Turkmenistan close to gas delivery deal with Turkey

Mar 12, 1999 01:00 AM

Turkmenistan is close to reaching a deal on gas deliveries to Turkey, a key prerequisite for building a planned pipeline, oil and gas minister Rejepbay Arazov said. The governments are busy negotiating the deal, and should close it "very soon," Arazov said.
With European gas prices low, however, the plan faces stiff competition from other planned projects, as the region's governments scramble for shares of the coveted Turkish market.

The proposed Turkmen pipeline would run through the Caspian sea, as well as neighbouring Azerbaijan and Georgia. If it is built, the poor Central Asian nation could increase its export revenues many times over by supplying Turkey as much as 16 bn cm of natural gas annually.

In February, the government awarded appointed PSG, a consortium of Bechtel Enterprises and General Electric's GE Enron to build the pipeline.
However, to get funding for the $ 2.0 bn to $ 2.5 bn project, the government needs to secure fixed gas sales.
And construction is unlikely to start until the five nations on the Caspian Sea agree on the division of the sea and its rich reserves. Turkmenistan must also solve a territorial dispute with Azerbaijan.

Turkey's Energy Minister Ziya Aktas has reportedly said the volume of the pipeline could ultimately go as high as 40 bn cm a year, with half of it shipped to third countries.
Arazov said he didn't think the deliveries could reach that level.

At the moment, Turkmenistan's huge gas reserves remain largely untapped, with only small volumes exported to Iran and to Ukraine, through Russia.
Meanwhile, Russia's Gazprom, is racing to secure the construction of a rival plan, a pipeline from southern Russia under the Black Sea to Turkey.
The U.S. government has expressed its political backing for Turkmenistan's trans-Caspian project, given that it circumvents Iran.
Iran is already building two pipelines to Turkey.
Moreover, such a pipeline would undercut Russia's traditional dominance in the region's energy market, another goal that fits U.S. policy objectives.

Source: AP
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