The Oil Drum

Heading Out wrote:

> Azerbaijan has been supplying around 80,000 bd of
> oil to Russia through the Baku-Novorossiysk oil pipeline
> which belongs to the Russian pipeline company Transneft.

This comment is at best misleading. It implies that the oil is sold to some party in Russia, and that just isn't the case. ARDNS (Azarbaycan Respublika Dovlet Neft Serketi plus or minus the odd funny-looking letter) uses the Baku-Shirvanovka branch of the Transneft pipeline system to get some of its oil to the terminal at Novorossiysk on the Black Sea for shipment to world markets. Technically this transaction is an invisible (service) export from Russia to Azerbaijan. The oil remains ARDNS property until a buyer lifts it at Novo.

There are lots of reasons for ARDNS to stop doing business with Transneft. They might not like the pipeline tariff levels, or the conditions of service. Maybe they don't want to buy service from an arm of the same unfriendly government that is cutting off their gas supplies. Maybe they prefer to evacuate the oil using their own share of the BTC pipeline capacity. And maybe they really need that oil as power station fuel to replace Russian gas (and shortfall from Shah Deniz?), so they're keeping it for their own use. Or all of the above. Or some other reason.