Azerbaijan bids to increase Iran gas supplies

Azerbaijan has launched a new gas-compressor station to handle a planned increase in gas supplies to Iran, Azeri state energy firm SOCAR said.

SOCAR and the National Iranian Gas Export Company (NIGEC) in January signed a five-year deal, which envisages doubling Azeri gas supplies to Iran to 1 billion cubic meters (bcm) per year.

But the absence of sufficient gas-compressor facilities in Azerbaijan postponed the supply increase that was supposed to start in February.

The new gas-compressor station, constructed in the town of Astara near the border with Iran, has a capacity of five million cubic meters (mcm) a day. Another gas-compressor station in Astara with the same capacity has been operating since 2005.

The deal between two countries underscores Azerbaijan’s policy of diversifying routes to sell its Caspian Sea gas, which is sought by the West for the European-backed Nabucco pipeline project aimed at reducing European energy dependence on Russia.

Azerbaijan is a key potential supplier for Nabucco, a 7.9 billion euro project that aims to bring up to 31 bcm of gas annually from the Caspian and Middle East to an Austrian hub via Turkey and the Balkans, cutting out Russia.

The pipeline is vying for Azeri gas from Russia’s South Stream project that plans to transit gas under the Black Sea to Europe, avoiding Ukraine.

Azerbaijan says it plans to send 10 bcm of gas from its Shah Deniz II deposit to Europe, but has other so-called “Southern Corridor” gas supply options, including the Italy-Turkey-Greece Interconnector (ITGI) and the Trans-Adriatic Pipeline (TAP).

Azerbaijan supplies just over 400 mcm of gas to Iran per year, in exchange for 350 mcm that Iran sends to Azerbaijan’s geographically isolated region of Nakhchivan.