President Dmitry Medvedev's visit to Baku on Monday, has seen Gazprom strike a deal to buy Azeri natural gas, and further cement energy ties between the resource-rich Caspian Region states.
Gazprom’s CEO, Aleksey Miller, says the company will buy 500 million cubic metres of natural gas from Azerbaijan under an undisclosed pricing formula.
"The agreement envisions that Gazprom will buy Azerbaijani gas from January 1, 2010. The gas will be purchased on the basis of the pricing formula. The base price is commercially attractive for our Azerbaijani partners,"
Gazprom has also been included in a list of potential buyers of gas from the second phase of the Shah Deniz gas field in the Caspian sea. Russia is in competition with Europe to buy Azerbaijan's Caspian gas, which is seen a potential source for Europe's proposed Nabucco pipeline.
Both nations President’s claim the deal will help guarantee energy supplies. Azerbaijan’s President Ilham Aliev, emphasised the deal is backed by commercial realism.
"This is a commercial agreement and this is very important because the issue of gas relations has lately been artificially and unjustifiably politicised. Russia and Azerbaijan show a culture of relations in the oil and gas sector that are not politicised, are free and have a market nature,"
But the timing could be critical. Several EU and other nations are due to sign up on an intergovernmental agreement for the Nabucco project in July.