Trasneft rejects SOCAR offer of Baku-Novorossiysk reverse flow

The issue of a reverse was raised and discussed last year. In October a delegation from the State Oil Company of Azerbaijan (SOCAR) visited Transneft and discussed this, he said.

"We do not think this would be a good idea economically or politically," he said. "This would mean that Rosneft oil, bypassing Novorossiyskiy Port, would go to the refinery in Baku and be processed, and Azerbaijani partners would provide the same volume of oil, but already on Turkish territory in Ceyhan. Rosneft would take it in Ceyhan and supply it to its refineries in Italy," he said.

This means 5 million tonnes would go to Baku, bypassing Novorossiysk. "This means the pipeline that now goes from Makhachkala taking oil from Kazakhstan, Turkmenistan and Lukoil - just over 6 million tonnes - would simply be sealed. Minus 7 million tonnes that went via Novorossiysk and minus another 5 million tonnes that would bypass Novorossiysk to Baku. Novorossiysk would lose 12 million tonnes. So we would deliver to the refinery in Baku, but would cut volumes to our domestic port in Novorossiysk by 12 million tonnes," he said.

"We calculated the figures, would it be interesting to get oil from Ceyhan, for transportation from Azerbaijan to Ceyhan is around $50 per tonne, and from Novorossiysk to the refinery in Sardinia - the difference was around $14 in favor of Novorossiysk," Tokarev said. So from Novorossiysk it is better to send oil to the Italian refinery than via the Baku-Ceyhan swap scheme. "We have voiced these arguments. All official Russian agencies know about this. We have told them that this is an undesired scheme and that it will create many problems. I hope they will listen to us," he said.

SOCAR and Rosneft held talks about a reverse of Russian Urals oil via the Baku-Novorossiysk pipeline. They discussed 5 million tonnes per year, part of which could go to the Baku refinery and the rest would be exported via the Baku-Tbilisi-Ceyhan pipeline.