Turkish-Azerbaijani gas deal welcomed

Tue 08 June 2010 11:18 GMT | 16:18 Local Time

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Natik Aliyev, Taner Yildiz

Azerbaijan's energy minister has described as a 'historic event' the signing of a package of agreements yesterday on gas supplies to Turkey.

Industry and Energy Minister Natig Aliyev and Turkey's minister of energy and natural resources, Taner Yildiz, signed the contracts in Istanbul.
Under the deals, Turkey will import more gas from Azerbijan's Shah Deniz field, up to 12 billion cubic metres annually. The deal sets the terms for the transit of Azerbaijani gas to European countries and addresses price adjustments to compensate Azerbaijan for the lower price for gas paid by Turkey since April 2008. The deal also covers the annual gas supply of Turkish petrochemicals giant, PETKIM, which has been purchased by Azerbaijan’s state oil company, SOCAR.
The deal took 39 negotiating sessions to reach, Turkish newspaper Today's Zaman commented today, and strengthens 'Turkey's strategic bid to become an energy hub in the region'.
Azerbaijani President Ilham Aliyev and Turkish Prime Minister Recep Tayyip Erdogan attended the signing ceremony.
Addressing the media, Turkish Minister Taner Yildiz said, 'Azerbaijani gas is extremely important in meeting the needs of Turkey and Europe for natural gas and for the future Nabucco project. The signed agreement serves our interests in this regard.'

Azerbaijan’s minister of industry and energy, Natig Aliyev, described the signing of the agreements as a historic event, state-run news agency AzerTAj reported. 'The Azeri-Chirag-Guneshli and Baku-Tbilisi-Ceyhan projects helped to increase prosperity not only in Turkey and Georgia but also in all the Caspian and Black Sea countries. The second major project is the development of Azerbaijan's Shah Deniz field and Turkey is playing an active role in this project. Before this project Azerbaijan imported gas from Russia, but now the development of Shah Deniz has allowed Azerbaijan to meet its own needs for gas and become a gas exporter.

'The deal signed today will further strengthen economic cooperation between Azerbaijan and Turkey. Azerbaijan makes huge investments in the Turkish economy. The State Oil Company of Azerbaijan, which now owns Petkim, wants to see the company develop further, so one part of the agreement covers the supply of natural gas to this company.'

Taner Yildiz declined to reveal the price Turkey would pay for gas from Shah Deniz 1. He said the price would be adjusted according to market conditions, rather than taken at a fixed rate.

A senior Turkish Energy Ministry official told the Hürriyet Daily News & Economic Review that the price Turkey would pay for Azerbaijani gas would be lower than that for Russian gas.

Pipelines boost
Another document signed yesterday was a Memorandum of Understanding between SOCAR and stated-owned Turkish pipeline corporation BOTAS on the purchase and transportation of natural gas. SOCAR President Rovnag Abdullayev and BOTAS Chairman Fazil Senel signed the memorandum.
'The signing of the package of documents between Azerbaijan and Turkey regulating the sale of Azerbaijani gas to Turkey and its transit to the European market via Turkey paves the way for the implementation of major gas projects,' SOCAR President Rovnag Abdullayev said after the signing ceremony, APA news agency reports.

'Today our companies and fraternal states have taken another historical step to develop cooperation in the energy sphere. The documents signed today pave the way for the implementation of new major projects, comparable with the BTC [Baku-Tbilisi-Ceyhan] pipeline and Baku-Tbilisi-Erzurum gas pipe,' Abdullayev said, according to a SOCAR press release.
The BTC pipeline was commissioned in summer 2007. It had exported 115.3m tonnes of oil as of 1 April this year. The Baku-Tbilisi-Erzurum gas pipeline that was commissioned in 2006 supplies Shah Deniz gas from the Caspian Sea to Georgia, Turkey and Greece.
The signing of the Azerbaijani-Turkish documents is an important step in the possible implementation of the Nabucco, Interconnect Turkey-Greece-Italy and Trans-Adriatic Pipeline that will all supply Caspian gas to Europe.
The Nabucco pipeline will pas through Azerbaijan, Georgia, Turkey, Bulgaria, Hungary, Romania and Austria and pump 31bn cubic metres of gas, less than 5% of the EU demand for gas in 2010.

Pipeline capacity on the Turkey-Greece-Italy route is expected to be 8-10bn cu.m. The pipeline will be launched in 2012. The gas pipeline shareholders are Greek gas company Depa and Italy's Edison.

The TAP gas pipeline will supply gas to south-eastern Italy via Greece and Albania. The gas pipeline includes a 115-km  underground section from Albania to Italy. The gas pipeline is planned to be commissioned in 2011. Its initial capacity will be 10bn cu.m with a possible extension to 20bn cu.m.

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