Gasexport still to get determined with prices of gas to be delivered to Azerbaijan in 2006

Oil&Gas Materials 1 December 2005 14:32 (UTC +04:00)

The State Oil Company of Azerbaijan has notified Gasexport Ltd, a part to Gasprom, a Russian gas giant, on its readiness to hold a meeting to define a price and volume of gas supply to Azerbaijan in 2006.

However, Gasexport has not made any appointment for such talks. For the time being Gasexport has not designed a unified price policy for sale of gas to the South Caucasus region in 2006, the reliable sources told Trend on condition of anonymity.

“The prices are expected to be considerably high in 2006 as compared to 2005. The company is expected to offer $110 per 1000 cu m,” the same source underlined.

Gasexport is currently considering the similar figure with Georgia.

Gasexprt has not made any decision on Azerbaijan, while the issue can be resolved by the New Year. At present the SOCAR purchases gas from Gasexport at $60 per 1000 cu m.

From 2006 Azerbaijan can considerably reduce its dependence on import fuel in connection with the increase of the gas balance within the country. The Azerbaijan International Operating Company (AIOC) is probable to present to SOCAR in 2006 a total of 3 billion cu m of associated gas produced from Azeri and Chirag fields. Under the PSA, signed between Azerbaijan and the AIOC shareholders in 1994, gas extracted from the Azeri-Chirag-Gunashli fields along with oil, is gibe to Azerbaijan free of charge. The AIOC can retain gas which the company needs for its oil and gas operations (gas injection to stratums).

If to take into consideration that in 2006 the SOCAR plans to extract 4 billion cu m of natural from its own fields, then acquiring additional 3 billion cu m of fuel from the ACG Azerbaijan could considerably release itself from import and purchase only 2-2.5 billion cu m of gas from Gasexport instead of 4.5 billion cu m in 2005.

In January to October 2005 Gasexport supplied 3.78 billion cu m of gas to Azerbaijan against 3.93 billion cu m delivered in 2004. This year the SOCAR plans to purchase 4.5 billion cu m of gas. The natural gas transported to the country via the Shirvanovka-Gazimahommad pipeline.