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New tariff for pumping Azerbaijan’s oil via Baku-Novorossiysk pipeline announced

Oil&Gas Materials 11 March 2014 18:50 (UTC +04:00)

Baku, Azerbaijan, March 11

By Elchin Ismayilov - Trend:

Under the new terms the tariff for pumping Azerbaijan's oil via Baku-Novorossiysk pipeline exceeds $16 per ton, a source in the State Oil Company of Azerbaijan Republic (SOCAR) told Trend on March 11.

Last year the Russian side decided to terminate the intergovernmental agreement on oil supplies via the Baku-Novorossiysk pipeline.

Oil pumping via this pipeline was suspended in February 2014 and forwarded to the Baku-Tbilisi-Ceyhan (BTC), which exports most of the oil produced in Azerbaijan (from the Azeri-Chirag-Guneshli block of oil and gas fields).

However, SOCAR and Russian Transneft have recently signed a new one-year agreement. Oil transportation via the Baku-Novorossiysk pipeline was restored according to this agreement.

Under the previous agreement the tariff for transportation of oil via the Baku-Novorossiysk pipeline was $15.67 per ton.

"The new tariff for pumping oil northwards slightly exceeds $16," the source said.

Baku-Novorossiysk oil pipeline transported oil independently produced by SOCAR, as well as from onshore fields, developed within joint ventures.

In 2013, SOCAR exported 1.75 million tons of oil via the northern Baku-Novorossiysk pipeline compared to 2.06 million tons in 2012.

Despite the new commercial agreement, SOCAR will continue pumping oil through the Baku-Tbilisi-Ceyhan oil pipeline. SOCAR's oil will be pumped via both pipelines in line with a specific schedule.

Before late 2014 the pumping in both directions will stand at 1.55 million tons; 1.02 million tons of this oil will account for the Baku-Novorossiysk pipeline and 530,000 tons for the Baku-Tbilisi-Ceyhan oil pipeline.

It was supposed that in case of no agreement, annually about two million tons of oil would be pumped via the Baku-Tbilisi-Ceyhan oil pipeline. This amount of oil was earlier annually transported by SOCAR via the Baku-Novorossiysk oil pipeline.

The company also has opportunities for transporting up to five million tons of additional volumes of oil via the Baku-Tbilisi-Ceyhan pipeline.

SOCAR has been operating Baku-Novorossiysk oil pipeline since 2008. The company took over the operatorship from Azerbaijan International Operating Company (AIOC - headed by BP).

Baku-Novorossiysk pipeline is 1,147 kilometers long: the length of its Azerbaijani section is 231 kilometers and the Russian section is 916 kilometers. It has a diameter of 720 millimeters. SOCAR said the pipeline was filled with oil in October, 1996. Its maximum capacity stands at 105,000 barrels per day.

The construction of the Baku-Tbilisi-Ceyhan pipeline started in April 2003, and it was filled with oil on May 18, 2005.

The shareholders of Baku-Tbilisi-Ceyhan Co. are BP (30.1 percent), AzBTC (25 percent), Chevron (8.9 percent), Statoil (8.71 percent), TPAO (6.53 percent), Eni (five percent), Total (five percent), Itochu (3.40 percent), Inpex (2.5 percent), ConocoPhillips (2.5 percent) and ONGC (2.36 percent).

Translated by E.A.

Edited by C.N.

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