July 17, 2008

Paper Links Azeri-US Oil Price Talks to October Presidential Election

Text of unattributed report in opposition Azerbaijani newspaper Yeni Musavat on 16 July headlined "Azerbaijan offered cheap oil to America"

Azerbaijani Industry and Energy Minister Natiq Aliyev yesterday met Steven Mann, visiting senior aide on Eurasia issues under the US Department of State, in Baku. Energy security was discussed at the meeting, a press release of the ministry press service said. The delivery of Caspian hydrocarbons to world markets, cooperation in this area as well as the latest soaring oil and gas prices and other issues were discussed at the meeting.

Mann is visiting Baku as part of a delegation led by Boyden Grey, special representative of the US president on energy issues in the Eurasia region. Grey was received by President Ilham Aliyev the day before. No doubt that this visit is a reply to the latest aggressive efforts of Russia to seize control over the Caspian energy resources. Natiq Aliyev spoke about skyrocketing oil prices at world stock exchanges. The minister said that Azerbaijan makes permanent efforts to prevent this tendency and approves of formation of an optimum price mechanism. For his part, Steven Mann said that Washington is trying to intensify talks on the delivery of hydrocarbons from Central Asia to Europe through the territory of Azerbaijan.

He also praised the latest sincere dialogue and cooperation between Azerbaijan and Turkmenistan, adding that the US administration was also taking relevant steps for the further development of the relations. The guest added that his country is actively cooperating with the government of Turkmenistan, trying to make this country to diversify its gas transport routes, playing an active role for the realization of the Nabucco project.

Russia's Neftegaz.ru website reports that when speaking about optimum oil prices, Natiq Aliyev meant that Azerbaijan was practically ready to sell oil to the USA at prices below the current market price. So at present, the USA purchases over 50 per cent of oil pumped via the Baku-Tbilisi-Ceyhan oil pipeline. The latest price of a barrel of Azeri light exceeded 149 dollars. It is reported that before this Saudi Arabia expressed its readiness to sell oil to the USA at prices below the market price.

At present, Venezuela is threatening to cease oil sale to the USA. From this standpoint, the US economy, which is in the grip of a crisis, has a burning need for oil at discount prices. Otherwise, the efforts of the Bush administration to save the country from an economic and financial crisis would be fruitless. For over two years, the USA has been trying to apply the principle of agreement between the seller and buyer instead of regulating oil prices in line with market principles.

It is assumed that the issue of selling Azerbaijani oil to the USA at discount prices was also discussed at a meeting between the special representative of Bush and the president of Azerbaijan at their negotiations. Azerbaijan is expected to extract a minimum of 50m t of oil this year, of which 43m will be exported.

It seems that the Azerbaijani authorities are ready to sell oil at discount prices to the USA. Bearing in mind that the presidential election is nearing in the country, it would be beyond any doubt that this bargain would be of political nature. Knowing that the US economy is in need of relatively cheap oil, the Bush administration may to a great extend turn a blind eye to the way the Azerbaijani authorities will conduct the election. At least if the USA purchases Azerbaijani oil at discount prices, it would hardly criticize shortcomings in the election or raise doubts about its legitimacy.

Originally published by Yeni Musavat, Baku in Azeri 16 Jul 08, p 5.

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