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Turkey will fully pay difference in value of Azerbaijani gas from Shah Deniz in spring

Oil&Gas Materials 25 December 2010 12:33 (UTC +04:00)

Azerbaijan, Baku, Dec. 25 / Trend I.Khalilova E.Ismayilov /

The Turkish state pipeline company Botas will completely pay the entire amount of debt worth $1.36 billion in the framework of the payments of difference in value of the Azerbaijani gas purchased by Turkey from the first phase of development of gas field Shah Deniz " in spring, the State Oil Fund of the Azerbaijan Republic (SOFAZ) said . The funds received from the state oil and gas projects and operations are accumulated in SOFAZ.

"The amount of the debt to project partners of the first stage of the Shah Deniz field development formed as a result of the recalculation of the old price is $1.36 billion. This amount includes the difference between the old and the new price and the interest accumulated on this debt. The total debt will be paid in accordance with the approved schedule until April," SOFAZ reported.

The contract to develop Shah Deniz was signed in June 1996. Participants are: BP (operator) - 25.5 percent; Statoil - 25.5 percent; NICO - 10 percent; Total - 10 percent; LukAgip - 10 percent; TPAO - 9 percent; and, SOCAR - 10 percent.

Botas has already transferred the first tranche worth over $600 million in the framework of the payments of difference in value of the Azerbaijani gas. Of the paid amount, $130 million fell to the state's share. The remainder was distributed among the project partners in accordance with their percentages, SOFAZ reported.

The Turkish state pipeline company Botas transferred the first tranche worth $ 500 million in the framework of the payments of difference in value of the Azerbaijani gas purchased by Turkey from the first phase of development of gas field Shah Deniz

The current price of Azerbaijani gas to Turkey is linked with the price of crude oil and petroleum products, the volume in the signed contracts and actually received amounts, contract terms such as "take or pay", transit fees and other factors. Given all the above the price of gas is constantly changing, SOFAZ reported.

Earlier, Azerbaijan and Turkey have agreed on the price of Azerbaijani gas in the first and second stages of the Shah Deniz project and its transit through Turkish territory. At present the parties are working on the preparation of documents that formalize the reached agreements.

Previously, Azerbaijani gas is supplied to Turkey at $120 per 1,000 cubic meters. However, the cost of gas for consumers on Turkey's domestic market is more than $300 per 1,000 cubic meters (data from the official website of the Turkish company Botas).

The contract reads that the price of gas from the Shah Deniz field could be reviewed after one year of the launch of supplies.

Under the current contract, Turkey must receive 6.6 billion cubic meters of gas from Shah Deniz in the first stage of the field's development. Reserves of the Shah Deniz field are estimated at 1.2 trillion cubic meters of gas.

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