SOCAR signs gas supply contract with Iran for 2010

Azerbaijan’s State Oil Co. of the Azerbaijan Republic (SOCAR), following the signing of a similar agreement with Russia’s OAO Gazprom last month, has signed a memorandum of understanding to supply natural gas to National Iranian Gas Co. (NIGC) starting in 2010.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Nov. 13 -- Azerbaijan’s State Oil Co. of the Azerbaijan Republic (SOCAR), following the signing of a similar agreement with Russia’s OAO Gazprom last month, has signed a memorandum of understanding to supply natural gas to National Iranian Gas Co. (NIGC) starting in 2010.

SOCAR head Rovnag Abdullayev said a sales and purchase agreement would be signed by the two sides before yearend. He said Iran will initially receive 17 bcf/year, with gradual increases planned.

The gradual increases of gas will depend on the state of gas infrastructure between the two countries, Abdullayev said. Iran and Azerbaijan are connected by the 1,500 km, 10 billion cu m/year Kazi-Magomed to Astara gas pipeline.

"Work is under way now to repair an existing pipeline to Iran,” said Abdullayev. “The compressor station in the border area of Astara will be upgraded,” he said.

Last month, Abdullayev said his country already had started repairing and upgrading its old pipelines in an effort to increase exports of natural gas to Iran as well as to Russia.

“The capacity of compressors is being increased so that in the future we could export as much gas to Iran as we wish,” said Abdullayev, who noted at the time that talks with Iran on the volume of supplies were still under way.

He also said that gas pipelines linking Azerbaijan to Russia were also being repaired to enable Socar to deliver up to 7 billion cu m/year of gas to Russia. At the time, Socar signed a long-term contract to supply Russia's OAO Gazprom with 500 million cu m/year of gas starting in 2010.

According to analyst IHS Global Insight, this week’s agreement with Iran “essentially mirrors a deal signed last month between SOCAR and…Gazprom, giving Azerbaijan further diversification of its export markets as the country continues to boost its gas production.”

Contact Eric Watkins at hippalus@yahoo.com.

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