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Ankara, Baku face pricing problems
BayBak, Azerbaijan | 1643 days ago | Thursday, 20th November , 2008 , 03:59 [am] | Azerbaijan
|.||The long history of Turkey and Azerbaijan as traditional allies is barely managing to contain a new potential crisis, created by none other than the age old issue of wealth and resources. The setting for this latest threat to relations is the regionâ€™s energy fields, as the two sides haggle over access to and prices for the regionâ€™s supply of oil and gas|
The long history of Turkey and Azerbaijan as traditional allies is barely managing to contain a new potential crisis, created by none other than the age old issue of wealth and resources. The setting for this latest threat to relations is the regionâ€™s energy fields, as the two sides haggle over access to and prices for the regionâ€™s supply of oil and gas
“One nation, two states” is the motto that describes the intensity of relations between Turkey and Azerbaijan. But when it comes to the nitty-gritty Äž money Äž cold winds have been blowing between the two for some time.
A full blown crisis in relations on the energy field has only been avoided thanks to the intervention of statesmen from both sides.
There are three major problems between the two countries on the energy field. The first is about the price of the natural gas Turkey is buying from the first stage of the Azerbaijani Shah Deniz field. The gas has been transported from the Baku – Tbilisi – Erzurum Pipeline since July 2007. The agreement signed between Ankara and Baku foresaw the price of natural gas as $120 per-cubic-meter, for a period of one year. With the agreement expiring last July, negotiations began. Turkeyâ€™s offer of a price around $150 was turned down.
“Turkey buys gas from Russia and Iran. The international market price for gas is around $300. Turkey pays approximately $280 – $290. The Azerbaijani government resents the Turkish offer,” said an energy expert familiar with the talks. The fact that Russia has told the Azerbaijani government that it will buy its gas at international market prices has further increased Azerbaijan’s resentment. Another problem area involves the second stage of the Shah Deniz field. This is a newly discovered field where production has not yet started. But already consumers are after it. For the European Union, which is looking to reduce its energy dependence on Russia, Shah Deniz stage two appears to be the best supply for the Nabucco pipeline project.
The U.S. backed project aims to bring Caspian natural gas to Europe via Turkey. The Turkish government has also been negotiating with the Azerbaijani government for the allocation of a certain amount of gas that will be produced from the second stage. According to the talks in the energy cognoscenti, Turkey has asked for 8 billion cubic meters to be allocated, whereas the Azerbaijani government has been proposing four billion cubic meters only.
Although negotiations over the price for the first stage and the quantity for the second stage are done separately, the two issues are related. The message given by Azerbaijani President Ä°lham Aliyev, on a recent visit to Ankara at the beginning of the month, demonstrates the fact that unless Baku gets a satisfactory deal over the price of gas it will not be enthusiastic in closing a deal on the allocation of gas from stage two.
In his talks with President Abdullah GÃ¼l, Aliyev said some Europeans were worried that gas would be allocated to Turkey from stage two. “In private talks they are blaming Turkey. We wonâ€™t fall into this trap. For us what matters are Turkeyâ€™s priorities,” he said according to reliable sources. But then he talked about the negotiations over the price from the first stage.
“SOCARâ€™s share is only 10 percent. British Petroleum and the Norvegian Staatoil are in it too. An official from BP who recently visited me in Baku said Turkeyâ€™s offer is not acceptable. He also told me that unless there is an agreement, BP will be looking for other alternatives,” said Aliyev to GÃ¼l and to the delegations present. Aliyev has also added that Russia has proposed to buy Azerbaijani gas at international market prices, in the Azerbaijani Äž Russian frontier. This was perceived as a clear message to Turkey that it should be increasing its price offer in the face of rising competition from other buyers.
BOTAÅž wants arbitration
Finally, the third problem area involves the Baku Äž Tbilisi Äž Ceyhan, or BTC, oil pipeline. The state owned Turkish pipeline company, BOTAÅž, has asked for an increase to the 35 cents-per-barrel fee it charges to transfer oil, a request turned down by the BTC consortium. As a result, BOTAÅž has threatened to take the issue to international arbitration.
This issue was also taken up during the GÃ¼l Äž Aliyev meeting. After the tete-a-tete meeting, GÃ¼l told the delegations that the two presidents had decided that it would be highly inappropriate for the two countries, which are enjoying such good relations, to go to international arbitration and that they had instructed their respective energy ministers to find a solution to the problem.hurriyet, Voice of a Nation