Trade and economic relations between Russia and Azerbaijan
Azerbaijan is one of the main economic partners of Russia among the CIS countries.
In 2009 trade between Russia and Azerbaijan amounted to $1779.5 million, with Russian exports accounting for $1468.3 million and Azeri imports for $311.2 million. In January-March, 2010 foreign trade with Azerbaijan dropped by 18.4% on the same period of 2009 to $320.5 million, with exports falling by 24.4% to $265.1 and imports increasing by 31.6% to $55.4 million.
Trade between Russia and Azerbaijan is fairly diversified. Russian exports in 2009 included food and agricultural raw materials, machines, equipment and vehicles, metals and metal goods, timber and paper and pulp goods, chemicals and mineral products. Russian imports in 2009 included foodstuffs; textiles and garments; mineral products, chemicals; machines and equipment, metals and metal goods.
On commission from Azerbaijan the Krasnoye Sormovo shipyard (Nizhniy Novgorod) built seven Project 19690 tankers with a displacement of 13,000 tons. The last in that series of tankers, The Shusha, was launched in June 2009. In 2009 Kamaz delivlered 560 trucks (medium trucks, dump trucks and tow trucks), AvtoVAZ delivered more than 11,000 cars to Azerbaijan.
Under a bilateral treaty of January 18, 1996 Azerbaijan pumps oil through the Baku-Novorossiisk Pipeline. In 2009 oil transit amounted to 2.5 million tons.
In October 2009 a medium-term contract was signed in Baku whereby Russia beginning from January 1, 2010 will buy 500 million cubic metres of Azerbaijan gas, with an option to increase purchases.
Mutual supplies of power as part of parallel operation of UES Russia and the power grid of Azerbaijan are taking place. In 2009 Russia exported to Azerbaijan 21.2 million kilowatt/hours of electricity and imported 158.02 million kilowatt/hours.
There is passenger and freight railway traffic and air transportation between some Russian cities and Baku.
The possibility of organizing parallel work of power grids, prospects for power transit to third countries as well as the building of a railway branch Kazvin-Resht-Astara (Iran) - Astara (Azerbaijan) is being discussed in a three-way format (Russia, Azerbaijan and Iran).
Businesses in Russia are increasingly interested in production activities on the Azerbaijan market. At present more than 500 enterprises and organisations with Russian capital are registered in Azerbaijan.
The most active player in the market of Azerbaijan is Lukoil. A Lukoil-Baku trading house has been established to supply oil production equipment. It is (jointly with the State Oil Company of the Republic of Azerbaijan) a cofounder of the Azeri-Russian-Singaporean Caspian Shipyard Company. The company takes part in developing Azerbaijan's largest gas-condensate field Shakh-Deniz on the Caspian (the share of the Russian-Italian LUK-Agip is 10%), it owns a 50% stake in the AzEuroTel fixed telephone operator. Lukoil has invested more than $1 billion in Azerbaijan.
Russia's Vneshtorgbank (VTB) has struck a deal to acquire a controlling stake (51%) in AF Bank. On November 23, 2009 VTB opened an official branch in Baku.
In late May 2007 a plant for the processing of bentonite built by the Russian-Azeri joint venture AzRosPromInvest was launched in Azerbaijan. Its authorized capital is $12 million. The projected capacity is 245,000 tons of bentonite a year.
The core activity of the Kavkaz Holding-Kirovsky Zavod joint venture, in which Russia owns a 51% stake, is the assembly of excavators and tractors on the basis of the Sabirabad Repair and Mechanical Plant.
In May 2008 the Russian company Baltika acquired the Baku-Kastel brewery (which was modernized and re-launched in May 2009). The $20 million project is the biggest Russian deal on the Azerbaijan market. The enterprise employs a workforce of 300 and accounts for 70% of the production of beer in the country.
Since 2008 the Russian company Crocus International (President A.I.Agalarov) has been building a tourist complex on the Caspian Sea worth more than $1 billion.
On May 29, 2009 the Russian company Sinterra and the leading mobile phone operator Azertelecom signed an agreement to create a joint venture which will build elements of a "ring" information structure for the Caspian states with subsequent expansion to the Persian Gulf.
A brake on mutual investments is the absence of an intergovernmental agreement on encouragement and mutual protection of capital investments.
Several constituent entities of the Russian Federation are cooperating with Azerbaijan in the economic field: Moscow, St Petersburg, the Republic of Dagestan, Kalmykia and Tatarstan, the Stavropol and Krasnodar Territories, the Astrakhan, Kirov, Moscow, Nizhniy Novgorod, Rostov, Samara, Saratov, Sverdlovsk, Tambov and Chelyabinsk Regions.
Baku has the missions of Dagestan and Tatarstan, the company Torgovy Dom Ural, the company Torgovy Dom Tatarstan, Aeroflot as well as regional Russian airlines (Bashkir Airlines, Perm Airlines, Pulkovo Airlines, Samara Airlines, Urals Airlines, etc). The Russian regions claim much of the credit for the increase by almost 4 times of the export of cars, tractors, buses and spare parts and a more than two-fold increase in the export of building materials, oil extracting equipment and piping.
The working mechanism that regulates trade and economic relations between Russia and Azerbaijan is the Intergovernmental Economic Cooperation Commission. The Commission's Russian co-chairman is the Energy Minister Sergei Shmatko (since June 2008) and the Azeri co-chairman is First Deputy Prime Minister Yagub Eyubov.
The 12th Session of the Commission took place in Baku on May 29, 2009. The trade mission of the Russian Federation was opened in Baku in March 2006.
