Russia's president on Monday clinched a major new natural gas deal with Azerbaijan, striking a blow to European efforts to reduce energy reliance on Russia.
Russian President Dmitry Medvedev traveled to the capital of Azerbaijan, Baku, along with the chief of Russia's state-run natural gas monopoly, Gazprom, to oversee the deal's signing.
Gazprom CEO Alexei Miller and Rovnag Abdullayev, head of State Oil and Gas Company of Azerbaijan, signed an agreement for Russia to buy 500 million cubic meters of gas annually starting next year.
Medvedev and his Azerbaijani counterpart Ilham Aliyev in televised comments hailed the agreement as an important step in bilateral relations.
Some Western observers suspect the deal is part of a Russian effort to corner regional energy supply, but President Medvedev said that Russia's deal with Azerbaijan has no political motives.
Miller announced last week that the company would sign an agreement on buying natural gas from the country's largest gas field, Shah Deniz.
When a second gas field at Shah Deniz comes online, Gazprom will get first refusal on the extra supplies if other companies make matching offers, Miller said, according to Russian news agencies. The contract foresees annual increases in supplies to Russia, Miller said.
The United States and Europe have courted Azerbaijan and its vast energy reserves as an alternative source of oil and gas. European officials are looking to build a major pipeline called Nabucco that would bring Caspian and Central Asian gas to Western markets.
A new Russian deal with Azerbaijan could create fresh doubts over the Nabucco project's ability to get enough gas to make it worthwile.
Azerbaijan produced 23 billion cubic meters of gas in 2008, and Aliyev pledged in January that the country would double the gas production in the next few years.