Azerbaijan and Iran on Wednesday agreed to a five-year deal to supply gas to neighbouring Iran, officials at the oil-rich Central Asian Republic’s State Oil Company (SOCAR) said, according to an AFP report.
The agreement will see the annual supply of at least one billion cubic metres of gas to the Islamic Republic.
“At the beginning of every year, the parties will agree the volumes of gas to be supplied during the year ahead but it will be a minimum of one billion cubic metres,” said the president of Azerbaijan’s SOCAR, Rovnag Abdullayev adding that supplies would start in February.
“The signing of the gas contract is a new and great step,” the Iranian Oil Minister and current head of OPEC, Masoud Mir-Kazemi, who is visiting Baku, told the Trend news agency, AFP said.
Iran holds the world’s second largest natural gas reserves after Russia but lack of foreign investment in its massive fields, energy inefficiency and massive domestic demand means it still needs to import gas.
Azerbaijan is a strategically important country for both the East and West who look to benefit from its hydrocarbon wealth.
Backed by Western governments, companies such as Britain’s BP have invested heavily in its energy sector, building a corridor of oil and gas pipelines from Azerbaijan through Georgia and Turkey to Europe.
In recent years, Russia and Europe have courted the ex-Soviet state which pumps oil along the 1,776 kilometre-long Baku-Tbilisi-Ceyhan pipeline – the second-longest oil pipeline in the world – carrying oil from its massive Azeri-Chirag-Guneshli oil field in the Caspian Sea to Western markets.
AFP reports that the president of the European Commission, Jose Manuel Barroso, is to visit Baku on Thursday in order to secure further Azerbaijani gas supplies for European Union countries which have seen their gas usage rise sharply in the last few months due to unusually cold weather.
