Azernews.Az

ANKARA – Turkey will repay by the end of March all of its $1.351 billion debt for the imported gas produced from Shahdaniz, Azerbaijan’s biggest gas field in the Caspian Sea, including over $300 million to Azerbaijan, an energy official said Thursday.

Shahmar Movsumov, Executive Director of Azerbaijan’s State Oil Fund, said Turkey has so far repaid over $700m of its debt, which had emerged due to price differences. $138m has been transferred to Azerbaijan for the gas supplied during Phase 1 of Shahdaniz development, while the rest was paid to other shareholders of the project. Azerbaijan will receive another $165m by the end of March, Movsumov said.

Under the agreement signed in 2001, the price of Azerbaijani gas sold to Turkey was $120 per 1,000 cubic meters. Though supplies to the neighboring country were expected to begin in 2004, Azerbaijani gas reached the Turkish market in July 2007 -- by the time gas prices had surged in world markets.

Turkey was importing 5 billion cubic meters of gas per year from the South Caucasus republic. Until April 2008, the country was paying $120. According to the contract concluded by Shahdaniz partners with Turkey, the price of Azerbaijani gas was to be reconsidered since then.

After intense talks between Azerbaijan’s state energy firm SOCAR and the Turkish government, the two countries signed a new gas agreement last June during President Ilham Aliyev’s visit to Istanbul. As a result of negotiations, Turkey agreed to pay an additional $1.351bn for the gas it imported between April 2008 and June 2010.