Socar offers TANAP stake to Shah Deniz partners

By bne IntelliNews September 7, 2012

Clare Nuttall in Almaty -

Azerbaijan's state oil company Socar has offered up to a 29% stake in the planned Trans-Anatolia gas pipeline (TANAP) to its partners in the Shah Deniz oilfield, BP, Statoil and Total. However, Socar appears determined to maintain a controlling stake, perhaps in bid to block Turkish ambition to add Turkmen gas into the mix.

Speaking to journalists in Baku on September 6, Socar President Rovang Abdullayev said that the international energy majors are "ready" to invest in the pipeline project. "SOCAR will leave for itself 51% of the share capital, 29% will be sold to other companies, thus the controlling stake will remain with Socar," Abdullayev said. Currently, Socar owns 80% of TANAP, with Turkish partners Botas and TRAO, holding the remaining 20%. Ankara has illustrated recently its hopes to expand its influence over what has become an extremely strategic project, but Socar's proposed deal appears designed to prevent that happening.

BP, Statoil and Total are working alongside Socar at the Caspian offshore Shah Deniz field. When production begins at the second stage development of the field, the gas will be exported via TANAP. The pipeline will run from Shah Deniz across Turkey, from where a second pipeline will carry gas from the field to Europe. Thus it is on the way to establishing itself as a lynchpin in the "southern corridor," over which Russia and the EU have been tussling for some years.

The Shah Deniz II consortium, which is led by BP and Statoil, is due to make the final choice between two potential projects to take the gas from the Turkish border and into Europe in mid 2013. Nabucco West would run to Austria and the Trans-Adriatic Pipeline (TAP) to Italy.

Abdullayev also went on to confirm that construction of TANAP, which has an estimated price tag of $7bn, is due to begin in 2013. The pipeline will initially have capacity of 16bn cubic metres (cm), and may later be increased to 32 bcm or even 60 bcm. Turkey, which will take 6bn cm from the first stage capacity for itself before sending the remainder onwards, said earlier this week that it is now working on a potential deal to fill the potential expanded capacity with gas from Turkmenistan, assuming that the gas can be carried across the Caspian Sea.

However, Abdullayev appeared less than enthusiastic on the prospect of opening an expanded TANAP to Turkmen exports. When asked about the potential deal with Turkmenistan, he responded: "TANAP is a project between Azerbaijan and Turkey. This project will deliver Azeri gas to Turkey and Europe," APA-Economics reported.

Relations between Azerbaijan and Turkmenistan have deteriorated recently, after Baku accused Ashgabat of starting seismic exploration work in disputed areas of the Caspian. The five littoral states - Russia, Kazakhstan and Iran being the others - have been bickering over territorial rights for years. The lack of agreement has helped stifle development of Central Asia's huge hydrocarbon reserves.

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