Azerbaijan Won't Pay

Azerbaijan's President Ilham Aliyev, who has historically tried to accomodate all major players in the Caucasus, has announced that his nation would rather risk shortage than pay Gazprom's price for natural gas.

"Azerbaijan has ceased importing gas from Russia as of January 1. Despite the anticipated shortage of gas in the country -- compounded by an unanticipated production delay at the international Shah Deniz gas project -- Azerbaijan has refused to pay $235 per 1,000 cubic meters of Gazprom-delivered gas in 2007. President Ilham Aliyev turned down such 'commercial blackmail,' telling the Russian media, 'I cannot allow that to happen. Azerbaijan is no longer the kind of state that can be forced into anything' (Ekho Moskvy, December 23).

"Gazprom’s final proposal to Azerbaijan in late December increased the volume offer to 2.5 billion cubic meters of gas for 2007, though still far below last year’s 4.5 billion cubic meters. And it raised the asking price from $230 to $235 per 1,000 cubic meters for 2007, compared with the $110 price charged to Azerbaijan, Armenia, and Georgia in 2006. Moscow left the price unchanged for Armenia in 2007 in return for property takeovers in that country; but it more than doubled the price to Azerbaijan and also to Georgia, which ruled out property transfers to Russia...

"Both Azerbaijan and Georgia have considered the possibility of emergency imports of Iranian gas in small volume to tide them over the winter. In Azerbaijan’s case, Iran was willing at the end of December to supply 1.8 billion cubic meters of gas in 2007, but the talks on the price were inconclusive. In January-February 2006, Azerbaijan transited small but critical volumes of Iranian gas to Georgia through the Astara-Gazi Mahomed-Gazakh pipeline during the Russian energy blockade of Georgia. Recalling that situation recently, U.S. Deputy Assistant Secretary of State Matt Bryza declared in Tbilisi that no one can 'tell Georgia to refuse buying Iranian gas and freeze in winter.'"

Maybe the BTC pipeline is finally cutting into Russia's geopolitical clout?