Russian President Dmitry Medvedev arrived in Azerbaijan on Thursday for a two-day visit to focus on economic ties, cooperation in the Caspian Region, and the Nagorny Karabakh settlement.

During the visit, Russian energy giant Gazprom and Azerbaijan's state oil and gas company are expected to sign a deal to increase supplies of Azerbaijani gas to Russia in 2011-2012.

Medvedev and his Azerbaijani counterpart, Ilkham Aliyev, will also sign a border agreement that will delimitate part of the land border that begins where Russia, Azerbaijan and Georgia meet and runs eastward to the Caspian Sea.

It is unclear whether the two presidents will discuss the status of the oil- and gas-rich inland Caspian Sea, which has been a source of long-running disagreements between the five littoral states - Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan - since the collapse of the Soviet Union in 1991.

A Kremlin source told RIA Novosti that the heads of the two states would also discuss military cooperation but did not elaborate on the issue. However, it was recently announced that Azerbaijan would buy four Russian Ka-32 helicopters, used in utility cargo work and fire-fighting.

The long-running conflict between Azerbaijan and Armenia over Nagorny Karabakh will also be on the agenda. As a co-chair of the Minsk Group with France and the United States, Russia is at the center of international efforts to mediate a settlement.

Earlier this month Aliyev said the conflict can be easily settled if Armenia withdraws its "occupation forces" from the disputed area.

The conflict over Nagorny Karabakh first erupted in 1988, when the ethnic-Armenian region claimed independence from Azerbaijan and sought support from Armenia. Karabakh has been de facto independent since a 1991-94 war that claimed more than 30,000 lives on both sides.

MOSCOW, September 2 (RIA Novosti)