ECONOMIC INTELLIGENCE WEEKLY

Created: 1/15/2000

OCR scan of the original document, errors are possible

Economic Intelligence Weekly

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Azerbaijan: Examining Alternatiyes to TCP

senior Azerbaijani energy official last week told [he will proposeew

pipeline to export gas to Turkeyhich could set back the US-suppoited trans-Caspian gas pipelinealeh Aleskerov, Director of Foreign Investment for the Azerbaijani energy firm Socar, said that companies developing the newly discovered Shah Deniz gasfield are discussing gas sales to Iran, which would allow Iran to increase planned gas exports to Turkey.

Aleskerov claimed preliminary test results show that Shah Deniz could contain as muchrillion cubic meters of gas.

Western oil industry estimates put Shah Deniz reservesoreillion cubic meters of gas, still enough to support an export project p

President Aliyev has given no Indication that he has vvUhdrttwn his support of the TCP, but Aleskerovivotal role In negotiating every important energy project involving Azerbaijan.

Aleskerov said the companies developing the Shah Deniz gasfield are considering an Iranian export route because that would be the quickest way to move gas to Turkey. Aleskerov told|

^ran is willing to buy moreillion cubic meters per year (bem/y) of Azerbaijani gas for reei port to Turkey and for domestic use in northern Iran.

Iran's northern pipeline system bas been expanded sufficiently to transport Azerbaijani gas to Turkey and the newly completed pipeline from Tabriz to Turkey has enough excess capacity to deliver morecrn/y.

referenceipeline from Azerbaijan to Turkey reflects frustration with Ashgabat over the terms offered Baku in the TCP proposal. Turkmenistan and Azerbaijan are far apart on the amount of Azerbaijan's gas that the TCP would accommodate.

Aleskerov also dismissed the Host Government Agreement (HGA) proposed by the PSG-Sheli consortium charged with implerncnting the TCPmust be ratified for the TCP toit burdeos Azerbaijan with obligations while offering no benefits.

Aleskerov claims Ihe proposal obligates Azerbaijan to provide whatever equipment is required by PSG-Shell, even though he had told PSG-Shell lhat no Azerbaijani Dipe-laying barges would be available because of prior commitments.

Aleskerov may calculate that movementas deal between Azerbaijan and Turkey might spur Turkmenistan to offer Baku better terms and could induce PSG-Shctl to alter the proposed HGA to meet Baku's requirements. If Baku proceeds with its own pipeline project, Turkmenistan's only alternative will be to export gas through Iran.

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