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Turkish-Azeri gas deal to be signed June 7
The deal would lay the groundwork for Azeri gas to flow to Europe, giving a boost to the European Union-backed Nabucco Pipeline project, which was conceived largely to cut Europe’s dependence on Russia’s gas. “Aliyev is expected to come on June 7, which is when the gas deals are to be signed,” an Azeri diplomatic source said on condition of anonymity.
The agreement, two years in the making, was to be signed earlier this month when Turkey’s Prime Minister Tayyip Erdoğan went to Baku, but Aliyev said there were still details that needed to be worked out.
The deal is expected to cover the price of Turkey’s gas imports from Azerbaijan as well as determine how much Turkey would charge Azerbaijan to transit its gas to Europe.
That could set the stage for potential commercial talks between the Nabucco shareholder companies and Azerbaijan over supplies for the 31 billion cubic metre pipeline, seen costing 7.9 billion euros ($9.68 billion).
The pipeline, which has yet to secure supplies, is competing with Russia’s South Stream pipeline project to feed Europe’s gas market, which is expected to be hungry for new imports around 2015, when a current gas glut is expected to end.
Negotiations have been complicated by political tensions between the allies over a bid by Turkey and Armenia -- Azerbaijan’s enemy in a conflict over rebel Nagorno-Karabakh -- to bury a century of hostility and mend ties. The rapprochement collapsed last month. For Turkey the deal will clear up the amount Ankara will give Azerbaijan in back payments for gas consumed since 2008, when the contract price was due for revision.
The agreement will also determine the volume of gas Turkey will receive from the second phase of production from Azerbaijan’s Shakh-Deniz gas field, seen coming on line between 2014 and 2017. The field is operated by BP and Statoil.
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