Turkey signs deal with Azerbaijan on $7 bn pipeline

ANKARA- Prime Minister Recep Tayyip Erdogan and Azerbaijan's President Ilham Aliyev oversaw the signing of the accord, it added.

This project is about transferring the natural gas extracted from the second phase of Azerbaijan's Shah Deniz field to Europe, Turkey's Erdogan said in a parliamentary address in Ankara earlier in the day.

Turkey and Azerbaijan in December last year signed a preliminary agreement on building TANAP to carry 10 billion cubic metres (bcm) of Azeri gas to European consumers per year, plus 6.0 bcm for itself.

With Tuesday's signing of the accord, the seven billion-dollar (5.6 billion-euro) project takes a step closer to becoming a reality in the next six years.

Erdogan said the project would pump gas not only from the Shah Deniz field but also from other resources owned by Baku in the Caspian.

"It will also be possible for Turkmenistan to ship gas to this project," he added.

The signing of the TANAP deal by Turkey and Azerbaijan was expected to happen in the few months following December's memorandum of understanding, but it took longer to finalise as they failed to agree on stakes, according to local media.

Turkey will get 20 percent of the shares in the pipeline that would run to its European border, divided between state-run pipeline company BOTAS and petroleum corporation TPAO. The Azeri state oil company SOCAR will hold the remaining 80 percent.

The pipeline is expected to pump the first gas in 2018 and its capacity is expected to rise to 23 bcm per year in 2023, and 31 bcm per year in 2026.