Russias Rosneft Seals Key Azerbaijan Oil and Gas Deal

Rosneft Seals Key Azerbaijan Oil and Gas Deal

"The agreements we signed today mark a new stage in our oil and natural gas cooperation," Azerbaijan President Ilham Aliyev said after the signing ceremony. "I am certain that this cooperation will be a great success."

MOSCOW -- Russian crude giant Rosneft (IW 1000/38) today signed an oil and gas agreement with Azerbaijan's state energy company aimed at loosening the European Union's ties with the key Caspian market.

Neither side disclosed the full details of a deal that was sealed on the sidelines of talks in Baku between visiting Russian President Vladimir Putin and Azerbaijan's President Ilham Aliyev.

"The agreements we signed today mark a new stage in our oil and natural gas cooperation," Aliyev said after the signing ceremony. "I am certain that this cooperation will be a great success."

Energy-rich Azerbaijan has been viewed by EU nations as a reliable alternative to the natural gas supplies they get from Russia via Ukraine--a route that has previously been blocked by Moscow during pricing disputes.

Azerbaijan's SOCAR state energy company has already signed agreements with such European giants as BP (IW 1000/4) and Statoil (IW 1000/26) as well as the United States' ExxonMobil (IW 1000/2).

But Baku relies heavily on Moscow for its armaments and has been cautious about upsetting Putin in the past.

Rosneft, Russia's largest oil producer, meanwhile has been desperately looking for ways to expand its natural gas business in direct competition to the Moscow-based behemoth Gazprom (IW 1000/88).

Political Pressure

State-owned Rosneft has been urging Putin to break Gazprom's monopoly on natural gas exports and allow the firm to conduct its own sales to European and Asian clients.

But Rosneft also needs to expand its natural gas base before such shipments can begin in any great extent.

It was not immediately clear whether Rosneft had secured any specific concessions from Azerbaijan on natural gas.

Media reports had previously said that Rosneft had set its sights on a stake in the Absheron shallow-water natural gas field in Azerbaijan's section of the Caspian sea.

Rosneft chief Igor Sechin, a Putin confidant who was a prominent member of the Russia delegation at the talks, said the deals signed on Tuesday covered "a full range of areas."

"These include mutual deliveries, swap operations and the possibility of jointly using our infrastructure," Sechin said.

He added that the strategic agreement "assumes an exchange of assets and joint production."

Copyright Agence France-Presse, 2013

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