Baku, Ankara needed for Nabucco, U.S. says

BRUSSELS, Nov. 20 (UPI) -- Ankara and Baku should resolve issues related to the price for natural gas in order to move forward with the Nabucco gas pipeline, U.S. officials said.

Richard Morningstar, the U.S. special envoy for Eurasian energy, warned that Nabucco companies could look for alternative options if Baku and Ankara cannot resolve their issues, the Azeri Press Agency reports.

"A failure to find an agreement would lead energy companies to search for different routes," he said.

Baku has considered raising the price of the gas purchased by Ankara from the Shah Deniz gas field.

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.

Partners to the Nabucco gas pipeline for the European Union aim to diversify the regional energy sector by courting Central Asian and Middle Eastern suppliers to the project.

Morningstar told an audience at the European Policy Center in Brussels that outstanding price negotiations were moving forward, but the importance of a resolution could not be underestimated.

"We strongly encourage Turkey and Azerbaijan to agree on pricing terms because the agreement is needed to win the trust of the participating companies in the Nabucco pipeline project," he said.

Nabucco partners are eyeing Azerbaijan, Turkey and Iraq as potential suppliers for the project. Morningstar stressed that Iranian gas is not a consideration.