"A preliminary agreement was reached in talks in Kazakhstan. Taking into consideration the fact that the amount of gas production in Kazakhstan will be up to 80 billion cubic metres a year, there are all grounds to say that from this point of view Azerbaijan will become a transit territory," said Aliev.

The Azerbaijani president did not rule out that Kazakh gas would be shipped via the under construction Baku-Tbilisi-Erzurum, due for completion in 2006, but did admit that Baku and Astana are "presently putting the finishing touches on an intergovernmental agreement" on Kazakhstan joining the massive Baku-Tbilisi-Ceyhan oil pipeline project.