As part of the working visit of Dmitry Medvedev, President of the Russian Federation to Azerbaijan, Alexey Miller, Chairman of the Gazprom Management Committee took part in the extended meeting with Ilham Aliyev, President of the Republic of Azerbaijan in Baku today.

The parties discussed the issues of cooperation between Gazprom and the State Oil Company of Azerbaijan Republic (SOCAR) relevant to Azerbaijani gas purchase. It was pointed out that further development of cooperation in the energy sector met strategic interests of Russia and Azerbaijan.

Summing up the meeting, Gazprom and SOCAR signed the legally binding Agreement on the Major Terms and Conditions for Azerbaijani natural gas purchase and sale.

After signing the Agreement Alexey Miller noted: “Owing to the gas transmission infrastructure available, the absence of transit countries between Russia and Azerbaijan and the world's biggest portfolio of contracts for gas supply to domestic and foreign consumers, Gazprom can propose the most viable conditions for Azerbaijani gas purchase. Gas supplies will start from 500 million cubic meters and gradually increase.”

Background

Azerbaijan holds up to 1.5 trillion cubic meters of proven natural gas reserves including the Shakh-Deniz field located in the Azerbaijani offshore sector of the Caspian Sea with recoverable reserves reaching nearly 1.3 trillion cubic meters of natural gas.

Annual gas consumption in Azerbaijan accounts for 12–14 billion cubic meters.

On March 27, 2009 Gazprom and the State Oil Company of Azerbaijan Republic signed the Memorandum of Understanding.

Pursuant to the Memorandum, an accord has been reached to launch the negotiations aimed at settling the terms of Azerbaijan's gas sales and purchase, with the first deliveries projected for January 2010.

In addition, the Memorandum stipulates developing a cooperation program on experience exchange, holding of training courses, arranging of seminars and visits to production facilities by the experts of both parties for information sharing.