SOCAR signs gas supply contract with Iran for 2010

Nov 13, 2009 01:00 AM

The Azerbaijan Republic's state-owned oil company (SOCAR) has signed a memorandum of understanding to supply natural gas to National Iranian Gas Company (NIGC) starting in 2010.
SOCAR head Rovnag Abdullayev said a sales and purchase agreement would be signed by the two sides before year end. He said Iran will initially receive 17 bn cf of gas per 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 bn cm per 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.

Earlier, 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 bn cm per year of gas to Russia. At the time, SOCAR signed a long-term contract to supply Russia's Gazprom with 500 mm cm per year of gas starting in 2010.
According to analyst IHS Global Insight, the agreement with Iran "essentially mirrors a deal signed earlier between SOCAR and Gazprom, giving Azerbaijan further diversification of its export markets as the country continues to boost its gas production."

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