Azerbaijan Says 'No' to Russia's Pump-Or-Pay Demand

* Azeri minister says could use BTC pipeline instead

* Says unable to pump enough oil for Russian demands

(Reuters) - Azerbaijan is not willing to accept Moscow's "pump or pay" conditions for shipping oil across Russia, the Azeri energy minister said on Monday.

The statement is a hardening of tone. Last month, the Azeri state energy company SOCAR said it was ready to discuss a new deal after Russia terminated a contract that dated to 1996.

"It's up to Russia. If they don't like these conditions, for us there is no problem. We have nothing to lose," Azerbaijan's Energy Minister Natik Aliyev told reporters on the sidelines of a conference in Vienna.

Azerbaijan's previous contract with Russia allowed the nation to transport oil through a 1,330-km pipeline from the Azeri capital of Baku to Novorossiisk, a port on Russia's Black Sea coast [pictured above].

But in return it had to guarantee it would ship no less than 5 million tonnes a year through the pipeline.

The 1996 agreement between Baku and Moscow gave a fixed rate for the pumping of Azeri oil to Novorossiisk and for annual transport volumes. A new contract would have to set a tariff, and under the principle of pump or pay Azerbaijan would pay that even if it doesn't use the designated amount of capacity.

Igor Demin, spokesman of the Russian oil pipeline monopoly Transneft, said in May that Russia might propose a new contract to Azerbaijan but still based on a "pump or pay" principle.

In reality, Azerbaijan has been only shipping around 2 million tonnes in latter years through Russia's pipeline system and Aliyev said it had never shipped 5 million tonnes.

"We do not have enough oil," Aliyev said, referring to its inability to use more of the Russian pipeline capacity. "For us it is more important to fill our own pipelines, not to go to Novorossiisk," he added.

Rather than shipping through Russia, Azerbaijan can pump its oil through the Baku-Tblisi-Ceyhan pipeline to the Mediterranean Sea.

Reporting by Francesco Guarascio; Writing by Barbara Lewis; Editing by Cynthia Osterman