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Shah Deniz lacking production agreements

May 14, 2009 at 9:50 AM   |   Comments

BAKU, Azerbaijan, May 14 (UPI) -- Production at Phase 2 of the offshore Shah Deniz gas field in the Caspian Sea requires purchase and transit agreements, Azeri officials said.

Azerbaijan President Ilham Aliyev met with Turkish Prime Minister Recep Tayyip Erdogan in the Azeri capital, Baku, to discuss bilateral energy measures.

Officials with StatoilHydro-Azerbaijan, an owner at Shah Deniz, blamed Turkey in April for holding up development of Phase 2 of Shah Deniz.

"The time frame of the development is not discussed at the moment," said Olav Skalmeras, the vice president of StatoilHydro-Azerbaijan. "It can be discussed only after the issue of gas transit via Turkey is solved."

Aliyev said during the meeting with Erdogan that his country needs gas purchase agreements and transit provisions in order to launch Phase 2, the Trend Capital news agency reports.

Gas volumes from Phase 1 of Shah Deniz are sold to customers in Azerbaijan, Georgia and Turkey. Aliyev said his country would remain present in the European energy market.

"Azerbaijan makes its contribution to energy security of Europe and will continue to do so," he said.

He added, however, that a diverse customer base was a policy that "meets our interests."

Europe is looking at Azerbaijan as a potential supplier to the planned Nabucco gas pipeline. Turkey would host a major leg of that project.

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