Turkey and Greece sign pipeline deal to carry Caspian gas

Apr 03, 2002 02:00 AM

Turkish and Greek ministers have signed an agreement that calls for the construction of a natural gas pipeline that would extend from Turkey's gas distribution network to northern Greece. Turkish Energy Minister Zeki Cakan and Greek Development Minister Akis Tzochatzopolous signed the agreement in Ankara on March 28.
Basic and detailed engineering studies are to be carried out for a pipeline that will run some 285 km from the Turkish city of Bursa across the Marmara Sea and into northern Greece to the town of Ipsala. The cost of the project is estimated at $ 300 mm and financial assistance is expected from the European Union. Each country will undertake to construct the section of the pipeline crossing its respective territory.

Greece and Turkey have been discussing the scheme, which is viewed as a major development in the political rapprochement of the two traditional rivals, for several years. The idea of a natural gas pipeline that would connect South-eastern Europe with gas from the Middle East has also been making the rounds for some time. In March, during an official visit to Athens by Iranian President Mohammad Khatami, Greek and Iranian officials signed an agreement calling for the eventual sale of Iranian natural gas to Greece.
The politics of this pipeline project go beyond the improvement in Greek-Turkish relations. News of the agreement has sparked numerous reports that the pipeline will be used to transport Iranian gas to Greece, but it seems likely that Caspian gas producers, particularly the BP-led Shah-Deniz consortium, will vie for a share of the pipeline. Turkey will be importing Shah-Deniz gas from Azerbaijan by 2005, and BP and its consortium partner Statoil have let it be known that they foresee a major natural gas conveyor stretching from the Caspian to southern Europe and carrying billions of cm of gas annually from Azerbaijan.

Turkey began to receive shipments of Iranian natural gas late last year after several years of delays. These shipments will eventually reach 10 bn cmpy under the present agreement. The delays were attributed to US efforts to persuade Turkey to ignore an agreement made between Ankara and Tehran in 1996 to purchase billions of cm. Greece and Turkey both may come under US pressure to choose Caspian gas instead (if the plan really is to ship Iranian gas by this route).
The Shah-Deniz gas pipeline will be built in conjunction with the Baku-Tbilisi-Ceyhan (BTC) crude pipeline, which appears to have solid US backing, while Washington is determined to put pressure on Tehran by blocking any development in its hydrocarbon industry. Furthermore, the United States is keen to boost its influence in the Caspian and Central Asia by assisting those countries in improving their economies through crude and gas exports.

Although the Shell-backed Trans-Caspian Gas Pipeline (TCGP) project appears to be shelved for good, under the right conditions, interest in it might be revived. The combination of Azerbaijani and Turkmen gas being shipped to Europe via apipeline through Turkey would suit a number of Western investors.

Source: NewsBase
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