Azerbaijan to Keep Control of Pipeline After Offering Stakes

State Oil Co. of Azerbaijan plans to keep control of a pipeline development with Turkey to carry gas to Europe as the state-run company offers part of its 80 percent holding to producers such as BP Plc (BP\), Statoil ASA (STL) and Total SA. (FP)

The three Western oil producers may be interested in buying stakes in the Trans-Anatolia pipeline, or Tanap, said Rovnaq Abdullayev, president of the Azeri company, known as Socar. The Baku-based company will consider the matter after Azerbaijan and Turkey sign accords, probably in March or April, he said today.

The two countries are developing the pipeline to provide an alternative supply for Turkey and Europe, which are dependent on Russian natural gas. It will link with the proposed Nabucco line that’s being developed by Germany, Austria, Hungary, Romania, Bulgaria and Turkey, or smaller volume projects vying for export rights, Abdullayev told Azeri television channel ANS yesterday.

Turkish state pipeline company Botas Boru Hatlari ile Petrol Tasima AS and oil and gas producer Turkiye Petrolleri AO have a combined 20 percent of Tanap.

The 2,000-kilometer (1,243 mile) Tanap pipe, with initial capacity of 16 billion cubic meters a year, may cost $5 billion to $7 billion, according to a preliminary feasibility study, Abdullayev said. Turkey will get 6 billion cubic meters of gas a year through the pipeline, with the rest going to Europe, after the project is completed in 2017, he said. Azeri and Turkish officials began work on the project in Ankara today, he said.

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Socar, which plans $17 billion to $20 billion of investment in Turkey in the next decade, is also interested in an auction of Igdas Istanbul Gaz Dagitim Sanayi Ve Ticaret AS, Istanbul’s gas grid company, Abdullayev said. Socar may get a local partner for a bid and also make an offer for Desfa SA, Greece’s gas transmission company, should the government sell, he said.

Socar, creating a $5 billion refinery with Turcas Petrol AS (TRCAS), is seeking as much as $4 billion in loans by the fourth quarter to build the facility, said Abdullayev. Socar is also interested in a Turkish plan to lease coal fields to investors.

The company is studying Ukraine’s request for liquefied natural gas supplies from Azerbaijan, Abdullayev said.

To contact the reporter on this story: Ercan Ersoy in Istanbul eersoy@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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