Turkey expects to secure oil for new pipeline

ANKARA (Reuters) - Turkey sees Russian, Kazakh and Turkmen oil filling most of a planned $4 billion pipeline from its Black Sea coast to the Mediterranean port at Ceyhan, Energy Minister Taner Yildiz said.

Turkey also expects to sign an agreement with the Azeri government on procuring extra natural gas, Yildiz said. A disagreement about pricing and diplomatic wrangling over Armenia has held up the deal.

Calik Group of Turkey and Eni, Italy’s biggest energy company, are joint partners in the Trans-Anatolian Pipeline that aims to deliver Caspian fuel from the northern city of Samsun to Ceyhan, terminus for two other oil pipelines, while bypassing Istanbul’s congested Bosphorus channel.

Russian companies may take a stake in the project, pipeline operator Transneft said last week. State-run Rosneft, Russia’s biggest oil producer, agreed in October to supply the pipeline with its own crude.

“After the Russian initiatives to secure oil for the pipeline, we expect fuel to be procured from Russia, Kazakhstan and Turkmenistan,” Yildiz told Reuters in an interview late on Tuesday.

“There are many reasons to back this pipeline politically,” he said. “It has strategic importance and will contribute to Turkey becoming a petroleum and natural gas corridor.”

The 550-km pipeline is expected to have a capacity of 1.5 million barrels per day.


Yildiz said the cancellation of a tender won by a Russian-led group to build Turkey’s first nuclear power station will not affect planned energy projects.

A top court in November canceled the results of last year’s tender, when a consortium made up of Russia’s Inter RAO and Atomstroiexport and Turkey’s Park Teknik was the only bidder, because the power prices it proposed far exceeded current levels. Turkey is planning another tender in 2010.

No technical obstacles were preventing a deal to procure an additional 8 billion cubic meters (bcm) of Azeri gas and Turkey expects the continuing negotiations to yield an agreement, Yildiz said, without giving a timeline for finalizing the deal.

Talks between the two sides have lagged over the price Azerbaijan wants to charge for the extra gas, some of which will be used by Turkey while the rest will be shipped on to Europe.

Turkey now buys 6 bcm of gas annually from Azerbaijan’s Shakh Deniz basin at a discount that is about half of what it pays Russia and Iran, its main suppliers of the fuel.

Azeri Foreign Minister Elmar Mahmadyarov is scheduled to visit Ankara on Friday for bilateral talks that are expected to include energy.

“From a technical perspective, I don’t see any obstacle blocking the gas talks with Azerbaijan. I can’t say that we have reached the final point on the transport rates, but I don’t see any serious problems,” Yildiz said.

“I believe we’ll reach an understanding.”

A deal has also been held up amid Azeri objections to Turkey’s U.S.-backed efforts to re-open diplomatic ties with neighboring Armenia.

Turkey ceased diplomatic relations with Armenia when the former Soviet Republic took control of the Nagorno-Karabakh enclave following a war with Azerbaijan in the early 1990s. Turks and Azeris share close linguistic and religious ties.

“We’ve reached agreements with many countries, our Azeri brothers won’t be exceptions,” Yildiz said. “I don’t see a serious problem in the extra gas we’ve requested.”

Writing by Ayla Jean Yackley, editing by Anthony Barker