Russia's Rosneft seals key Azerbaijan oil and gas deal

(MOSCOW) - Russian crude giant Rosneft on Tuesday signed an oil and gas agreement with Azerbaijan's state energy firm aimed at loosening the European Union's ties with the key Caspian market.

Neither side disclosed the full details of a deal that was sealed on the sidelines of talks in Baku between visiting Russian President Vladimir Putin and Azerbaijan's President Ilham Aliyev.

"The agreements we signed today mark a new stage in our oil and natural gas cooperation," Russian news agencies quoted Aliyev as saying after the signing ceremony.

"I am certain that this cooperation will be a great success," Aliyev said.

Energy-rich Azerbaijan has been viewed by EU nations as a reliable alternative to the natural gas supplies they get from Russia via Ukraine -- a route that has previously been blocked by Moscow during pricing disputes.

Azerbaijan's SOCAR state energy company has already signed agreements with such major European partners as BP and Statoil as well as the United States' ExxonMobil.

But Baku relies heavily on Moscow for its armaments and has been cautious about upsetting Putin in the past.

Rosneft -- Russia's largest oil producer -- meanwhile has been desperately looking for ways to expand its natural gas business in direct competition to the Moscow-based behemoth Gazprom.

State-owned Rosneft has been urging Putin to break Gazprom's monopoly on natural gas exports and to allow the firm to conduct its own sales to European and Asian clients.

But Rosneft also needs to expand its natural gas base before such shipments can begin in any great extent.

It was not immediately clear whether Rosneft had secured any specific concessions from Azerbaijan on natural gas.

Previous media reports said that Rosneft had set its sights on a stake in the Absheron shallow-water natural gas field in Azerbaijan's section of the Caspian sea.

Rosneft chief Igor Sechin -- a Putin confident who was a prominent member of the Russian delegation at the talks -- said the deals signed on Tuesday covered "a full range of areas."

"These include mutual deliveries, swap operations and the possibility of jointly using our infrastructure," news agencies quoted Sechin as saying.

Sechin added that the strategic agreement "assumes an exchange of assets and joint production."

Putin himself did not address energy issues in reported comments. But he noted that Moscow was "interested in making sure that (the Caspian) region was one of peace, stability and cooperation."

The two agreements signed by the heads of Rosneft and SOCAR covered the undisclosed specifics of joint oil deliveries and a separate "agreement on cooperation" between the two firms.

A Rosneft statement said the sides had come up with a list of oil projects they would jointly develop in Russia and Azerbaijan as well as other countries.

"For this purpose, the sides will create a joint venture on a parity basis," the Rosneft statement said.

Rosneft said the two companies also agreed to coordinate their marketing campaigns and to use each other's pipelines and oil terminals on specific occasions.

"The agreements will allow the two companies to expand the geographic area of their activities, help them access new markets and resources, and allow them to optimise their deliveries of oil and oil products," the Rosneft statement said.