Azernews.Az

By Nigar Abbasova

Azerbaijan and Iran, two oil-rich countries are considering the issue of resuming strategic oil swap scheme, abandoned more than five years ago.

Iran’s Ambassador to Azerbaijan Mohsen Pak Ayeen, talking to Trend said that the two countries are in talks over oil swap for further supply of Azerbaijani crude to the world market.

Under oil swap deals, which started in 1997, Iran received crude oil from Azerbaijan, Kazakhstan and Turkmenistan through its North (Shomal) Oil Terminal on the Caspian coast and delivered an equivalent volume to the countries in the Persian Gulf. The procedure was suspended in 2010, on the grounds that the income from the swap was not sufficient for Iran.

Oil swaps, which stand for the exchange of raw materials to facilitate logistics operations, are expected to allow the Islamic Republic to optimize oil deliveries to refineries, located in the northern part of the country.

The two countries also have an experience of implementing swap operations in gas industry. Azerbaijan is supplying gas to Iran’s Northern provinces in exchange for Iranian gas supplies to Azerbaijan’s Nakhchivan Autonomous Republic.

The ambassador mentioned that Baku and Tehran continue bilateral negotiations on increasing the volumes of gas swaps.

Highlighting the issue of Iranian gas export to Europe, the ambassador said that currently the country is studying the issues of necessary infrastructure, transit cost and route.

Shana agency reported earlier that Iran is ready to resume oil swap operations with northern neighbors by means of Neka oil terminal, which is considered to be the biggest terminal in the Caspian Sea for loading crude byproducts as well as the only facility with infrastructure relevant for oil swap and loading procedures.

Initial volumes of swaps are expected to stand at 120,000 barrels of oil per day (bpd), though planned expansions of facilities will scale up volumes up to 1.5 million bpd in the future.

The Islamic Republic holds 34 trillion cubic meters of proven gas reserves, sharing 18.2 percent of total global gas reserves, which puts the country in the top of the world's gas holders list. Moreover, the country ranks the fourth in the world for the volume of its proven oil reserves.

Nevertheless years of sanctions have profoundly affected Iran's energy sector, restrained its production and export of oil and gas. The economic sanctions against Iran were lifted on January 16. Currently, the country produces 3.65 million barrels per day (mbd), about 0.85 mbd more than in the sanctions era and still about 0.2 mbd less than pre-sanctions level.

--

Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

Follow us on Twitter @AzerNewsAz