Turkey, Azerbaijan reach gas agreement

Azerbaijan and Turkey have reached an agreement on the value of Azerbaijani gas and its transit through Turkish territory, reports Trend, citing a senior representative at the State Oil Company of the Azerbaijan Republic (SOCAR).

Azerbaijani gas will be exported to Turkey during the first and the second stages of the Azerbaijani gas field Shah Deniz development.

"Yet, there is only an agreement on principles and specific numbers. The agreements are in the interests of Turkey and Azerbaijan, as well as European gas consumers. We have agreed with our Turkish counterparts on the best figures, on gas sales and transit," the source added.

The source declined to name the figures.

Azerbaijani gas is exported to Turkey at a price of $120 per 1,000 cubic meters. However, the cost of gas for consumers on Turkey's domestic market is more than $300 per 1,000 cubic meters (data from the official website of the Turkish company Botas).

Turkey has repeatedly stated its readiness to pay the difference that arises in the case of an agreement between the parties on a new gas price in the first stage. Gas sales to Turkey during the second phase of Shah Deniz development will be carried out according to a new price.

Under the current contract, Turkey will receive 6.6 billion cubic meters of gas from Shah Deniz in the first stage of the field's development. Shah Deniz reserves are estimated at 1.2 trillion cubic meters.

The contract to develop the offshore Shah Deniz field was signed on June 4, 1996. Participants are: BP (operator) - 25.5%, Statoil Hydro - 25.5%, NICO - 10%, Total - 10%, LukAgip - 10%, TPAO - 9%, and SOCAR - 10%.