Gas Deals Signed Between Turkey And Azerbaijan

ANKARA (Reuters)–On Monday March 12–Turkey signed a 15-year agreement with Azerbaijan to buy gas from the Shakh Deniz fields in the hydrocarbon-rich Caspian Sea from 2004.

Turkish President Ahmet Necdet Sezer and Azeri President Heydar Aliyev–who is on an official visit to Turkey until Friday–signed an intergovernmental agreement with energy ministers from both sides. The two Turkish-speaking countries are close regional allies. "The Shakh Deniz project will pave the way for other pipeline projects that will be the backbone of an East-West energy corridor," Sezer said–referring to a US-backed plan to carry Caspian resources to Western markets.

Aliyev said another project to pump Caspian oil to Turkey’s Mediterranean coast–would definitely be complete despite some Western concerns over its commercial viability.

A senior official said gas from Shakh Deniz–currently being developed by a consortium led by BP Amoco and Statoil–would be transported to Turkey on a pipeline to be built from Baku through Georgia to Turkey’s eastern city of Erzurum–where it will intersect another line from Iran.

"The gas from Azerbaijan will be the cheapest among all gas deals Turkey has struck so far," the official said–declining to elaborate on the price.

According to the draft agreement–Turkey–who wants to diversify its gas resources to lessen dependence on Russia–will begin buying two billion cubic meters of gas from Azerbaijan in 2004. The amount will rise to 6.6 billion cubic meters in 2007.

Turkey has been working to bring piped gas from Russia–its sole gas supplier at present on an existing pipeline through Ukraine–Romania and Bulgaria–through a new link under the Black Sea–called the Blue Stream project. It is also building a pipeline for gas from Iran due this summer and a project to buy Turkish gas is awaiting Turkmen’stan’s approval.

Turkey will be responsible for the 250 kilometers of the pipeline on Turkish territory whereas the line from Shakh Deniz to the Georgian-Turkish border will be built by SOCAR. The Azeri and Georgian sections of the pipeline will be 770 kilometers long.

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