Moscow, Baku duscuss oil refining

© Photo: Maria Novoselova/Vestnik Kavkaza

Russian oil may be processed by Azerbaijani oil refineries. A preliminary agreement was reached during the negotiations by Russian Deputy Prime Minister Alexander Novak and the head of the Azerbaijani Ministry of Economy, Mikail Jabbarov.

Russian Deputy Prime Minister Alexander Novak and Azerbaijani Minister of Economy Mikail Jabbarov discussed the participation of Russian oil and gas companies in new projects in Azerbaijan. It is expected that as a result of negotiations on the Tikhoretsk-Baku oil pipeline to Azerbaijan, reverse supplies of Russian oil will be increased, and companies from the Russian Federation will launch sales of gasoline, the Russian government reports.

The parties noted the growing trade turnover between the countries: by the end of 2022, the volume of mutual trade increased by 25%, and in January – August 2023, the trade turnover added another 15.7% compared to the same period last year.

Russia also has a number of new initiatives for the transit and processing of Russian oil and gas at Azerbaijani capacities, the goal of which is to consolidate efforts in this direction.

The parties also discussed the prospects for building technological cooperation between companies in Russia and Azerbaijan within the framework of the import substitution policy, the Russian government’s report reads.

Azerbaijan is interested in processing

In a conversation with a Vestnik Kavkaza correspondent, economist Elshad Mamedov noted that the most interesting area of cooperation for the Azerbaijani economy discussed at the negotiations between Novak and Jabbarov is the processing of Russian hydrocarbons.

“Today, the main focus is on the products with higher added value. Azerbaijan’s refining capacity, including oil refineries, needs to be expanded and brought to quality standards that will allow us to export products around the world. The potential here is huge. In the upcoming years, the modernization of our oil refining capacities will continue; great attention is paid to this in Azerbaijan,” the economist said.

“Modernization of the refinery will, among other things, open up new opportunities for bilateral cooperation between Russia and Azerbaijan. The sanctions regime against Russia will remain for a long time, the confrontation between the West and the Russian Federation is protracted, and amid these conditions the reorientation of Russian export channels to the South and East is obvious. By the way, Azerbaijan is also interested in Russian oil refining technologies - they can be beneficial for exporting products with higher added value,” Elshad Mammadov emphasized.

The economist noted the gas processing as well. “Today, the Russian gas production industry has enormous free capacity. The European direction is no longer a priority for Gazprom in terms of pipeline gas exports; a significant part will be redirected towards China, but not all the former European volumes. Therefore, we can talk about investments in gas processing plants infrastructure in Azerbaijan for the creation of products from Russian gas. The resources of both Russia and Azerbaijan can be quite a significant basis for the development of a large gas processing complex on Azerbaijani territory," the expert concluded.