The Russian Oil and Gas Report (Russia)
March 26, 2010 Friday
AZERBAIJAN-TURKEY QUARREL PLACES NABUCCO PROJECT AT RISK
Turkey and Azerbaijan have suspended talks on natural gas supplies
from Azerbaijan to Europe. Reuters notes that these negotiations, on
which the Nabucco pipeline’s fate depends, have been suspended on
account of Turkey’s efforts to normalize relations with Armenia.
"Our talks with Azerbaijan have been on hold for four to six weeks,
and the main problem is political," said Turkish Energy Minister Taner
Yildiz. He also noted that it remains unclear whether Azerbaijan has
accepted Turkey’s offer to charge less than market rates for gas
transit to Europe. Neither have the negotiators made any decisions
regarding second-phase development at the Shah Deniz gas field,
scheduled for 2014-16.
The differences between Turkey and Azerbaijan work to Russia’s
advantage, since they undermine the Nabucco project’s positions in the
Caspian region. President Ilham Aliyev of Azerbaijan said in October
2009 that Turkey had led the gas talks into a dead end; he also
threatened to sell his country’s gas to Russia and Iran. Azerbaijan
may also join the project working on the gas pipeline from
Turkmenistan, via Uzbekistan and Kazakhstan, to China – whose economy
needs more and more energy resources.
In October 2009, Gazprom signed a contract to buy up to 500 billion
cubic meters of gas from Azerbaijan in 2010. In late December, the
State Oil Company of the Azerbaijan Republic (SOCAR) announced that
this export figure would be doubled. The Gazprom -SOCAR contracts
don’t set an upper limit for gas exports from Azerbaijan to Russia.
Gazprom said in January 2010 that it intends to buy as much gas as
Azerbaijan wants to sell.
Gazprom also wants to buy gas from the Shah Deniz offshore field, with
reserves estimated at 1.3 trillion cubic meters. The European Union is
interested in the same field as a resource base for Nabucco.
The Nabucco project, competing with the Russia-backed South Stream gas
pipeline, is managed by a consortium of European companies including
OMV (Austria), Bulgargaz (Bulgaria), Botas (Turkey), RWE (Germany),
MOL (Hungary), and Transgaz (Romania). In contrast to South Stream,
Nabucco will bypass Russia.
Nabucco is intended to be an extension of the Baku-Tbilisi-Erzurum gas
pipeline. From there, it will run via Turkey to the Balkan states and
then to Austria. Nabucco is scheduled to start operating in 2014. Yet
it still remains unclear where the gas to fill this pipeline will come
from.
Source: Lenta.ru, March 23, 2010; RBC.ru, March 23, 2010
Translated by InterContact