South Stream could get more Azeri gas

Azerbaijan views Russia as the main buyer of its  gas and it is  expected that an additional agreement to increase the amount of gas to be supplied  to Russia  could be signed during  President Medvedev's upcoming state visit to Azerbaijan. 

The supplementary agreement will cover gas delivery from Azerbaijan for the 2011 and 2012 years. There is no mention in the additional agreement of a ceiling on the quantity of gas that Russia can buy from Azerbaijan, and the price will be similar to the old one.

Gazprom, the Russian gas giant, plans to double this year the amount of gas it buys from Azerbaijan, to hit the one billions cubic meters mark. Experts believe that it will enable Gazprom to increase the potential for the supply of gas to Europe via the South Stream pipeline.

The planned capacity of the pipeline is 63 billions cubic meters per year, and the cost of the project is almost 9 billions dollars. Under the existing contract between Russia and Azerbaijan, Gazprom has the possibility of snapping up all the Azeri gas, and Russia can become the main transit country for Azerbaijan’s  gas destined for Europe, said Konstantin Simonov, general director of the Foundation for energy security.

"Azerbaijan is  currently prospecting large gas deposits, but pins hopes on the commissioning of the second branch of the Shak-Deniz well, which is capable of significantly increasing the amount of gas output by Azerbaijan. Russia will not be reselling Azeri gas , but serving only as a transit corridor, in accordance with the new demand by Europe, concerning the delivery of fuel from different sources. That is why Europe is asking Azerbaijan to participate in the Nabucco project, a project whose fate remains hazy. Investors are not in a hurry to put money in it. On the other hand, the South Stream project is  taking shape and will soon be up and running," said Konstantin Simonov.