Turkey, Azerbaijan agree on terms of gas shipments from Azerbaijan

Turkey, Azerbaijan agree on gas shipments

ISTANBUL — Turkey and Azerbaijan signed a deal on Monday that will provide 11 billion cubic meters (388 billion cubic feet) of Azeri natural gas a year to Turkey beginning as early as 2016.

Azerbaijan turned down Turkey’s request to allow it to re-export some of those gas shipments to Europe, but the energy ministers of both countries said their deal would “pave the way” for Azerbaijan to eventually provide gas to a pipeline project aimed at reducing the European Union’s reliance on Russian energy.

An eventual agreement by Azerbaijan to ship gas through the proposed Nabucco pipeline is key to making it a viable rival to Russian pipelines running to Europe. European countries sealed a deal on the Nabucco project last year, but at best it would only put a dent in Moscow’s dominance, even if it finds the gas supplies.

Azerbaijan’s Energy Minister Natiq Aliev said his country has supported the Nabucco pipeline project, which intends to bring natural gas from Central Asia and the Middle East to Europe to diversify the continent’s energy sources and reduce Russia’s dominance.

Aliev said Azerbaijan has not made a firm promise to join the project, but added: “Today’s deals would lay the grounds to speed up the realization of the Nabucco pipeline, and Azerbaijan is ready to contribute when that happens.”

Turkey tried to persuade Azerbaijan to allow it to re-export some of its new Azeri gas shipments to Europe. But Rovnag Abdullayev, head of Azerbaijani state-owned oil company SOCAR, said Monday’s deal does not give the right to Turkey to re-export the Azeri gas.

Azerbaijan wants to create its own market in Europe, according to a Turkish Energy Ministry official, and it does not want to immediately commit to the Nabucco project.

Abdullayev said his country would continue to discuss that issue with Turkey.

Under a separate deal that will remain valid, Turkey has been importing 6 billion cubic meters (212 billion cubic feet) of Azeri gas and re-exporting some of it to Greece.

Meanwhile, Turkey bowed to Azeri pressure to increase the price of its gas purchases retroactive to April 15, 2008.

Turkish Energy Minister Taner Yildiz said from now on the price of the gas will be adjusted according to market conditions. But one energy official said Turkey would still be able to purchase Azeri gas at discounted price compared to Russian shipments.

The deal was signed on the sidelines of a summit focusing on security and cooperation in Asia. The shipments would start as early as 2016 after exploration of a new gas field in Caspian Sea, said Yildiz.

Turkey, located between Asia and Europe, aspires to become an energy conduit between Central Asia, Middle East and Europe.

However, Turkey shelved discussions of Russian gas shipments to Israel last week after an Israeli raid killed nine pro-Palestinian activists on an aid flotilla that attempted to break the blockade on Gaza. The attack sharply escalated tensions between Turkey and Israel.

Russia also has secured Turkish support for another pipeline project that rivals Nabucco.

Russia’s South Stream project would eventually run from Russia to Bulgaria before delivering gas to consumers in the European Union. Russia expects an official Turkish endorsement later this year to construct part of the pipeline through Turkish waters in the Black Sea.

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Associated Press Writers Suzan Fraser in Ankara and Burhan Ozbilici in Istanbul contributed to this report.

(This version CORRECTS UPDATES with the deal being signed, details of it. corrects dateline to Istanbul, sted Ankara. ADDS photos, contributor’s line.)