Does Gazprom Deal Mean No Azerbaijani Gas For Nabucco?

(RFE/RL) -- Azerbaijani natural gas may be headed to Russia instead of the European Union-backed Nabucco pipeline project.

That's the way it looks to some following a visit by the head of the State Oil Company of the Azerbaijani Republic (SOCAR) to Gazprom headquarters in Moscow on March 27.

SOCAR chief Rovnag Abdullayev met with Gazprom chief Aleksei Miller and the two signed a memorandum of understanding for supplying Azerbaijani gas to the Russian company. According to Gazprom's website, the two sides agreed to start negotiations for Gazprom's purchase of Azerbaijani gas beginning in January 2010.

Significantly, there was no mention of the volume of gas to be sold. According to what information was available, the gas may be supplied mainly to Russia's southern republic of Daghestan.

Gazprom's website said the two companies would conduct joint technical inspections of the 200-kilometer Baku-Novo-Filya pipeline that runs along Azerbaijan's Caspian coast to the Russian border, and ultimately modernize the pipeline. "Azerbaijani gas will be supplied to Russia along this route," the company's website reported.

That led some to conclude Azerbaijan would not participate in the Nabucco pipeline project, which aims to bring some 30 billion cubic meters of gas to Europe annually. The pipeline would run 3,300 kilometers from eastern Turkey through Bulgaria, Romania, and Hungary, ending in Austria.
 

Nabucco pipeline project

Nabucco's plans call for using Azerbaijani gas to fill the pipeline in the first stage, then mixing Azerbaijani gas with gas from Central Asia, and possibly other countries, in the second stage.

Leaving Nabucco Empty?

The day Abdullayev and Miller signed the memorandum of understanding, the Russian news agency Interfax quoted Tatyana Mitrova, the director of the center for the study of world energy markets at the Russian Academy of Sciences, as saying the SOCAR-Gazprom agreement "strengthens the probability that the Nabucco project will be left without gas."

Speaking to RFE/RL's Azerbaijani Service, noted economist Natig Jafarli agrees that Nabucco's future may now be in doubt. "Azerbaijan made its choice and agreed to the gas deal with Russia," he says. "Now we can say that Azerbaijan has refused Nabucco as a gas supplier."

But in comments on Azerbaijan's ANS-TV on March 30, SOCAR chief Abdullayev said, "We are interested in the Nabucco project and we are holding talks with the participants in this project."

Ilham Shaban, editor at Azerbaijan's Turan news agency, says any panic about Nabucco is baseless. "Some say, and I read it in both Russian and Western media, that Azerbaijan is rejecting Western routes and Nabucco. But that is not true," he says.

"The memorandum says the gas deliveries will start in 2010. However, the gas volumes needed for Nabucco will be available only after 2014-15, when production under phase 2 will start at Shahdeniz field," Shaban notes. "This means the memorandum only envisages small volumes to cover Daghestan's needs."

Among the potential supplier countries for Nabucco, Azerbaijani President Ilham Aliyev has been the strongest backer of the project, speaking in favor of Nabucco at a special conference on the issue in Budapest at the end of January.

But Nabucco -- unlike Gazprom -- still does not have written commitments from Azerbaijan, or from any other supplier.

Khadija Ismayilova of RFE/RL's Azerbaijani Service contributed to this report

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