Azerbaijan-Russia Gas Deal Plans Dims Nabucco Hopes

Azerbaijan and Russia are close to signing a gas sales agreement, Azerbaijani and Russian news sources announced on March 30.

In a potential blow to the US- and European Union-backed Nabucco pipeline project, Russia's Gazprom has made an offer to its Azerbaijani counterpart to purchase Azerbaijani gas at a price comparable to European alternatives, the Russian news website Vzglyad reported.

Gazprom and the State Oil Company of Azerbaijan signed a memorandum of understanding on March 27 that paves the way for talks to begin on Azerbaijan supplying gas to Russia's North Caucasus regions. Supplies may start early next year on terms of "delivery at frontier," Gazprom has announced.

To prepare for deliveries, the two companies plan also to upgrade a 228-kilometer pipeline that runs from Baku to Novo-Filya on the Azerbaijani border with the Russian region of Dagestan.