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No pricing terms on Azeri gas for Turkey

BAKU, Azerbaijan, Aug. 11 (UPI) -- Baku and Ankara failed to reach agreements on the pricing terms of natural gas deliveries during the latest round of negotiations, officials said.

Baku is considering raising the price of the gas purchased by Ankara from the Shah Deniz gas field. Ankara purchases around 211 billion cubic feet of natural gas each year currently at a rate of $120 per 1,000 cubic meters.

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The offshore Shah Deniz field has the capacity to produce 318 billion feet of gas from its initial phase, with another 706 billion cubic feet expected from Phase 2 by 2012.

Rovnag Abdullayev, the president of the State Oil Co. of Azerbaijan Republic, said he walked away from a Saturday meeting with Turkish Energy Minister Taner Yildiz without a pricing agreement, the Azerbaijan Business Center reports.

For his part, Vagif Aliyev, an investment director at SOCAR, said securing a pricing agreement with Turkish pipeline operator BOTAS was a top priority.

"Azerbaijan wants to receive maximum price for its gas that would conform to existing prices for gas at the Turkish market," he said.

Aliyev said the average price for natural gas on the Turkish market, based on a formula linked to crude oil prices, was around $320 per 1,000 cubic meters in the early part of the year when energy prices plummeted.

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"Now it will increase taking into account oil prices at the level of $70 per barrel," he warned.

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