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Gazprom Natural Gas Deal Puts the Future of Nabucco in Doubt

Russian President Dmitry Medvedev’s September 2-3 visit to Azerbaijan yielded a big energy deal, as the Russian state-controlled conglomerate Gazprom secured an agreement to

The pact between Gazprom and the Azerbaijani state entity SOCAR will double the amount of Russian gas purchases, from 1 billion cubic meters this year to 2 billion cubic meters in 2011. The deal also provides for an even greater level of imports in 2012 and beyond, with no set limit on Azerbaijani sales.

Such an arrangement raises questions about the future of some long-planned energy projects, namely the Nabucco pipeline. Azerbaijan is seen as a primary supplier of the Nabucco route. But this latest Russian deal stands to foster uncertainty over Azerbaijan’s desire to supply a sufficient volume of gas to make Nabucco financially tenable. Moscow has long opposed Nabucco, the completion of which would create a Caspian Basin export route that avoids Russian territory.

The September 3 pact is the third gas purchase agreement signed in just the past year between the two countries. The first agreement, signed in October of last year, provided for Russian purchases of 500 million cubic meters of gas annually.

During a joint news conference on September 3, President Aliyev praised the gas deals as “open and sincere.” He also sought to reassure Azerbaijan’s Western energy partners that strengthening energy cooperation with Russia would not come at their expense. "We don't see our work in the gas sector as an opportunity for unfounded competition. We are working not on the basis of political concerns, but economic practice," Aliyev said.

Such sentiments were echoed by independent experts in Baku. Ilham Shaban, the head of Caspian Barrel, an energy-oriented think tank, suggested that Azerbaijan had enough gas to meet its Russian commitments and participate in Nabucco. “These agreements have so far nothing to do with gas from the Shah Deniz field,” Shaban told EurasiaNet.org.

Medvedev also downplayed the notion that the Russian deal posed a threat to Nabucco. “Russia and Azerbaijan are serious players, gas suppliers, so we should not create obstacles to each other,” he said. Medvedev added that the sides had agreed to hold a summit on energy issues soon.

Besides the energy deal, Russian and Azerbaijani officials signed two agreements covering border matters. There was no immediate public word on one of the most important topics of discussion between Aliyev and Medvedev – the Nagorno-Karabakh peace process.

“It is really important period for the Karabakh conflict’s resolution now. The OSCE summit in Astana in December will end either with progress on this issue or failure. The latter would mean collapse of all mediating efforts of the Minsk Group during last years. Therefore Medvedev’s visit is very important for Baku in order to understand Moscow’s current position,” said Rasim Musabekov, a Baku political analyst.

During their joint press conference, the two presidents were evasive on the substance of their Karabakh discussions. Medvedev merely said he is prepared to continue mediating. “I am ready to discuss the toughest questions that remain on the agenda. The intensity of talks should not decrease,” he said. Aliyev, meanwhile, thanked Medvedev for his mediating efforts. “Talks with his participation are the most efficient,” the Azerbaijani leader stated.

Medvedev also sought to reassure Azerbaijani leaders about Moscow’s recent base-lease extension deal reached with Armenia.

Tabib Huseynov, an analyst for the International Crisis Group in Baku, described the Russian-Armenian agreement, under which Russia will maintain troops at the Gyumri military base until 2044, as a source of concern for Baku. The presence of Russian troops, according to Huseynov, heightens the possibility of “Russian military involvement in the event of a resumption of hostilities over Nagorno-Karabakh.” He added that it was likely that Aliyev sought at least a verbal guarantee from Medvedev that assets at the Gyumri base would never be used against Azerbaijan.

By. Shahin Abbasov




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