Azernews.Az

BAKU – Crucial decisions are expected this year on developing Azerbaijan’s biggest gas field Shahdaniz and the Southern Corridor project that envisions gas exports to Europe, a BP official has said.

Al Cook, BP Azerbaijan Vice President for Shahdaniz Full Field Development, said in Washington on Wednesday that first, an agreement will be signed on selling Azerbaijani gas to major European consumers by the end of 2011, which will be followed by the signing of contracts on the transit of fuel through the Southern Corridor of pipelines. Afterwards, agreements will be inked on allocating $20 billion to finance the development of the Shahdaniz field and build the required pipelines, Cook said.

The BP Azerbaijan official said this year will also see the signing of an Azerbaijani-Turkish agreement on delivering the South Caucasus republic’s gas to European markets and on exporting gas to Turkey.

Cook said BP executives have recently held separate meetings with both Azerbaijani President Ilham Aliyev and Turkish Energy Minister Taner Yildiz, and both of them pledged to do everything possible to implement the Southern Corridor project.

"We can say that there have always been fraternal relations between Turkey and Azerbaijan. Simply, differences emerged during diplomatic talks on reopening the Turkish-Armenian border. But after Turkey and Azerbaijan signed an agreement on gas sales last June, the relationship rose to a high level again. We can say that there are very constructive relations between President Aliyev and Turkish Prime Minister [Recep Tayyip] Erdogan, and at a lower level – between Energy Minister Yildiz and Azerbaijani Minister of Industry [and Energy] Natig Aliyev and head of the State Oil Company Rovnag Abdullayev."

Cook said both the close relations between Baku and Ankara and other factors are creating favorable conditions for a successful implementation of the South Corridor project.

He said the project is both commercially viable and politically suitable considering that on one hand, it will reduce Europe’s reliance on Russian gas and on the other, it will allow to deliver gas from the resource-rich Caspian region to European countries through Georgia and Turkey.

Cook declined to comment on the recent WikiLeaks report that claimed that President Aliyev had accused BP of stealing billions of dollars of oil from his country. He only said that there could be "ups and downs" in the relations of companies with countries they have long operated in, adding that BP has been doing tremendously important work for Azerbaijan and the country’s leaders are well aware of that.

On January 13, European Commission President Jose Manuel Barroso co-signed with President Aliyev a declaration in Baku that commits the Caspian country to supply Europe with "substantial volumes of gas" to realize the Southern Corridor project.

The primary source for the project is gas to be produced during Phase 2 of developing the Shahdaniz field. Cook said that after the project is launched, hopes are also bound with supplies from Turkmenistan and Iraq.

Currently, several pipeline projects are competing to create the Southern Corridor. The EU has thrown its weight behind Nabucco, a 3,300-kilometer pipeline proposed by a consortium of firms led by Germany's RWE that could pump up to 31 billion cubic meters of gas a year from Baku all the way to Austria.

The EU has recently said in a statement that Azerbaijan will decide in the next months which project would get the award for Phase 2 of the Shahdaniz development. The bloc hopes to have a commitment by March, the month a 200 million euro support package the EU has promised Nabucco expires if there's no investment decision. The EU's package would only cover a fraction of the pipeline's estimated 7.9 billion euro cost.

In addition to Nabucco, there are a number of smaller pipeline projects. ITGI - backed by Italy's Edison, Greek gas company Depa and Turkey's Botas - would take gas from Turkey's border to southern Italy, while the Trans Adriatic Pipeline - proposed by Switzerland's EGL, Norway's Statoil and German E.ON AG - plans to go from Greece, across Albania and the Adriatic Sea to Italy.