Socar holds talks with Russia, Iran

Azerbaijan's state energy company Socar is planning to buy natural gas from Russia’s gas monopoly Gazprom, the company head Rovnag Abdullaev told journalists March 14.

Socar is considering importing up to 3bn m³ this year. "We are interested in purchasing Russian gas still, so we have submitted our proposals to Gazprom," he said.

Imports will allow Azerbaijan to inject more gas into the Azeri-Chirag-Guneshli reservoir to maintain pressure and keep oil production steady.

Also, the company has upgraded capacity of its underground gas storage facilities (UGS) bringing them up to 5bn m³. “We want to test them at maximum capacity,” he said.

Socar is in talks not only with Russia but with Iran as well, Abdullaev said, although that is about swap operations. "Iran has excess gas in summer, while in the peak consumption period of winter it experiences gas shortages. We are negotiating to use our UGSs in summer for Iranian gas that then will be delivered to the country’s northern regions in the winter,” Abdullaev, said, adding that talks are under way between technical groups from both sides.

Socar has two UGS not far from Baku: Garadag and Kalmaz.

With low oil prices, burning fuel oil for heat and power generation has become more profitable than gas, said Socar’s CEO said. “So we have adjusted our operations to maintain profitability in a low-price environment," he said.

Gazprom’s chairman Victor Zubkov during his recent visit to Baku to attend a forum said that he did not see Azerbaijan as Gazprom competitor in Europe. “Azerbaijan has been purchasing gas from us. We have a contract with Socar till 2025 for 2bn m³/year,” he said in an interview with local online resource.

Azerbaijan stopped buying Russian gas in 2007. In 2010 Socar started exporting to Russia instead. However, gas supplies to Russia stopped in 2014 and now Azerbaijan needs gas from Russia again.

Azerbaijan desk