The announcement followed a visit between Russian President Dmitry Medvedev and his Azeri counterpart, Ilham Aliyev, Trend Capital News said.

"The issue was discussed between the Azerbaijani and Russian presidents during President Medvedev's official visit to Baku. (Both) presidents backed continuation of negotiations," Russian Ambassador to Azerbaijan Vasiliy Istratov said.

The proposal came from June negotiations brokered between Gazprom chief Alexei Miller and Aliyev to purchase Azeri gas at market prices on a long-term basis.

"We are ready to purchase gas on the basis of market pricing and in possible maximum volumes from Azerbaijan and other countries in which Gazprom operates," Miller said in June.

Production from the Shah Deniz natural gas field in Azerbaijan could reach 7 trillion cubic feet of product per year by 2012.