Washington briefing: Russia clinches Azerbaijan gas supplies

by Emil Sanamyan

Published: Friday July 03, 2009

Ilham Aliyev and Dmitry Medvedev in Baku on June 29, 2009. . ITAR-TASS

Washington - On June 29 Russian president Dmitry Medvedev paid a previously unscheduled three-hour visit to Azerbaijan, whose leader agreed to begin to sell natural gas to Russia, news agencies reported.

The initial supplies would be a modest 500 million cubic meters in 2010, but Russia expects the volumes to increase as more Azerbaijani natural gas becomes available for export in 2013. Azerbaijan already exports natural gas to Georgia, Turkey, and Greece.

The move was seen by analysts as a Russian success in a diplomatic tug-of-war, as Moscow seeks to maintain its dominance as Europe's main natural-gas supplier. As part of that effort, Russia has been trying to secure natural gas purchase contracts from Central Asian producers.

A reflection of Russian interest was the high price it is willing to pay Azerbaijan for the supplies - $350 for a thousand cubic meters (tcm); by contrast, Azerbaijani gas is sold to Turkey for $120 per tcm.

Earlier this year, European Union pledged funds to facilitate a gas pipeline that would bring it Central Asian gas, including some from Azerbaijan, while bypassing Russia. The so-called Nabucco pipeline also enjoys strong support from the United States, but has been hampered by a lack of commitment by Turkmenistan and transit issues with Turkey.

Also this week, the prime minister of Sweden, the EU's incoming president, indicated a postponement in funding for the Eastern Partnership program, citing economic difficulties. The program includes Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine.

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