Azerbaijan thinking about suspension of oil transportation via Baku-Novorossiysk

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Azerbaijan’s President Ilham Aliyev announced that because of raising prices for Russian gas, Azerbaijan can suspend oil exports transit via the Russian pipeline. At a session held yesterday dedicated to preparations for winter period, the Azerbaijani president instructed the government to consider the issue of suspending oil transportation via the Baku-Novorossiysk pipeline, noting he expected proposals as soon as possible.

Experts believe that Russia was trying to persuade Azerbaijan refuse from possible gas supplies to Georgia, for which the supplies can replace the Russian gas, Vedomosti newspaper writes. It looks like Azerbaijan decided to abandon its energy alliance with Russia, which was followed by a report that Gazprom would raise the gas price for Azerbaijan from $110 up to $230 and intended to cut down gas supply. Raising the price for Azerbaijan, on the one hand, will help the Russian company escape accusations that raising the price for Georgia was a political gesture, and, on the other hand, put limits on Azerbaijan’s possibilities for selling gas to Georgia. In response to the increase of price for the Russian gas, Ilham Aliyev announced a possibility of suspending oil supplies via the Baku-Novorossiysk oil pipeline. President Aliyev established a direct connection between possible reduce of oil transportation via the Baku-Novorossiysk pipeline and the situation with gas supplies: he explained that increase of the price and curtailment of supply demand extra oil consumption for power generating. This winter Azerbaijan intends to carry out exchange operations in gas and energy delivery to Georgia in case of deficit in its energy system and import energy to Georgia during peak hours in Baku.

Last winter, when accidents occurred at export power lines and gas pipelines on the Russian-Georgian border (thought in Tbilisi to be staged by Russia), this scheme provided stable functioning of the Georgian energy system.

The Baku-Novorossiysk oil pipeline belongs to Transneft and Azerbaijani National Oil Company. According to the Azerbaijani National Oil Company, in 2005, Azerbaijan transported over 4.1 million tons of oil to Russia; in January-September 2006, about 3.6 million tons of oil were transported via the pipeline. Key rival of the pipeline controlled by Transneft is the Baku-Tbilisi-Ceyhan with annual planned capacity of 25 million tons. It started working since May 2006, Newsru informs.