Today at Gazprom headquarters Alexey Miller, Chairman of Gazprom Management Committee held a working meeting with Yagub Eiyubov, First Deputy Prime Minister of the Republic of Azerbaijan.

The issues of supply terms of Russia produced natural gas to Azerbaijan in 2006 were reviewed at the meeting. The parties agreed to shift to the European pricing level (taking into account the transportation schemes) and to adjust volumes of natural gas supplies in 2006. Alexey Miller and Yagub Eiyubov decided to sign corresponding contracts in the nearest future.

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Azerbaijan’s annual domestic demand for gas is at the level of 9.5-10 bcm. Natural gas constitutes around 45% in the national energy balance.

In the past few years Azerbaijan produces about 5.5 bcm of natural gas. 40% of gas production is coming from Bakhar field. Starting from 2006, Azerbaijan plans to increase its natural gas production after Shakh-Deniz field is brought into operation.

On January 1, 2004, Gazprom started to supply natural gas to Azerbaijan. In December 2003 a long term five year natural gas sales contract was signed by Gazexport and the State Oil Corporation of the Republic of Azerbaijan. The contract is valid from 1 January, 2004, up to 31 December, 2008. The contract stipulates annual supply of 4.5 bcm of gas to Azerbaijan.