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Transneft suspends part of Baku-Novorossiysk oil pipeline

January 10, 2014, 12:53 UTC+3 MOSCOW
Transneft, continues works to suspend a part of the Baku-Novorossiysk pipeline between Makhachkala and Baku due to Azerbaijan’s lack of initiative to sign oil transit agreement
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© ITAR-TASS/Grigory Sysoev

MOSCOW, January 10, 12:13 /ITAR-TASS/. Russia’s oil transportation company, Transneft, continues works to suspend a part of the Baku-Novorossiysk pipeline between Makhachkala and Baku due to Azerbaijan’s lack of initiatives to sign a commercial agreement on transit of oil, a representative of the transport monopoly Igor Demin told Itar-Tass on Friday.

Azerbaijan’s SOCAR state-run company has not begun official negotiations on a commercial agreement on transit of Azerbaijan’s oil via the territory of the Russian Federation after termination in last May of an intergovernmental agreement between Russia and Azerbaijan, which was a base for a transit agreement.

In early February, Transneft’s all obligations for transit of Azerbaijani oil will expire, and the transport company is ready to accomplish suspending of the Makhachkala-Baku unused part by pumping inert gas into the pipe, Demin said, adding the passage between Makhachkala to Novorossiysk would be used like previously for transportation of oil coming to the port of Dagestan’s capital city (Makhachkala).

In May 2013, Russia’s Prime Minister Dmitry Medvedev ordered to terminate the intergovernmental agreement between Russia and Azerbaijan, which was a base for an agreement on transit of Azerbaijani oil via the territory of the Russian Federation. Over five past years, Azerbaijan failed to observe terms of the intergovernmental agreement as it transited oil twice less than the agreement stated. The intergovernmental agreement planned for pumping of five million tonnes of oil from Azerbaijan, but realistically the amount was never above two million tonnes a year. In 2013, the transit of Azerbaijan’s oil via the territory of the Russian Federation made 1.7 million tonnes.

Revenues from the transit have never reimbursed Transneft’s expenses to service properly the pipeline. Transneft as a side in the agreement could not use the tariff, which was calculated depending on the double the amount, as the tariff was fixed in the intergovernmental agreement.

Transneft has around 70 thousand kilometres of linear pipelines, over 500 pumping stations, over 20 million cubic metres of reservoirs; it transports 93 percent of Russian oil.

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