Baku has proposed Tehran utilize Azerbaijan's route and infrastructure to export oil and gas to the international markets, Azerbaijan's minister of economic development said.
Discussing oil trade with Iranian officials in Tehran, Shahin Mustafayev added that Iran can use Azerbaijan’s infrastructure, especially the Baku-Tbilisi-Ceyhan Pipeline and the Trans Anatolian Gas Pipeline (TANAP), to export its oil.
Mustafayev also suggested Iran make use of Azeri gas storage facilities, IRNA reported.
Iran’s gas production in winter is less than the country’s consumption. But in summer it produces several billion cubic meters of surplus gas. Currently, the country stores some of the surplus gas in Shourijeh and Sarajeh gas storage facilities to pump into the national gas network in winter. The facilities’ capacity stood at 2 billion cubic meters in autumn.
Azerbaijan has two natural gas storage facilities, Kalmaz and Garadag, with a total capacity of 5 bcm. The two facilities currently store only 3 bcm of gas, so Iran can store around 2 billion cubic meters of its surplus gas there and retract them in winter.
Mustafayev expressed the two countries' readiness to jointly invest in the production of oil equipment at a meeting with Iranian Oil Minister Bijan Namdar Zanganeh,
Pointing to Iran’s extensive experience in the production of oil equipment, Zanganeh proposed undertaking joint manufacture of oil equipment and supplying Azeri oil and gas firms with engineering services.
“Our companies have extensive experience in the oil and gas sector. We would be glad if the Azeri government supports them and paves the way for them to work in Azerbaijan, and vice versa," said the oil minister.
"Issues discussed during the recent meetings are expected to continue at technical levels to bear result," Amirhossein Zamaninia, Iran's deputy oil minister for international and commercial affairs, said.
"There is a political will in both countries to further expand energy cooperation," Zamaninia added.
Swap
Mustafayev further said Azerbaijan is seeking to diversify oil transport routes.
This is while Tehran has also voiced readiness to carry out swap deliveries of Azerbaijan’s oil and gas to the Persian Gulf states.
Iran started crude oil and gas swaps with neighboring countries in 2000, but the former administration of president Mahmoud Ahmadinejad decided to halt swap operations in 2010.
Iran now stands ready to swap Azerbaijani oil to the Persian Gulf, Zanganeh said during his meeting with Mustafayev in Tehran.
"Oil can be transported from Iran’s Caspian port of Neka via a pipeline (with a capacity of 500,000 bpd) to Tehran Oil Refinery. Azerbaijan will in turn get the equivalent oil on Iran's southern borders in the Persian Gulf," Zanganeh said.
Currently, three development projects are being implemented in Neka Terminal to boost oil swap operations with the Caspian littoral states. The development plans are projected to increase the oil swap capacity of Neka Terminal in Mazandaran Province from the current 120,000 to 500,000 bpd in the initial phase, and then to 1.5 and 2.5 million bpd later. The project is slated to be completed by June 2016.
“We have a pipeline running to Russia and we carry out deliveries to Georgia and Turkey via another one,” said Mustafayev. “For us, it is strategically important not to depend on one direction and to cooperate [in this area] with Iran as well.”
Zanganeh said pursuant to the recent negotiations, an agreement can be signed to start working after sanctions on Iran are lifted.
“We have put forward concrete proposals for cooperation in the Caspian Sea and we look forward to a response from the Azeri side. It will be possible to sign a corresponding document at a meeting of the heads of state, after an agreement is reached,” he said.
