Great progress in talks on transit of Azerbaijani gas via Turkey: SOCAR representative

"Great progress has been achieved with Turkey regarding transit and terms of possible gas export as a part of Shah Deniz II," a source said.

He said the sides have closer position regarding Shah Deniz II. Turkey is a friendly and fraternal country for Azerbaijan and supply of Azerbaijani gas to Turkey is act implemented in a friendly manner.

"Gas is a commercial product and is not a tool to achieve political goals [...]. We will make every effort to sell it as suitable price," a source said.

He said Azerbaijan and Turkey have disagreements over the cost of gas in Shah Deniz I. "The disagreements are serious in the Shah Deniz I given the fact that the Turkish side is impartial and we understand them. The price can not be increased up to the level of the market prices so quickly, [...] but, nevertheless, the laws of the market are the same for all "SOCAR representative said.

"Azerbaijani gas is not inferior in quality and timeliness to neither Russian nor Iranian gas. Azerbaijan must sell gas to Turkey cheaper than Russia. "[...] We see no reason why our gas should be sold to Turkey cheaper. Of course, it will be cheaper than Russia, given the
fact that Russian gas has been to this market from the very beginning. To occupy this niche, we should sell a little cheaper than natural, but not too much," a source said.

Another SOCAR source said earlier that seven rounds of talks on this issue have already been held. There is progress in the issue of changes in the cost of gas. However, the parties have different approaches to the price formula and the matter is pending, a source said.

Azerbaijan intends to increase the price of gas to Turkey as a part of the Shah Deniz I. Azerbaijan exports gas to Turkey at $120 per 1000 cubic meters. However, this price is indicated in the contract signed in 2001.

The contract also stipulates that the gas price can be considered a year after the supplies is launched. So, new prices (which the sides are negotiating) will be applied from April 15, 2008.

Under the contract, 6.6 billion cubic meters of gas will be transported to Turkey via Baku-Tbilisi-Erzurum per year as part of the Shah Deniz-1. Shah Deniz partners plan to achieve this volume in 2009.

The contract on development of off-shore Shah Deniz field was signed on 4 June 1996. The sides to the contract are ?? (operator - 25.5%), Statoil (25.5%), SOCAR (10%), LukAgip (10%), NICO (10%), Total (10%), and TPAO (9%).

/Trend Capital/