Gazprom and SOCAR start gas swaps

Gazprom and SOCAR start gas swaps

The State Oil Company of Azerbaijan (SOCAR) and Russia’s Gazprom company will start implementing swap transactions on Russian gas supplies to Azerbaijan in October, SOCAR President Rovnag Abdullayev said.

He added that around 10 million cubic meters of Russian gas will be supplied per day, and around 2 billion cubic meters per year.

"Gazprom has an excess of natural gas, and therefore we have decided to store these volumes in our gas storage facilities. We have held such talks with Iran as well. For our part, we have expanded the capacity of our gas storage facilities and the supply of Russian gas will become a kind of pilot project for testing their capabilities. As a result, SOCAR and Gazprom agreed to switch to the temporary swap scheme," Trend cited him as saying.

The head of the Center for Oil Research, Ilham Shaban, said in an interview with the correspondent of Vestnik Kavkaza that these supplies cannot be called a gas swap in the traditional sense.

"These are not swap transactions, this is a commercial agreement. The Azerbaijan Methanol Company (AzMeCo) signed a commercial agreement with Gazprom Export on the purchase of gas," he explained.

The expert noted that, despite the fact that Azerbaijan has its own gas, all its volumes have already been allocated for other purposes in the near future, in particular to expand the country's gas network and it has no gas left for the production needs of commercial organizations. "Unfortunately, gas for methanol production was not provided to Azerbaijan for the winter of 2015-2016. That is, according to SOCAR statements, when AzMeCo reaches its design capacity it needs 600-700 million cubic meters per year, and SOCAR hasn't got these volumes – they have already been distributed," Shaban noted.

"A full-blown expansion of the gas network is being carried out in Azerbaijan, which provides gas supplies to 95% of settlements," he said.

In fact, the purchase of gas is carried out by AzMeCo, and SOCAR only allows it to take advantage of its infrastructure," the head of the Center for Oil Research concluded.