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EC and Azerbaijan Discuss Boosting EU Gas Sales Through BTE Pipeline 10 avril 2006

Posted by Acturca in Caucasus / Caucase, Energy / Energie, EU / UE.
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World Markets Analysis, April 10, 2006

Sally Bogle

Azerbaijan wants to boost Caspian Sea gas exports to the European Union (EU) once the planned Baku-Tbilisi-Erzurum (BTE) gas pipeline comes onstream at end-2006. Azerbaijan has signed a gas supply contract with Georgia. The two discussed increasing BTE shipments once Azerbaijan's giant offshore Shah-Deniz gas field comes online. Following a meeting with the European Commission (EC), Azeri Foreign Minister Elmar Mamedyarov said that his country aimed to increase capacity on the 16-Bcm/year BTE pipeline, expected to be operational from end-2006, to supply rising European demand. 'This meets our interests and will allow us to buy less gas from Russia and Iran or other countries, especially now that prices are growing. We will be self-sufficient in terms of gas supplies,' Mamedyarov said. Azerbaijan is also negotiating with Greece on extending Caspian Sea gas supplies to the Balkans, northern Italy or central Europe. 'We are trying to put all these components together in order to take our gas to the international market next year or in 2008,' Mamedyarov added. Fokion Fotiadis, EC Deputy Director General for External Relations, said that the EU was interested in expanding relations with Azerbaijan and more closely integrating Azeri oil company SOCAR into the European market.

 Significance: Azerbaijan, keen to ship its gas to Europe without passing through Russian territory, is taking advantage of rising concern in the EU over Russian reliability to press home its case for boosting gas through the BTE pipeline. For now, the link will end at Erzurum in Turkey, with shipments further westwards dependent on investment in Turkish gas pipeline expansion. With Turkey under pressure from Russia to export excess Russian gas through the Blue Stream pipeline westwards and south to Israel, the Anatolian country could find itself overstretched. However, Turkey recently said that it was on track to start shipments through a new link with Greece by end-2006. Greece and Italy are pressing ahead with an onward link into Western Europe. Prospects for an expanded BTE pipeline look promising given the completion of the Baku-Tbilisi-Ceyhan oil pipeline, which is expected to ship its first tanker load of Azeri oil out of Ceyhan this summer.

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