VZCZCXYZ0011
RR RUEHWEB

DE RUEHKB #0276/01 0791441
ZNR UUUUU ZZH
R 191441Z MAR 08
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC 5012
INFO RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEAIIA/CIA WASHINGTON DC
RUEKDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHDC
RHMFISS/CDR USEUCOM VAIHINGEN GE
RUEHAK/AMEMBASSY ANKARA 2727
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS BAKU 000276 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/CARC 
 
E.O. 12958:  N/A 
TAGS: PGOV PREL AJ ENRG
SUBJECT: AZERBAIJAN ENERGY UPDATE, MARCH 2008 
 
¶1. SUMMARY: This is the first in a series of regular energy updates, 
highlighting developments outside of the major off-shore oil and gas 
production and transport projects.  The information contained in 
these reports is drawn primarily from the Azerbaijani local press, 
and has not been checked for accuracy.  The opinions and policies 
expressed in this report are those of the authors, not the U.S. 
Government.  END SUMMARY. 
 
¶2. SOCAR HEAD TAKES SECOND JOB 
------------------------------ 
 
On March 17, the Azerbaijani Football Federation's Association 
(AFFA) elected SOCAR President Rovnag Abdullayev as its new 
President.  Abdullayev said he would actively contribute to the 
development of Azerbaijan's football, seek tax exemption for 
football sponsors, and that SOCAR would help all the football clubs 
of Azerbaijan, 
 
¶3. AZERBAIJAN AND GREECE SIGN GAS MOU 
------------------------------------- 
 
On March 17, GOAJ Energy Minister Natig Aliyev and visiting Greek 
Development Minister Christos Philias signed an MOU on energy 
cooperation, including the supply of Azerbaijani gas to Greece. 
Greece wants to import 1 billion cubic meters annually of 
Azerbaijan's gas from Shah Deniz Phase Two (further details septel). 
 
 
¶4. DIESEL FUEL TO BE SHIPPED FROM KULEVI 
---------------------------------------- 
 
According to SOCAR, its Kulevi Black Sea Oil Terminal in Georgia has 
been fully repaired and SOCAR will start operations there in late 
March or early April, when it plans to ship its first tanker with 
Azerbaijan's diesel fuel.  SOCAR bought the terminal from the 
well-known Georgian businessmen, Badri Patarkatsishvili in 2006.  It 
is repairing the terminal with a syndicated loan of $305 million 
from 15 European banks over five years.  SOCAR also plans to 
transport oil from Kazakhstan via Kulevi. 
 
¶5. SOCAR TO INVEST $100 MILLION IN GEORGIAN PROJECTS 
--------------------------------------------- ------- 
 
SOCAR intends to invest $100 million in projects in Georgia in 2008. 
 This will be done via SOCAR Georgia (the local subsidiary).  SOCAR 
investment in Georgia was $380 million in 2007.  The index will 
decrease because the repair of the oil terminal in Kulevi has been 
completed.  SOCAR will build new oil reservoirs totaling $15 million 
in Georgia in 2008.  An office will be also built for SOCAR Georgia 
for $10 million. 
 
¶6. SOCAR TO START DRILLING FIRST WELL ON UMID FIELD 
--------------------------------------------- ------- 
 
SOCAR President Rovnag Abdullayev said SOCAR would start exploratory 
drilling on the offshore Umid gas field soon.  The first production 
well will be launched in 2009.  The gas field reportedly includes 
200 billion or 300 billion cubic meters. 
 
¶7. SOCAR'S PRESIDENT TO VISIT GEORGIA 
------------------------------------- 
 
SOCAR President Rovnag Abdullayev will visit Georgia next week to 
continue talks over Azerbaijani gas exports and to discuss several 
other Georgian projects.  Talks are expected to focus on the price, 
amount and schedule of the supply of Azerbaijani gas.  Abdullayev 
said Azerbaijan would be able to provide Georgia with the required 
amounts completely after its own gas extraction increased to 8 
billion cubic meters.  In 2008, Azerbaijan is ready to supply up to 
500 million cubic meters at $180-200 per 1,000 cubic meters. 
Georgian Energy Minister Khetagouri said Azerbaijan and Georgia 
would finalize their talks over gas trade soon. He said the sides 
were discussing technical details and not the price of the gas. 
 
¶8. SOCAR GEORGIA - BIGGEST TAXPAYER OF GEORGIA 
--------------------------------------------- -- 
 
SOCAR Georgia has been recognized Georgia's largest taxpayer in 
¶2007.  This subsidiary of SOCAR was created in December, 2006. 
SOCAR invested $380 million in Georgia's economy in 2007. 
 
¶9. KAZMUNAYGAZ BUYS NAFTRANS LTD ASSETS 
--------------------------------------- 
 
Kazakhstan's state-run oil and gas company Kazmunaygaz has bought 
the entire assets of Naftrans Ltd that manages Georgia's Batumi Oil 
Terminal.  The deal totaled $220 million. The Naftrans assets total 
$335 million now.  Naftrans also transports oil and oil derivatives 
from the Azerbaijan-Georgian border to the Batumi Terminal. 
 
DERSE