Azerbaijan to sell gas direct to Greece

Azerbaijan plans to sell 700 mln cubic metres (bcm) of gas per year directly to Greece, bypassing Turkish intermediaries, the Azeri energy minister said on Wednesday.
Greece has been buying 0.7 bcm of Azeri gas per year from Turkey since the end of 2008 as a part of re-export scheme.
"We agreed with Turkey and Greece that gas from Azerbaijan will be sold to Greece without Turkey's participation," Industry and Energy Minister Natik Aliyev told reporters after talks.
"Legal issues are under discussion right now. Volumes will be the same, 700 mln cubic metres, but may rise in the future."
He did not specify when Azerbaijan could start direct supplies.
Agreement between the sides was reached on February 1 in the Azeri capital Baku, Harry Sachinis, the Chairman & CEO of the Greek company DEPA, told reporters.
"This is just the beginning of the process and if we get a proof that direct purchases are justified from a commercial point of view, we'll sign a contract," Sachinis said.
"We would like to do it quickly. SOCAR (Azeri state energy company) and Botas (Turkish company) want the same."
Azerbaijan's gas output rose by 11.2% in 2010 year-on-year to 26.2 bcm from 23.6 bcm in 2009.
The oil-rich country plans to produce 28.0 bcm of gas this year, including 9.1 bcm produced at its major Shah Deniz field.
Shah Deniz, co-led by BP and Statoil, is estimated to contain 1.2 trln cubic metres of gas.
Production at the deposit began in 2006, while second phase production is expected to begin by late 2016 or early 2017.
Sachinis said Greece was discussing with Azerbaijan the possibility of buying gas from Shah Deniz's second phase.
"DEPA is discussing with SOCAR and its Shah Deniz partners the possibility of gas purchases from the Shah Deniz second phase, but I can't tell you volumes and prices so far," he said.
Azerbaijan's total gas reserves are estimated at 3-5 trln cubic metres.
It sells gas to the domestic market, neighbouring Georgia and Turkey via the Baku-Tbilisi-Erzurum pipeline, as well as Russia.