C. Boyden Gray, the U.S. special envoy for Eurasian energy, said an agreement could be signed in 2009 whereby Turkey hosts a gas transit route to bring natural resources to Europe, Trend Capital News reported.

Though Gray did not specifically mention the Nabucco gas pipeline, he had hinted the Western-backed project from Azerbaijan was the favored route over the rival South Stream pipeline from Russia.

"We all focus on the Nabucco project, but we do not have to forget that there are also other projects which enable us to transport the energy resources to Europe," Gray said in September.

He acknowledged, however, that South Stream may develop quicker than Nabucco as the rising cost of steel has translated to a price increase of about 1.5 times its original $6.8 billion price tag.

Gray was in the region to meet with top officials on the need to diversify the European energy market.

His move follows earlier visits to Central Asia from U.S. Secretary of State Condoleezza Rice and U.S. Vice President Dick Cheney to develop energy ties in the region.

Pakistan, Iran move on IPI
Pakistan said it was cautious of the gas pricing formula proposed by Iranian officials for the Iran-Pakistan-India pipeline following reports of a bilateral deal.

All parties to the pipeline from the Iranian South Pars gas field had agreed to a pricing mechanism based on recommendations from a third-party consultant. Unless Iran tries to reach a separate bilateral agreement directly with Pakistan, the project could face further obstacles, the Pakistani Daily Times said.

A Friday report in the Press Trust of India said Pakistan and Iran had agreed to move ahead with plans for the planned 1,724-mile pipeline without India, saying New Delhi could sign on at a later time.

"Pakistan wants the gas pipeline project (to) be initiated bilaterally between Pakistan and Iran while India could join afterwards whenever it so desires," said Pakistani Prime Minister Yousaf Raza Gilani.

Iran said that if Pakistan disrupts the flow of gas to India, Iran will reduce Pakistan's gas supplies in an equal volume. Iran also sought a force majeure clause to protect Tehran from legal consequences should India or Pakistan face gas disruptions if Iran came under military attack.

Tehran asked Islamabad to include the phrase "situation of armed conflicts or war" as a substitute for "act of war." The new language covers state-centric military conflict rather than internal issues exclusively.

An agreement between Pakistani Foreign Minister Shah Mahmood Qureshi and Manouchehr Mottaki, his Iranian counterpart, would move the project along as Pakistan is facing a looming energy shortage.

Iranian officials last week agreed to supply Pakistan with oil on a deferred payment schedule in the wake of the energy crisis.

"We discussed difficult economic challenges," Qureshi said. "I made a request that it will be a great help if Iran provides us with oil on a deferred payment under the Iranian law," he said.

Caspian oil production resumes in December
BP, the operator of the Azeri-Chirag-Guneshli oil field in the Caspian Sea, said production and transportation would return to full capacity by December.

The statements contradict reports from Vidadi Rustamov, the deputy head of the State Oil Co. of Azerbaijan Republic, who told attendees at an oil and gas conference in Kazakhstan production would resume in October.

Operators closed two platforms in the Caspian oil field because of a gas leak in September. Though the gas leak cut production by slightly more than 30 percent, BP said full exports from the field through the Baku-Tbilisi-Ceyhan pipeline may be delayed to December, the Azeri Press Agency reported.

Production from Azeri-Chirag-Guneshli peaked at 841,169 barrels per day in July. The field is the primary source of oil from the BTC pipeline.

A fire at a pumping station in eastern Turkey closed the pipeline in early August, and a conflict between Georgia and Russia over the breakaway republic of South Ossetia briefly disrupted the flow of roughly 1 percent of the world's oil.

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