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Azerbaijan sees Turkish gas deal by end-Sept

Azerbaijan said on Monday it could sign a gas transit deal with Turkey to ship exports from its Shah Deniz field to Europe by the end of September in a potential boost to the European Union's Nabucco pipeline plans.

"The first round of talks is completed and we have started the second round," Vagif Aliyev, the head of Azeri state energy firm SOCAR's investment department, told reporters.

"Signing of the gas agreement between Azerbaijan and Turkey may happen at the end of September," Aliyev said.

Azerbaijan is negotiating to sell Ankara 6 billion cubic metres (bcm) of gas per year from the second phase of the giant Shah Deniz field and to ship 10 bcm to European customers via Turkey.

Talks were resumed, after breaking during parliamentary elections in Turkey, with the visit of Turkish Prime Minister Tayyip Erdogan to Baku at the end of July.

The EU-backed Nabucco is one of three pipeline projects bidding for Azerbaijan to supply 10 bcm of gas per year to be pumped directly to Europe, bypassing Russia.

The 27-member bloc announced earlier on Monday that it had agreed to negotiate a treaty with Azerbaijan and Turkmenistan to bring natural gas from the world's fourth-largest reserves across the Caspian Sea to Europe.

But the European pipeline faces competition for Azeri gas from the Interconnector Turkey-Greece-Italy (ITGI) and the Trans Adriatic Pipeline (TAP).

Aliyev said all three consortiums had already submitted their final commercial proposals to SOCAR.

"We are going to choose the most acceptable and promising project because we are talking about gas shipments for the next 20-30 years," he said.

The Shah Deniz field is being developed by BP and Statoil as well as SOCAR and several others. It is estimated to contain 1.2 trillion cubic metres of gas.

Production began in 2006 and the second phase is expected to come onstream by 2017. Azerbaijan has been in talks with more 20 companies and consortiums looking to buy gas from Shah Deniz II.

Azerbaijan's gas output rose by 11.2 percent in 2010 year-on-year to 26.2 bcm from 23.6 bcm in 2009. The oil-rich country plans to produce 28.0-29.0 bcm of gas this year. Total gas reserves are estimated at 2.5 trillion cubic metres.

Source: Reuters

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