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Azerbaijan and Turkey to Start Gas Pipeline

Azerbaijan and Turkey plan to start work this year on a gas pipeline that would form the first leg of a new supply route that Europe hopes will reduce its dependence on Russian energy.

The ambitious $7bn pipeline across the length of Turkey will be finished by 2017, said Natiq Aliyev, Energy Minister of Azerbaijan.

At Turkey's western frontier it will connect with one or both of the rival pipelines that European consortia are vying to build to carry gas from BP's giant field in Azerbaijani waters of the Caspian Sea.

Signalling Azerbaijani readiness to assist European efforts to develop alternative suppliers to Russia's Gazprom, Mr Aliyev said: "For European energy security, we are becoming a very important bridge."

The pledge to press ahead with the new pipeline appears to counter concerns from European investors that the development of the supply route through Turkey might lag the construction of the onward pipelines into Europe.

Two groups – the Trans-Adriatic Pipeline through Greece to Italy, backed by Germany's EON, Norway's Statoil and EGL of Switzerland, and the Nabucco West proposals for a line to Austria from Germany's RWE , other European energy groups and eastern European governments – are competing for the backing of the gas field's owners.

The new pipeline through Turkey – known as the Transanatolian Pipeline, or TANAP – will initially have capacity for 16bn cubic metres of Azerbaijani gas annually, Mr Aliyev said. That would rise to 31bcm by 2020 with possible expansions to carry gas from Turkmenistan and Kazakhstan.

Mr Aliyev also suggested that the second phase of the Shah Deniz project in the Caspian might yield as much as 20-25bcm a year, far more than the 16bcm forecast by BP, its operator.

The minister said the state energy companies of Azerbaijan and Turkey, which will jointly build TANAP, were open for talks with BP on selling it a stake in a venture that will be a critical element of its investment plans at Shah Deniz.

Source: Financial Times

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