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SOCAR, Transneft Agree on Oil Transit Tariff

Maritime Activity Reports, Inc.

February 25, 2014

Reuters - Azerbaijan's state energy company SOCAR agreed with Russian oil pipeline monopoly Transneft on transportation tariff at $16 per metric ton, slightly up from a previous $15.67, to be shipped via Russia in 2014, SOCAR's official said.

Adnan Ahmadzada, SOCAR's marketing and operations department head, told Reuters in an interview the tariff was fixed in Russian roubles and might change slightly depending on exchange rate fluctuations throughout the year.

He said SOCAR was ready to ship 1.0-1.5 million metric tons of oil via Russia this year, reversing plans to halt exports in mid-February.

"We also agreed that we would have an opportunity to ship additional transit volumes of oil from third parties," Ahmadzada said.

He said SOCAR had started talks with Kazakhstan and Turkmenistan on this issue.

"We can ship additional 3.5 million metric tons of oil through Baku-Novorossiisk as the pipeline's capacity is 5 million metric tons," he said.

SOCAR had planned to halt oil exports via Russia in February, opting instead to send the bulk of its crude through Baku-Tbilisi-Ceyhan pipeline and retaining some to cover rising domestic demand for oil products.

Oil exports via Russia were 1.75 million metric tons in 2013, down from 2.06 million metric tons shipped in 2012.

In May last year, Russia terminated a contract to pump Azeri oil across its territory, ending an 18-year agreement between the two countries on the grounds that Azerbaijan had not been shipping the agreed quantities.

Oil has flowed along the 1,330-kilometer pipeline from the Azeri capital of Baku on the Caspian Sea to the Russian Black Sea port of Novorossiisk since May under a separate standalone contract between Transneft and SOCAR.

(Reporting by Margarita Antidze; Editing by David Evans)

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