ECONOMY

NEW VERSION OF AGREEMENT SUBMITTED TO SOCAR FOR CONSIDERATION

02.12.2003 [16:37]
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In spite of the regular supplies of oil along the Baku-Novorossiisk pipeline, actual volumes transported however do not conform with the volumes indicated in the agreement for oil transit signed in 1996. Taking into account the objective complexity of this issue, the Russian side is proposing signing a new agreement and hold special negotiations to draft it. The main goal here concerns reaching specificity and a long term agreement. This was disclosed to journalists in Baku by the Russian Deputy Prime Minister Viktor Khristenko on 28 November.

Meanwhile, SOCAR president Natik Aliyev noted that there was no need to substitute the intergovernmental agreement signed in 1996 since its status was higher that other agreements. In his opinion, the commercial aspects of the transportation of oil along the Baku-Novorossiisk pipeline was regulated by an agreement entered into between SOCAR and Transneft. "Today the Russian side was proposing a new agreement that would be based on principles of market-driven economy. We support that effort but we also have counter problems on transportation aspects," said Natik Aliyev. This includes the mixing of high quality Azerbaijani oil with Russian oil grades resulting in the sales from Novorossiisk of Urals mixture, which fetches less money on the market than pure Azerbaijani would have done. To solve this problem, the issue of oil quality bank was raised several times, but unfortunately has still not found a solution.

Mr Aliyev said that in accordance with the existing agreement transit tariff was set at USD15.67 for the transportation of a ton of oil. Apart from this tariff, the Azerbaijani side does not pay any taxes, duties or any other payments. In the new agreement, noted the president of SOCAR, it looks very likely that proposals would be made for the payment of taxes, port duties and other levies. According to him, the Russian side presented SOCAR with a new agreement variant that will be considered by 1 February 2004. "Then we could start negotiations and I hope that in the end we could reach a common agreement," said Natik Aliyev.

In any case, noted Mr Aliyev, the State Oil Company cannot export over 2.5 million tonnes of oil along the Baku-Novorossiisk per year. "For us that is the maximum limit. The rest of the oil is sent to our refineries, and should we reduce volumes of oil sent to our refineries, the work of these refineries would be ineffective," he explained.

For the past ten months of the current year, a total of 2.3 million tonnes of oil have been exported along the Baku-Novorossiisk pipeline route.