Turkey, Azerbaijan fail to agree on legal aspects of gas agreement

Oil&Gas Materials 25 July 2011 12:22 (UTC +04:00)

Azerbaijan, Baku, July 25 / Trend A.Badalova /

Turkey and Azerbaijan can not agree on the legal aspects of the contract on sale of gas from the second stage of development of the Azerbaijani gas condensate field Shah-Deniz, SOCAR Head of the Foreign Investments Department Vagif Aliyev said at a meeting with Turkish journalists, Today 'zaman reported.

He said 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.

"The legal norms governing the contract may be British or Swiss regulations," Aliyev said.

He said an agreement signed with BOTAS in 2010 on the Shah-deniz project was governed by the British regulations - the same kind of agreement should be on the Shah-Deniz-2 project.
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.