US Confirms Azeri-Turkish Impasse On Gas Transit Talks
US Deputy Assistant Secretary for Eurasian Affairs, Matthew Bryza, told the TUROGE conference in Ankara on 13 March that Azeri-Turkish negotiations over the conclusion of a transit agreement, which would open the way for the export of gas from Azerbaijan to Europe, appeared to be deadlocked. He said that he hoped the two sides would be able to conclude an agreement by June of this year so that the Nabucco gas pipeline partners would be able to sign a transit protocol with Azerbaijan. However, Turkey is understood to be calling for 7-8 bcm/year of gas from the second phase of the Shah Deniz gas field development, for which supply capacity is not expected to exceed 16 bcm/y. Both the proposed Interconnector Turkey-Greece-Italy (ITGI) and Nabucco pipelines would need a minimum export commitment of around 8 bcm/y, potentially leaving little for Azerbaijan and Georgia.
Azerbaijan is unwilling to offer Turkey a discount on the gas to be transited via its soil to Europe, whether via Nabucco, ITGI or the Trans Adriatic Pipeline (TAP). Azeri sources have confirmed that Baku is firm about its decision to not sell more than 3.5 bcm/y of Shah Deniz 2 capacity to Turkey. Nabucco CEO Reinhard Mitschek told the conference that “the Nabucco project as it stands offers Turkey sufficient benefits that it will not continue with demands for offtake rights of 15% or whatever. We need to convince all the projects’ partners that a packet solution is best for the future of the project.” He added that the consortium would be willing to delay its investment decision if the timetable for the development of Shah Deniz 2 is pushed back by the Azerbaijan International Operating Company (AIOC) partners. Otherwise, he said, “Nabucco could become operational by 2014.”
Other recent developments in the Caspian and Black Sea regions include:
Gazprom’s Deputy Executive Director Alexander Medvedev told Vesti TV on 16 March that the Russian firm had turned down a request from the Nabucco consortium to export Central Asian gas to Europe via the proposed 31 bcm/y capacity pipeline. He said that Russia has decided to “stick to South Stream,” adding that Moscow could not divide its potential export commitment on two projects that are partially targeting the same downstream markets. Russia and Hungary recently agreed on the joint construction of a gas storage facility in Hungary for South Stream, capable of holding up to 50% of Hungary’s annual gas consumption of approximately 12 bcm/y.
Edison CEO Umberto Quadrino told Dow Jones on 13 March that the Italian company was ready to assist Bulgaria to diversify its gas imports by means of supply through the ITGI project (MEES, 9 March). “We are ready to examine this possibility as soon as we have availability of gas,” Mr Quadrino said. Edison is one of a number of companies looking to secure gas supplies from Azerbaijan. Bulgaria has been negotiating with Azerbaijan independently for the supply of up to 1 bcm/y.
Copyright MEES 2009.
