Weekly economic review (11.01- 16.01.2010)

Analysis Materials 19 January 2010 12:21 (UTC +04:00)

The beginning of 2010 was remembered with remarkable events directly related to natural gas supplies in the Caspian region. From the very beginning of January Azerbaijan launched gas delivery to Russia. On Jan. 13 Azerbaijan signed a short-term gas delivery to Iran.

The State Oil Company of the Azerbaijan Republic (SOCAR) and Iranian National Gas Export Company have signed a short-term contract for Azerbaijani gas supplies to Iran. Iran's north regions distant from major gas fields will be supplied with Azerbaijani gas.

Azerbaijan and Iran will also sign an agreement on confidentiality, on conduct of talks over five-year contract [with possible extension] on Azerbaijani gas delivery.

The contract was signed by SOCAR President Rovnag Abdullayev and NIGEC Managing Director Seyed Reza Kasaei-Zadeh after talks held in Baku

From the beginning of the year Azerbaijan plans to supply gas to Iran in definite volumes in accordance with opportunities of the existing infrastructure of the two countries.

Modernization of gas infrastructure will allow to supply about 5 million cubic meters of the Azerbaijani gas per day (about 1.8 billion cubic meters per year) to Iran.

Now the infrastructure allows to deliver about 500 million cubic meters of gas per year. Futher the sides intend to expand the discharge capacity through increasing the discharge capacity of gas compression stations.

Iranian Ambassador to Azerbaijan Mohammad Bagher Bahrami said earlier that Iran intends to purchase about 5 billion cubic meters of gas from Azerbaijan.

Azerbaijan and Iran are connected with the Kazi-Magomed-Astara pipeline gas pipeline. Its length is 1.474.5 kilometers, including the territory of Azerbaijan - 296.5 kilometers. Its capacity is 10 billion cubic meters per year. This route is a branch of the pipeline Gazakh-Astara-Iran, put into operation in 1971. Three compressor stations in Kazi-Magomed, Agdash and Gazakh have been built. The gas transportation system is 55 atmospheres. Pipe diameter is 1,200 mm.

According to BP, gas production hit 116.3 billion cubic meters while using 117 billion cubic meters in 2008.