is being shipped from the Novorossiysk port under the name of the Russian export blend, URALS.

"Despite the relative unprofitability compared to the Baku-Supsa and Baku-Tbilisi-Ceyhan pipelines, the Baku-Novorossiysk was one of the three pipelines, which exported our oil, and a country that has no outlet to the open seas, is in need of more pipelines," SOCAR senior official stressed.

To date the Azerbaijani and Russian sides have not yet found a mutually acceptable solution on the work of the pipeline, but the negotiations are continuing. If the parties do not agree, in accordance with the intergovernmental agreement, pumping of Azerbaijani oil through the pipeline will be suspended in February 2014, SOCAR representative said.

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