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Home / Issue Archive / 2007 / October #10 / Turkey and Greece Open Pipeline For Caspian Gas

№ 10 (October 2007)

Turkey and Greece Open Pipeline For Caspian Gas

Turkey and Greece opened the US$440 million Turkey-Greece Natural Gas Pipeline, giving Caspian gas direct access to the European Union market for the first time

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Greek Prime Minister Costas Karamanlis, according to Turkey's state-owned Anatolian News Agency, told the opening ceremony at the Evros River border crossing between the two countries that the event marked the completion of a project of historic significance.

The Greek news agency ANA-MPA said Turkish Prime Minister Recep Tayyip Erdogan described the pipeline as a "silk road for energy" because it would bringing the hydrocarbon riches of Central Asia to European markets.

The 285-km (180-mile) line from Karacabey in Turkey to Komotini in Greece, which will eventually have a 12 bcm/y capacity, is intended to serve as the first part of a Turkey-Greece-Italy Interconnector.

Initially, some 750 million cubic meters a year of Azerbaijani gas will be exported to Greece but this is intended to grow in steps to 3 Bcm/yr. The Italy connection, on which construction is expected to start next year, will ensure the delivery of some 8.8 Bcm/yr of gas across the Adriatic.

The importance of the pipeline was underlined by the guest list. The Anatolian agency reported that Azerbaijani President Ilham Aliev, US Energy Secretary Samuel Bodman and Georgian Energy Minister Alexander Khetaguri were present at the opening ceremony.

Responding to concerns about the pace of Azerbaijani gas development, Aliev was quoted as saying that from now on Azerbaijan would meet both its own energy needs and, via the new pipeline, serve as a supplier for its partners' energy needs with this project.

Azerbaijani gas reaches Turkey through the recently opened South Caucasus pipeline across Georgia, and then transits the Turkish system to Karacabey before entering Greece.

Azerbaijan is currently negotiating with Turkey over arrangements for its gas exports. Turkey is understood to be seeking to introduce what it calls a "transit plus" formula whereby it will buy the gas from Azerbaijan itself and then re-sell it to customers further afield at whatever mark-up it feels it can secure.

Azerbaijan is seeking direct access to markets beyond Turkey, with transit through Turkey governed by a regulated transit fee system.

The line has received strong backing from the European Union which regards it as one of the two main pillars of its gas supply diversification strategy in southern Europe. The other is the planned 30-Bcm/yr, Eur5 billion Nabucco pipeline from Turkey to Austria, via Bulgaria, Romania and Hungary.

Source: Platts Energy

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