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Turkey may help Iran join Nabucco

Oil&Gas Materials 4 November 2009 12:22 (UTC +04:00)

Azerbaijan, Baku, Nov. 4 / Trend , A.Badalova/

A gas agreement signed between Turkey and Iran may provide the Nabucco gas pipeline project with additional resources. Turkey's dream to become a European gas supplier is ultimately based on expanding energy cooperation with Iran. Considering the U.S. and EU sanctions on the country due to Tehran's nuclear program, Europe is unlikely to purchase Iranian gas directly. At this stage, it can only be supplied to Europe via re-export through Turkey.

Iran, having the second largest gas reserves in the world, is a lure for the EU. However, a major problem in transforming the country into a gas exporter for the European market is the unstable political situation in the country and the nuclear issue. These questions prevent the participation of foreign investors in developing Iran's largest deposits.

Nevertheless, an Iran-Turkey energy intergovernmental agreement signed in October could pave the foundation for transporting Iranian gas via the Nabucco pipeline. The agreement involves making Turkish investments in the Iranian gas projects, transporting Iranian gas to Turkey and further to Europe, and supplying Turkmen gas to Turkey via Iran.

According to the an at the U.S. Energy Security Analysis company, Andrew Reed, the agreement increases the chances of Iran participating in the Nabucco gas pipeline project, as Turkey through is a participant via the Botas company.

"Turkey's current foreign policy of "zero problems with neighbors" is a positive development for Iran's development of energy relations with Ankara," Reed wrote Trend in an e-mail.

Another positive milestone for Iran is the lack of a Trans-Caspian pipeline to link Turkmenistan to Nabucco, Reed said.

"Turkey and Iran are neighbors, gas deliveries from Iran to Turkey are already in place. It is understandable and a contribution that Turkey tries to secure Gas volumes for the future," an official source in the Nabucco project wrote to Trend in an epmail.

According to BP, the proven gas reserves in Iran amounted to 29.61 trillion cubic meters in early 2009. Gas production in the country in 2008 increased by 3.6 percent to 116.3 billion cubic meters. Gas demand in the country, according to BP, was 117.6 trillion cubic meters in 2008.

According to the Nabucco source, Iranian gas can be transported via the pipeline only after the improvement of the country's political situation.

"Once the political environment permits Iranian gas to be delivered to Europe then Nabucco would of course be the natural transportation route to achieve such," a source at the consortium wrote Trend in an e-mail.

In the meantime, Azerbaijan, northern Iraq and Turkmenistan remain priority sources, the source added.

The Nabucco project worth 7.9 billion euro will deliver Azerbaijani and Central Asian gas to the EU. Nabucco shareholders are the Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE with 16.67 percent each.

Construction of the pipeline is expected to begin in 2011 and the first supplies - in 2014. Its maximum capacity will be 31 billion cubic meters per year. An investment solution on the project will be made in the first quarter of 2010. Nabucco Gas Pipeline International will invest 30 percent of the project on basis of its share. The remaining 70 percent will be provided by international institutions.

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