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Russia Rekindles Energy Ties With Azerbaijan

BAKU -- Russia said on Thursday it will launch talks on buying gas from ex-Soviet Azerbaijan, a prospect that could undermine a Western-backed project to bypass Russia and ship fuel from the region direct to Europe.

Russian officials said they were prepared to buy all of Azerbaijan's gas exports after Russian President Dmitry Medvedev visited the country on the first leg of a trip aimed at cementing Russia's hold over Caspian Sea energy.

Russia is one of the world's largest gas producers but it needs to import the fuel from its ex-Soviet neighbours to cover its own needs and export gas to lucrative European markets.

Most of the gas from ex-Soviet states around the Caspian Sea flows into Russia's pipeline network. A push by the European Union and United States to court those states and build alternative export routes has alarmed Moscow.

"In the course of talks, Gazprom and Azeri colleagues decided to start talks...on the conditions for buying Azeri gas," Alexei Miller, CEO of Russia's state-controlled gas giant Gazprom told reporters.

He was speaking after Medvedev met Azerbaijan's President Ilham Aliyev in the capital, Baku.

Gazprom spokesman Sergei Kupriyanov said Russia was seeking a long-term gas agreement with Azerbaijan and was "ready to buy as much as they can sell".

Aliyev said he was aware of potential new energy projects between the two countries but made no direct comments about the sale of Azeri gas to Russia.

Russian Energy Orbit

Bringing Azerbaijan back into its energy orbit is a major objective for Russia. In the past few years Baku has embraced Western-backed energy projects. These include a pipeline, built by a BP-led consortium, to ship Azeri oil to the Mediterranean, and a second link that pumps gas from Azerbaijan to Turkey.

A pipeline through Russia, that used to carry most of Azerbaijan's oil exports, is almost defunct.

Azerbaijan's BP-operated Shakh Deniz gas field will, at least initially, supply all the gas for the Nabucco pipeline. Backed by the European Union, it will connect the Caspian Sea, via Turkey, to customers in Europe.

Nabucco's backers want to persuade Turkmenistan, a major gas producer on the other side of the Caspian Sea, to join the project. They are proposing a pipeline across the Caspian to link Turkmenistan to Azerbaijan.

Turkmenistan, which has among the world's biggest gas reserves and each year exports the equivalent of Italy's annual consumption, is the next stop on Medvedev's trip.

Medvedev used his meeting with Aliyev to make an unusually explicit statement of support for Azerbaijan in its dispute with its neighbour, Armenia, over the Nagorno-Karabakh region.

Recognised internationally as part of Azerbaijan, ethnic Armenian separatists in Nagorno-Karabakh fought a war with Azerbaijan in the 1990s war and now run the region. Baku has vowed to restore its control.

Many officials in Azerbaijan privately accuse Russia of siding with the Armenians and of standing in the way of a settlement. "The two sides underlined the importance of a speedy resolution of the Nagorno-Karabakh conflict on the basis of respect for...sovereignty, territorial integrity and the inviolability of a state's borders," said a joint statement after the talks.

Commenting after the talks on that statement, Aliyev said: "We are grateful to Russia for this position."