Azerbaijan Signs Gas Supply Contract With Iran Before EU Visit

Azerbaijan agreed to export at least 1 billion cubic meters of natural gas a year to Iran the day before meetings with the European Union on a new fuel transit corridor, reports Bloomberg.

Supplies will start Feb. 1 under the five-year contract, and the export volumes may be increased in the future, said Rovnag Abdullayev, the head of State Oil Company of Azerbaijan (SOCAR) in comments broadcast on state television from the signing ceremony in Azerbaijan’s capital of Baku.

Iranian Oil Minister Masoud Mir-Kazemi met with his Azeri counterpart Natig Aliyev yesterday and discussed setting up a joint bank to fund the two countries’ energy projects, according to Iran’s state-run Mehr news agency.

Azerbaijan plans to boost gas output and aims to increase exports as the EU and Russia vie for its fuel. European Commission President Jose Barroso and Azeri President Ilham Aliyev plan to sign a joint declaration today on the establishment of a so-called southern corridor to supplement existing supplies and routes from Russia, Norway and North Africa.

The EU sees Azerbaijan as the likely first supplier to the planned Nabucco gas link from the Caspian region as it seeks to lessen dependence on imports from Russia. OAO Gazprom, Russia’s gas-export monopoly, agreed to double purchases of the fuel from Azerbaijan to 2 billion cubic meters in 2011.