Russia, Azerbaijan leaders see progress towards gas deal

"In my opinion we have a very high chance of entering a full-blown agreement," Medvedev told reporters after meeting Aliyev at the Russian leader’s residence outside Moscow.

The meeting came after Russia and Azerbaijan's state-run energy companies last month signed a preliminary deal on natural gas sales from 2010, which could remove a potential source of gas for Nabucco.

Aliyev said that Azerbaijan hoped to diversify its gas exports. The country currently exports gas westwards through Turkey.

"For us... diversification of deliveries and the opportunity to enter new markets is of significant interest... because today Azerbaijani gas is transported in the Western direction," Aliyev said.

He said Russia was a natural partner for Azerbaijan because the countries were neighbors and gas export infrastructure was already in place.

"There are no transit countries between our countries. There is no need for additional investment to build a gas pipeline," Aliyev said.

But both presidents stressed that it would be up to the two state companies involved, Russian gas giant Gazprom and Azerbaijani national energy firm Socar, to make the final agreement.
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"I am hoping that the talks being conducted between our companies will be successfully completed," Aliyev said. "There are no, and cannot be, any limits to cooperation in the gas sphere on our part."

Such a move could have implications for Nabucco, a pipeline project that the European Union has supported in a bid to lessen its dependency on Russian gas supplies.

The Nabucco project is seen as a rival to Russia's South Stream gas pipeline designed to annually pump 31 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, via Turkey.

Azerbaijan, along with Turkmenistan, would be a possible supplier of gas for the pipeline.

Russian-led peace efforts

The Kremlin also said that one of the "central themes" of the meeting would be the deadlock over the Nagorno-Karabakh occupation, over which Azerbaijan and Armenia fought a war in the early 1990s.

Moscow in recent months has stepped up its efforts to reconcile Armenia and Azerbaijan in what analysts say is a bid to increase its influence in the Caucasus region.

Last November, Russia hosted rare peace talks between the two bitter ex-Soviet foes.
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The Kommersant daily reported Friday that Russia had convinced Armenian President Serzh Sarksyan to take part in another summit with Azerbaijan's Aliyev mediated by Medvedev in the Russian city of Saint Petersburg in June.
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The newspaper, not citing any sources, said that Russia was offering hefty financial support to Armenia and weapons sales to Azerbaijan as rewards for taking part in the Russian-led peace talks.

Turkey also closed its borders and cut its diplomatic relations with Armenia since 1993 over Armenia's invasion of  20 percent of Azerbaijani Nagorno-Karabakh territory.