The high-level two-day seminar was opened by the Deputy Minister of Industry and Energy of Azerbaijan, Gulmammad Djavadov, and the Vice-president of SOCAR, Elshad Nassirov, who emphasised the timeliness of the Energy Charter publications and, in this case, their relevance for producer countries like Azerbaijan. Azerbaijan is one of the largest exporters of hydrocarbons in the region and it relies on transit to reach its important export markets.

"In the environment of highly volatile energy markets and inherent risks related to energy flows crossing borders, it is crucial to provide a well-argumented and mutually-accepted basis for informed debate and a constructive international dialogue on energy pricing mechanisms and transit conditions,"

said Deputy Secretary General of the Energy Charter Secretariat Andrei Konoplyanik in his opening remarks.

Gas has not yet developed into a global commodity similar to oil, and price mechanisms for gas trade differ among regions. The analysis of such regional differences, including pricing in liquid markets and under long-term contracts, was the main theme of the seminar discussion.

In relation to transit tariffs, the basic principle of the Energy Charter Treaty is that tariffs should be non-discriminatory, and also that no party shall impose unreasonable delays, restrictions or charges on energy products in transit within the Energy Charter constituency. Further elaboration of transit conditions is currently the subject of multilateral discussions on a draft Transit Protocol.

As part of the mission, members of the Secretariat were invited to visit the site of the Sangachal oil and gas terminal, south of Baku.

The terminal, operated by BP, is the starting point of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-Erzurum (BTE, also named South Caucasus) gas pipeline, and connects with the Shah Deniz gas field and the Azeri-Chirag-Gyuneshli oil field.

With the kind permission of the BP terminal operator, the presentation made to the Secretariat by BP is available here.

The seminar was based on the Secretariat's recent publications:

• Putting a Price on Energy - International Pricing Mechanisms for Oil and Gas (2007)
• From Wellhead to Market: Oil Pipeline Tariffs and Tariff Methodologies in Selected Energy Charter Member Countries (2007)
• Gas Transit Tariffs in Selected ECT Countries (2006)

This seminar on pricing mechanisms is the latest in the series of such meetings organised in Energy Charter member countries.