Ilham Shaban, head of the Baku Center for Oil Studies, and Andrey Kazantsev, Director of the Analytical Center of the Institute for International Studies of MGIMO, have commented on the deal signed by Rosneft head Igor Sechin (Russia) and SOCAR President Rovnag Abdullayev (Azerbaijan) during the visit of Russian President Vladimir Putin to Azerbaijan.
Shaban noted that it was a framework agreement for 5 years, a common scheme used by SOCAR since 1990. It includes joint explorations for oil and gas, swap operations, development of infrastructure, exploitation of petroleum facilities and trade.
Energy Minister Novak said that joint ventures needed such deals.
SOCAR Trading Singapore was an active participant of tenders for ESPO oil supplies for Rosneft enterprises, Sechin said. Another cooperation alternative was swap operations. Azerbaijan will build a refinery with a capacity of 10 million tons in the Karadag District by 2020. SOCAR may only supply 6 million tons of oil to the district, forcing Azerbaijan to import 4 million tons. Kazakhstan and Russia are the best import sources, Shaban assumes.
The expert said that Rosneft could provide 3 or 5 million tons of oil. The Baku-Novorossiysk Pipeline (called the Grozny-Baku Pipeline in the 1990s) can be used for that purpose. In the 1990s, it was used to pump Russian and Kazakh oil to Baku refineries that were 16-18 million tons a year, with a capacity of 22 million tons.
European facilities of Russian companies may be used, Shaban reminded. This includes the Italian refinery in Sardinia. It is easy to deliver oil there from Ceyhan.
Kazantsev noted that the deal could demonstrate competition between Russian companies of the Caspian. Russia has interest in gas extraction in the sea. LUKOIL used to be the main petroleum company of Russia there. Rosneft entered the area and may become one of the main competitors of LUKOIL and Gazprom.
The expert said that the deal benefits both sides. But it lacks clear projects. It has points on investments in Caspian oil fields and cooperation of SOCAR and Rosneft.
