Russia and Azerbaijan sign major gas agreement

Russia's President Dmitry Medvedev clinched a major new natural gas deal with Azerbaijan Monday, striking a blow to European efforts to reduce energy reliance on Russia, AP writes.

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 the regional energy supply, but Medvedev said that Russia's deal with Azerbaijan has no political motives.

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 direct to Western markets. Moscow, meanwhile, has been lobbying for a pipeline via Russia named the South Stream, which would tunnel under the Black Sea to reach southern Europe.

A new Russian deal with Azerbaijan could create fresh doubts over the Nabucco project's ability to get enough gas to make it worthwile.