RIA Novosti reported that Gazprom and Azerbaijan have agreed to start talks on Azerbaijani natural gas sales to the Russian energy giant.

Mr Alexei Miller CEO of Gazprom said "Azerbaijan could become one of the countries selling natural gas to Gazprom, even though the country bought gas until recently, adding that the company was seeking to buy the largest possible volumes of gas at market prices.”

Mr Miller said Thursday the forecast had been raised. "By the end of 2008, gas in Europe will cost USD 500 per 1,000 cubic meters. He said that oil prices go past USD 250 per barrel, the natural gas price would exceed USD 1,000 per 1,000 cubic meters. He added that such high prices would not be an unnatural phenomenon for the market, as some individual Gazprom contracts had at certain times already exceeded the figure.”

Mr Rovnag Abdullayev president of the State Oil Company of Azerbaijan said earlier that the South Caucasus republic was studying Gazprom's offer to buy Azerbaijani gas at market prices along with proposals to supply natural gas for the Nabucco and Trans-Adriatic gas pipeline projects.

Azerbaijan is considered as a potential natural gas supplier for the Western-backed Nabucco project designed to bypass Russia and pump up to 30 billion cubic meters of natural gas annually from Central Asia to Europe via Azerbaijan, Turkey, Bulgaria, Romania, Hungary and Austria.