SOCAR might stop shipping oil via Baku-Novorossiysk pipeline
BAKU. Nov 21 (Interfax) - State Oil Company of Azerbaijan Republic (SOCAR) might stop shipping oil along the Baku-Novorossiysk pipeline, company vice president for refining David Mammadov told reporters on Wednesday.
He said company is "not comfortable" with the tariff that Russian pipeline monopoly Transneft is proposing for 2014. "Therefore, I think that we'll go from pumping oil along the northern route (Baku-Novorossiysk) to the west (Baku-Supsa, Baku-Tbilisi-Ceyhan). The Baku-Novorossiysk pipeline will sit idle until we find a mutually beneficial solution with the Russian side," Mammadov said.
Transneft has started mothballing the Shirvanovka - Makhachkala pipeline at the border with Azerbaijan, the company's spokesman, Igor Dyomin, told Interfax.
"The agreement [to ship Azerbaijani oil along the Baku - Novorossiysk pipeline] lapses in February, and there isn't a new one, so we are starting to mothball the Shirvanovka - Makhachkala section," he said.
Dyomin said had only held informal talks with Transneft. "We told them how much it would cost to transport oil, depending on volumes, but we have not heard any proposals from them regarding volumes," he said.
It might cost 700 rubles a tonne to ship 1.8 million tonnes of oil a year and less than 400 rubles to ship 5 million tonnes. The tariff is currently $16 a tonne.
Dyomin said these were not final proposals but negotiable ones, but no official talks had taken place.
He clarified that the mothballing applied only to a 250-km section of the pipeline. The remainder will be used to ship crude oil from Kazakhstan - an expected 5 million tonnes in 2014 - to Novorossiisk. It might also be used to ship oil from Turkmenistan, he said.
He also said Transneft was not making any preparations to pipe oil in reverse as nobody had officially approached with regard to this.
SOCAR head Rovnag Abdullayev was reported as saying earlier that the company would ship Azerbaijani oil along the Baku-Novorossiysk pipeline until the end of 2013.
Russian Prime Minister Dmitry Medvedev recently signed an order to dissolve the transit contract with Azerbaijan for the Baku-Novorossiysk pipeline, which has been in effect since 1996. As per this agreement, SOCAR has the right to continue delivering Azerbaijani oil through the Baku-Novorossiysk pipeline until the end of this year.
SOCAR then issued a statement expressing readiness to continue commercial talks with Transneft, which operates the Russian portion of the pipeline.
The Russian-Azerbaijani intergovernmental agreement allows Azerbaijan to transport 5 million tonnes of oil a year through the Baku-Novorossiysk pipeline at a tariff of $15.67 per tonne.
It was also reported earlier that SOCAR and Russian oil major Rosneft are in talks to ship Russian Urals crude in reverse along the Baku-Novorossiysk pipeline. This would be 5 million tonnes of oil per year, some of which would go to Baku oil refineries and the remainder would be exported along the Baku-Tbilisi-Ceyhan (BTC) pipeline.
"At first glance this operation seems economically effective, but we will try to finally clarify this issue by the end of this year. The profit earned as a result of this operation will be distributed equally between SOCAR and Rosneft," Abdullayev said. He said Russneft would be responsible for working out issues with Transneft concerning the reversal of oil shipments along the pipeline.
Transneft president Nikolai Tokarev has said his company is skeptical about the plans for reverse shipments of Russian oil along the pipeline. "It's possible to comment on real projects but such fantasies, and I wouldn't call this anything else, it's very difficult. Because the issue has not been worked out, it arose spontaneously, everyone found out about from the newspapers," Tokarev said.
SOCAR exported 2.064 million tonnes of oil along the Baku-Novorossiysk pipeline in 2012 and plans to ship 1.8 million tonnes along the pipeline in 2013.