Iran Wants Steep Increase in Azeri Gas Imports

Iran wants to raise gas imports from Azerbaijan almost six-fold to 2 billion cubic metres (bcm) a year from a current 370 million cubic metres and to use gas storage in Azerbaijan, a source at the Azeri state energy company SOCAR told Reuters.

Despite having the world's biggest natural gas reserves, Iran is struggling to keep up with subsidy-fuelled gas consumption, which has almost doubled during the past decade to over 160 billion cubic metres (bcm) a year.

Azerbaijan has a small swap deal in which Iran supplies fuel to its exclave of Nakhchivan - isolated from the rest of Azerbaijan by neighbouring Armenia - and pays Iran back by pumping similar volumes to northern Iran.

The ex-Soviet country exported 151 bcm to Iran in the first four months of this year versus 149 bcm in the same period a year earlier. SOCAR plans to export 0.4 bcm of gas to Iran in 2014, the same as last year.

"Iran's desire to increase gas imports from Azerbaijan was one of the main topics of discussion at a recent meeting in Baku between the SOCAR president and Iranian deputy industry, mines and trade minister," the source, who did not want to be named, told Reuters.

"The proposal from the Iranian side to buy gas from Azerbaijan is interesting indeed," he said.

Apart from buying gas, Iran also wants to store gas in the summer months in Azerbaijan, when its ts consumption is lower.

Another official from SOCAR said Azerbaijan did not have enough storage facilities for Iran, but the company was working on a plan to boost capacity to 5 bcm from a current 3.2 bcm by 2016.

(Reporting by Nailia Bagirova; Writing by Margarita Antidze; Editing by William Hardy)