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Turkey, Azerbaijan sign pipeline deal
by Staff Writers
Ankara, Turkey (UPI) Dec 28, 2011

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Turkey and Azerbaijan this week signed an agreement for a new "Trans-Anatolian" natural gas pipeline stretching from Turkey's eastern to western borders.

The 2,400-mile, $5 billion pipeline would transit natural gas from Azerbaijan's Shah Deniz II fields in the Caspian Sea across Turkey and would become part of the basis of a new Southern Corridor gas route to European markets.

The stand-alone pipeline could also be connected to proposed Nabucco pipeline project, which is designed to carry gas from the Caspian region and the Middle East through Turkey to Europe.

The deal to build the Trans-Anatolian pipeline was signed in Ankara Monday by Turkish Energy Minister Taner Yildiz and Natiq Aliyev, Azerbaijan's industry and energy minister.

Aliyev said the pipeline start out carrying 16 billion cubic meters of gas per year but eventually could increase that amount to 24 billion cubic meters per year, the Turkish daily Today's Zaman reported.

Of that amount, 6 billion cubic meters would be sold to Turkey while some 10 billion cubic meters would go to European markets, Aliyev said.

A consortium consisting of the State Oil Company of the Azerbaijani Republic -- SOCAR -- the state-owned Turkish Pipeline Corp. -- or BOTAS -- and the Turkish Petroleum Corp. was established to construct the project.

Others would be allowed to join the consortium once the project is under way, the two energy ministers said, adding plans are to begin to start construction as soon as possible in 2012 and complete the pipeline by late 2017.

Yildiz said the Trans-Anatolian project doesn't mean Ankara has backed off on its support for the ambitious, EU-backed Nabucco pipeline, which some analysts have said would be made redundant by the new pipeline, the Anatolian News Agency reported.

"We are Nabucco's partner and we have 16 percent share," he said. "We have made a hard effort to realize that [Nabucco] project and continue to make efforts. The Trans-Anatolian natural gas pipeline is an important alternative."

The Nabucco pipeline is meant to diversify Europe's gas supplies away from Russia but Azerbaijan could supply only half of its massive proposed capacity. The rest would come from still-unsecured sources in Turkmenistan, Iran and Iraq.

It is competing with Interconnector Turkey-Greece-Italy, the Trans Adriatic Pipeline and the South East Europe pipelines to tap the Shah Deniz II gas fields.

A top official of TAP told the Hurriyet Daily News SOCAR's decision to build the Trans-Anatolian pipeline could be a significant blow to the chances of Nabucco's landing the rights to Azerbaijan's Caspian fields, which are controlled by SOCAR, BP and Norway's Statoil.

Cenk Pala, Turkey's representative on the TAP project, told the newspaper the Trans-Anatolian pipeline will be better able to supply Europe in the short run than Nabucco due to the latter's lack of suppliers other than Azerbaijan.

"Europe talks about the Turkmen gas, almost two-thirds of which they lost to Russia with a 2003 agreement," Pala said, adding, "Nabucco is a commercially driven project and no investment decision can be made unless the supplies are granted beforehand."

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Afghanistan signs first major oil deal with China
Kabul (AFP) Dec 28, 2011 - Afghanistan on Wednesday signed an oil deal with China which could earn the war-torn country $7 billion over 25 years.

Afghanistan's first major oil exploration contract will see state-owned China National Petroleum Corporation develop three oil fields in the relatively peaceful north of the country along the Amu Darya river.

Under the deal, signed in Kabul by Afghan mining minister Waheedullah Shahrani and CNPC president Lu Gong Xun, Afghanistan will take 70 percent of the net profits, and the Chinese oil giant will pay 15 percent corporation tax.

"This will have enormous benefits for Afghanistan," Shahrani told reporters after the signing.

Energy hungry China, which is pushing into oil-rich countries to secure the resources needed to fuel the world's second largest economy, outbid four companies for the contract.

The deposits are estimated to contain about 87 million barrels of oil, relatively small globally but significantly profitable for Afghanistan, Shahrani said.

"If there are 87 million barrels of oil and each barrel is estimated at $100, Afghanistan will make about $7 billion in the next 25 years," the minister said.

Extraction along the Amu Darya river, which separates Afghanistan from its Central Asian neighbours, is not expected to begin until late next year, he added.

The joint-venture is being launched with Afghan company the Watan Group.

Afghanistan currently imports its oil and gas, mostly from Central Asian countries and Iran, which on Monday signed a deal to supply its neighbour with a million tons of fuel oil, petrol and aviation fuel a year.

Lu Gong Xun, who is president of CNPC's international branch, said his company has agreed to build a refinery and was expected to invest about $400 million in the project, which will also create hundreds of local jobs.

He said investment will expand if more reserves are explored in the future.

Six oil deposits have been discovered in Afghanistan, including one elsewhere in the north estimated to be worth 1.8 billion barrels, as well as in Herat in the west, Helmand in the south and Paktia in the southeast.

Afghanistan's natural resources could theoretically generate billions of dollars in tax revenue.

But exploitation of these resources faces massive hurdles due to ongoing instability, woeful infrastructure and endemic corruption.


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US warns Iran not to shut key oil route
Tehran (AFP) Dec 28, 2011
The United States warned Iran on Wednesday that any move to block shipping in the Strait of Hormuz, the world's most important oil transit channel, will not be tolerated. The warning came after Iran's navy chief Admiral Habibollah Sayari said in an interview that "shutting the strait for Iran's armed forces is really easy - or as we say (in Iran) easier than drinking a glass of water." ... read more

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