To ship oil through Azerbaijan economically inefficient saysTransneft

Russian oil pipeline monopoly Transneft – the operator of the Baku-Novorossiysk pipeline's Russian section – considers the decision of the Rosneft oil company to ship oil through Azerbaijan economically inefficient.

The transportation of Rosneft's oil to the refinery in Sardinia via the Transneft pipeline system is cheaper by $45 than its supply via the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, Transneft President Nikolay Tokarev said in an interview with Russia 24 TV channel .

Earlier, Azerbaijan's state energy company SOCAR and Rosneft signed an agreement on cooperation and basic conditions of oil supply. Later, the sides announced that they had launched talks on a possible reverse flow of Urals crude through the Baku-Novorossiysk northern route pipeline in the amount of 5 million tons per year.

If the talks succeed and the cost-effectiveness of operations under consideration is approved, part of the oil will be processed in Azerbaijan, and some of it will be delivered via the BTC pipeline and shipped from the Ceyhan terminal in Turkey on the Mediterranean Sea. Evaluation of the effectiveness and the negotiations are expected to be completed by late this year.

Tokarev said that this agreement stipulates offload of the Russian enterprises and instead upload of the Azerbaijani enterprises.

"In particular, refineries. The agreement envisions to offload the volume from Russian pipelines and transport these volumes through the competing Baku-Tbilisi-Ceyhan pipeline, which crosses the territory of Azerbaijan, Georgia and Turkey. But I think there's nothing special to comment on. We have just calculated the economics (indicators) of this idea. The oil transportation from Novorossiysk to Rosneft's refineries in Sardinia is cheaper by approximately $45 than doing the same thing through the territory of Azerbaijan via the Baku-Tbilisi-Ceyhan oil pipeline," Tokarev said.

Rosneft does not exclude reverse flow of Urals crude through the Baku-Novorossiysk northern route pipeline, which was earlier announced by SOCAR.

SOCAR has set terms before Rosneft on oil pumping via the Baku-Novorossiysk pipeline in the reverse mode with a sulfur content of less than one percent, which does not affect the quality of the oil transported through the BTC oil pipeline, and will allow the shipment of Azeri Light oil from the Ceyhan terminal.

According to the standing agreement, in case the program is implemented, the profits will be shared equally between the parties.

Rosneft will itself resolve the issues on operations relating to the oil transportation via the Baku-Novorossiysk pipeline and the project implementation with Transneft.

The Baku-Novorossiysk pipeline (also known as the Northern Route Export Pipeline) is an 1,330-kilometer oil pipeline, which runs from the Sangachal Terminal near Baku to the Novorossiysk terminal at the Black Sea coast in Russia.

The total length of the pipeline, which carries crude oil from the Azeri-Chirag-Gunashli oil fields in the Caspian Sea to the Turkish Mediterranean coast, is 1,768 kilometers, including the 443 kilometer section running via Azerbaijan, the 249 kilometer section via Georgia and 1,076 kilometers via Turkey.

Adapted from TODAY.AZ