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Monday, November 20, 2006

Annals of Energy Weaponization

Zaman Daily News reports:

The Sahdeniz Project, which makes it possible to purchase cheap natural gas at $120 a cubic meter from Azerbaijan, has been hindered by Russia. Moscow has threatened Azerbaijan into not lowering the price of natural gas it sells to Turkey. Tired of Moscow’s pressure, Baku has offered state-owned Turkish Pipeline Company (BOTAS) to postpone the project for one year. Russia is trying to hinder the Sahdeniz Project after the Baku-Tblisi-Ceyhan Oil Pipeline project. After the Sahdenis Project, which is considered to be the second-biggest investment in the energy field, becomes active, Turkey will be able to buy cheap natural gas at $120 per cubic meter. Since this project will provide natural gas at half the price offered by Russia and Iran, Azerbaijan’s hand will be strengthened at the bargaining table. Moscow reportedly told Baku, “If you sell Turkey the natural gas that I give at $120, we will increase the price to $230.” This threat has been influential on Azerbaijan, according to some circles. According to BOTAS officials, Azerbaijan asked for postponement of 2007 natural gas agreement for a year due to pressure from Moscow. Azerbaijan offered to sell three billion cubic meters of natural gas to Turkey at the same price in 2008 and 2009. Turkey, which does not want to experience another gas crisis, does not want to take a backward step in the Sahdeniz Project since it wants to maintain product diversity and decrease prices.

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