Total exec: Shah Deniz transit talks with Turkey ‘difficult’
Transit of natural gas from phase two of Azerbaijan's Shah Deniz
field could be re-routed via Russia if already-difficult talks with
Turkey fail, French oil major Total SA's senior vice-president for
Central Asia, Arnaud Breuillac, told Dow Jones Newswires in an
exclusive interview.
Current discussions with the Turkish government regarding the transit of natural gas from the second phase of Shah Deniz are "quite difficult", Breuillac said, with disagreements over price also an obstacle to progress. Turkey is demanding prices as low as those negotiated during the first phase even though market conditions have changed and prices are higher now.
Total holds a 10% interest in Shah Deniz, which is developed by a consortium including operator BP PLC Norway's Statoil, Russia's OAO Lukoil, Turkey's TPAO and the Azerbaijani state oil company SOCAR.
Turkey buys 6 billion cubic meters of natural gas a year from the first phase Shah Deniz field, which produces a peak of 8 billion cubic meters of gas annually. The upper-limit of the gas price is set at $120 per 1,000 cubic meters, which is lower than international prices.
Turkey's position as a final destination for second phase Shah Deniz gas was also preventing an agreement. "(Turkey) doesn't need all the gas that will be produced during the second phase ... A part should transit (the country)," Breuillac said, but Turkey is reluctant.
"The Turks must understand that if they don't accept that part of the gas transits (through Turkey), it won't then transit through their territory but will go to Russia or even to Iran instead," Breuillac said.
SOCAR recently signed a deal with Russia's state-controlled Gazprom OAO for gas from Shah Deniz which would see gas pipelines to Russia upgraded, Breuillac noted.
He stressed there wouldn't "in any case" be a repeat of the commercial exclusivity agreed with Turkey for Shah Deniz's first phase.
Despite the difficulties, the start of the second phase of Shah Deniz remains on track for 2016, Breuillac said.
Breuillac, who met with national oil group SOCAR's president Rovnag Abdullayev in Azerbaijan last week, said that Shah Deniz's second phase is expected to produce twice as much as the first phase, with a total estimated production of around 16 billion cubic meters of natural gas per year. *
Current discussions with the Turkish government regarding the transit of natural gas from the second phase of Shah Deniz are "quite difficult", Breuillac said, with disagreements over price also an obstacle to progress. Turkey is demanding prices as low as those negotiated during the first phase even though market conditions have changed and prices are higher now.
Total holds a 10% interest in Shah Deniz, which is developed by a consortium including operator BP PLC Norway's Statoil, Russia's OAO Lukoil, Turkey's TPAO and the Azerbaijani state oil company SOCAR.
Turkey buys 6 billion cubic meters of natural gas a year from the first phase Shah Deniz field, which produces a peak of 8 billion cubic meters of gas annually. The upper-limit of the gas price is set at $120 per 1,000 cubic meters, which is lower than international prices.
Turkey's position as a final destination for second phase Shah Deniz gas was also preventing an agreement. "(Turkey) doesn't need all the gas that will be produced during the second phase ... A part should transit (the country)," Breuillac said, but Turkey is reluctant.
"The Turks must understand that if they don't accept that part of the gas transits (through Turkey), it won't then transit through their territory but will go to Russia or even to Iran instead," Breuillac said.
SOCAR recently signed a deal with Russia's state-controlled Gazprom OAO for gas from Shah Deniz which would see gas pipelines to Russia upgraded, Breuillac noted.
He stressed there wouldn't "in any case" be a repeat of the commercial exclusivity agreed with Turkey for Shah Deniz's first phase.
Despite the difficulties, the start of the second phase of Shah Deniz remains on track for 2016, Breuillac said.
Breuillac, who met with national oil group SOCAR's president Rovnag Abdullayev in Azerbaijan last week, said that Shah Deniz's second phase is expected to produce twice as much as the first phase, with a total estimated production of around 16 billion cubic meters of natural gas per year. *
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