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Socar not to cede some of its TANAP stake to Turkey

11 April 2012 14:20 (UTC+04:00)

Azerbaijan does not intend to cede its stake in a pipeline project to transport Caspian natural gas across Turkey to Europe, according to the head of the Azerbaijani energy firm Socar. He was commenting on Turkey`s recent statements on the possibility of increasing its stake in the project.

``The issue of the distribution of equity between the Azerbaijani and Turkish sides in the Trans-Anatolian Pipeline (TANAP) has already been solved and is not expected to be reviewed,`` Rovnag Abdullayev told reporters last week.

Socar has 80 percent stake in the project, while 20 percent is owned by the Turkish pipeline monopoly Botas.

Abdullayev said part of Azerbaijan`s 80 percent share could be transferred to the gas companies operating in Azerbaijan. The issue of distribution of shares, he said, will be considered after Azerbaijan and Turkey sign an intergovernmental agreement on building the TANAP pipeline.

The Socar president said major energy firms producing gas in Azerbaijan, including BP, Statoil and Total, have already expressed interest in buying a stake in the TANAP project. A decision on the distribution of shares will be made depending mainly on the volume of gas transported by the companies through this pipeline, Abdullayev said.

He added that some foreign countries -- including Ukraine -- are also seeking participating interest in the project.

Abdullayev said that though some of Azerbaijan`s stake will be distributed among other project participants, Socar intends to keep control of the gas pipeline.

Turkey and Azerbaijan signed a memorandum of understanding in December on building the 2,000-kilometer (1,240 mile) TANAP pipeline from eastern Turkey to its European Union border. The link may carry 10 billion cubic meters of gas a year to the EU from Azerbaijan`s Shah Deniz field in the Caspian Sea, while Turkey will buy 6 billion cubic meters.

Parties involved in the pipeline project intend to resolve all outstanding issues in 2012 and to start construction work immediately in order to complete it by the end of 2017.

A further agreement on TANAP was delayed from late March as Turkish and Azerbaijani companies work out their stakes. Turkey wants as much as 50 percent, the non-state Azerbaijani news service Turan reported, citing unidentified Turkish officials.

Total may join in
Total SA, Europe`s third-largest energy company, may join the TANAP project as the European Union seeks to cut dependence on Russian fuel.

Total was invited to participate in the project, as were BP Plc and Statoil ASA, its partners in Shah Deniz gas project. It will take the Shah Deniz partners ``several months`` to decide on a route, said Christian Giudicelli, general manager of Total E&P Azerbaijan.

``We are evaluating the TANAP proposal very seriously,`` Giudicelli said in an interview with Bloomberg.

Nabucco, a 7.9 billion euro ($10.5 billion) pipeline project backed by the EU to import Caspian fuel, will consider whether to link up with TANAP as it prepares to make a final investment decision next year. The decision has been repeatedly delayed as Nabucco vies with competing links for Azerbaijani and other Caspian region gas resources.

Absheron gas
The capacity will be increased to 24 billion cubic meters a year from 8.8 billion cubic meters by adding compressor stations and building a link parallel to the existing one, Giudicelli said. The expansion will be completed before the planned second phase of Shah Deniz starts in 2017, he said.

Total is continuing exploration of the Absheron development with Socar and France`s GDF Suez SA after reporting a gas discovery there in September.

``Our initial estimate of Absheron`s reserves is several trillion cubic feet of gas,`` Giudicelli said. ``The range of the evaluation is still large because we have only one well at the moment.``

Socar has said Absheron may contain 300 billion cubic meters of gas and 45 million tons of condensate. Total and Socar each hold 40 percent, and GDF Suez has 20 percent.

Production at Absheron may start ``somewhere in the 2020s``, Giudicelli said. The partners will invest ``several billions of dollars`` to develop the field.

Total, which has been in Azerbaijan for the past 15 years, is looking to expand its presence, Giudicelli said. ``We are interested in growing in Azerbaijan,`` he said. ``We can offer our experience and knowledge in developing other prospective structures in Azerbaijan.``

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