Pipeliners

04 December 2008 - Upstream OnLine - The European Union sees an improvement in relations between Caspian producers Turkmenistan and Azerbaijan as a step towards implementing the Nabucco gas pipeline project, a senior official said. The two gas-rich nations, eyed by Brussels as a key source of energy for the $10 billion Nabucco pipeline, took steps to overcome past disagreements this year by forging closer energy ties and agreeing to diversify energy shipments. EU representative for Central Asia, Pierre Morel, on a visit to the Turkmen capital Ashgabat, said that would help speed the implementation of Europe's broader Southern Corridor project which includes Nabucco. "I think this prepares the ground for the Southern Corridor," Morel told Reuters. "I am convinced the EU should step up its efforts to build Nabucco. The next steps might be taken in the coming months and in early 2009." Turkmenistan pledged to seek better ties with Azerbaijan after Saparmurat Niyazov, who showed little interest in regional co-operation, died in 2006. His successor, Kurbanguly Berdymukhamedov, visited Baku this year to settle old disputes over the ownership of borderline offshore Caspian oil and gas fields and mutual debts. Most recently, he met with his Azeri counterpart Ilham Aliyev last week. "President Berdymukhamedov's serious efforts with regards to Azerbaijan look promising," Morel said after talks with the Turkmen leader. Turkmen gas could reach Nabucco either through Azerbaijan, via a planned pipeline across the Caspian, or through Iran, but the latter option faces political challenges due to Iran's complicated relations with the West. EU officials have been frequent visitors to Ashgabat this year and Berdymukhamedov last month visited Germany and Austria to discuss energy and investment. "All these visits are like pieces of a puzzle coming together," Morel told Reuters. Turkmenistan currently produces about 70 billion cubic metres of gas a year, most of which goes to Russia. But analysts said the country, which has already promised to sell 10 Bcm of gas per year to Europe, needs foreign investment to ramp up gas production and meet its supply commitments. "Our companies are waiting for Turkmenistan to create the environment needed for investment," Morel said.