Ambassador: Azerbaijan, Turkey plan to sign transit gas agreement in September

Azerbaijan and Turkey plan to reach a transit agreement on supply of Azerbaijani gas to Europe in September 2011, Turkish ambassador to Azerbaijan Hulusi Kilic said on Tuesday.

He said negotiations on the agreement are successfully underway.

The transit agreement envisages sale of 10 billion cubic meters of the Azerbaijani gas directly to Europe through Turkey.

The main source for Azerbaijani gas supply to Europe via Turkey is the second stage of "Shah Deniz" field development, first gas production within which is expected in 2017. Some 10 billion cubic meters of gas per year can exported to Europe.

Concluding a transit agreement with Turkey is necessary for transporting Azerbaijani gas, particularly from the Shah Deniz field to Europe. Today SOCAR negotiates with potential buyers and transporters of Azerbaijani gas. However, the contracts, as well as permissions for the launch of the second stage of Shah Deniz development can be expected only after signing a transit agreement with Turkey.

As SOCAR Head of the Foreign Investments Department Vagif Aliyev said earlier, the two sides concluded negotiations on most of the contract details, including transit fees, gas volume and transportation options. However, disagreements on legal issues still hamper the signing of the agreement.

Aliyev said the volume of investment in the Shah-Deniz-2 project, which, given the construction of pipelines can hit $25 - $30 billion, should be safeguarded. One of ways to obtain such a guarantee is a solid legal framework that would protect the interests of all parties,

Shah Deniz reserves are estimated at an amount of 1.2 trillion cubic meters of gas.
The contract to develop the offshore Shah Deniz field was signed June 4, 1996. Participants to the agreement are: BP (operator) - 25.5 percent, Statoil - 25.5 percent, NICO - 10 percent, Total - 10 percent, LukAgip - 10 percent, TPAO - 9 percent, SOCAR-10 percent.

Under the Azerbaijan- Turkey contract, Turkey should receive 6.6 billion cubic meters of gas from the Shah Deniz annaully. The volume will be 6 billion cubic meters under the Shah-Deniz-2 project.


/Trend/