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Azerbaijan receives $ 260 million from Turkey under payment of difference in value of Shah Deniz gas

Oil&Gas Materials 19 April 2011 17:13 (UTC +04:00)

Azerbaijan, Baku, April 19 / Trend A.Akhundov /

The Turkish state pipeline company Botas completely paid 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 ", Executive Director of the State Oil Fund of the Azerbaijan Republic (SOFAZ) Shahmar Movsumov said today.

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 company began payment of the debt in December 2010 and carried out it in six tranches," Movsumov said.

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.

Movsumov said $260 million of the paid amount fell to the state's share. The country received $131 million of this amount in 2010.

The remainder was distributed among the project partners in accordance with their percentages.
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.

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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