Socar in Talks to Buy 5 Million Tons of Oil a Year From Rosneft

State Oil Co. of Azerbaijan is in talks to buy 5 million metric tons of Urals crude a year from OAO (ROSN) Rosneft, part of which will be re-exported through the BP Plc-led Baku-Tbilisi-Ceyhan pipeline and part refined in Baku.

Socar, as the Azeri company is known, plans to complete the talks by the year-end, President Rovnaq Abdullayev said today in the capital. The crude will be shipped through the “reverse flow” of the Baku-Novorossiysk pipeline, Abdullayev said.

Azerbaijan currently uses Baku-Novorossiysk to ship smaller volumes of oil to the Black Sea port, with 2 million tons sent last year. Russian Prime Minister Dmitry Medvedev in May ordered a halt to Azeri crude exports via the pipeline from Jan. 1.

Socar and Rosneft agreed last week to set up a 50-50 joint venture to explore and produce natural gas in Azerbaijan, Russia and elsewhere. They will also cooperate in oil and oil-product sales and use of infrastructure such as pipelines and terminals.

Rosneft is interested in Socar’s Caspian energy operations and the Azeri company is interested in joining Rosneft projects, Abdullayev said without elaborating. Rosneft is also interested in cooperating in oil trading with Socar through the Fujairah and Ceyhan ports, as well as in Singapore and Africa, he said.

To contact the reporter on this story: Zulfugar Agayev in Baku at zagayev@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net

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