Turkey and Azerbaijan to agree on Transanatolian gas pipeline by July

Oil&Gas Materials 17 May 2012 11:49 (UTC +04:00)

Azerbaijan, Baku, May 17 / Trend E. Kosolapova/

By the end of June Ankara will conclude an agreement with Azerbaijan to set up Transanatolian pipeline to transport gas from the Caspian state's giant Shah Deniz field, Turkey's energy minister Taner Yildiz told The Financial Times.

According to Yildiz, the move would provide the consortium managing Shah Deniz gas field with sufficient assurance of a sufficient outlet for the gas to proceed with the $22 billion development of the field's second phase.

"There is now no obstacle to the Shah Deniz project," he said.

European Union officials have hoped that a bigger pipeline, named Nabucco, would take the gas more than 3,000km into the heart of Europe and, at a later stage, also transport gas from Turkmenistan, so providing substantial alternative supplies to Russian gas.

"It would not be appropriate to say that this project is over, but its concept and title will be changed," Mr Yildiz said of Nabucco, adding that the project would probably survive as "Nabucco West" - a smaller, shorter pipeline, widely thought likely to begin at the Bulgarian-Turkish border rather than in Azerbaijan.

"In the end I believe whatever the name of the project is, it is more important that it is do-able," Mr Yildiz said in an interview.

His comments follow an announcement last month by Viktor Orbán, Hungary's prime minister, that Mol, the Hungarian oil and gas company, was pulling out of the Nabucco consortium. Mr Orbán said Nabucco was "in trouble", largely because of a rival pipeline promoted by Russia. Other companies in the Nabucco consortium, which include RWE of Germany and OMV of Austria, have already floated the idea of the slimmed down Nabucco west scheme.

Earlier, Azerbaijan and Turkey signed a memorandum of understanding to establish the consortium that will build the Trans Anadolu Pipeline (TANAP) for supply of gas from Shah Deniz gas field to Europe through Turkey.

The initial capacity of the pipeline will be 16 billion cubic meters. Some 6 billion cubic meters of the volume will be allocated to Turkey, while the rest will be transported to Europe.

The second stage of development of the Azerbaijani Shah Deniz gas condensate field will be launched by late 2017. Gas reserves of this field are estimated at 1.2 trillion cubic meters.

The contract to develop Shah Deniz was signed June 4, 1996. Participants are BP (operator) - 25.5 percent, Statoil - 25.5 percent, NICO - 10 percent, Total - 10 percent, Lukoil - 10 percent, TPAO - 9 percent, and SOCAR - 10 percent.