Pipeline deal imminent

20 August 1999


The partners in a planned $2 billion gas pipeline between Turkmenistan and Turkey were expected to sign a framework deal in July finalising contributions to the project. Azerbaijan, Georgia, Turkmenistan and Turkey must all agree to the details of the project in order for it to proceed.

The first 750 km of the pipeline will run through Turkmenistan and another 300 km will pass under the Caspian Sea. There is a further 600 km stretch through Azerbaijan and Georgia before the final 320 km in Turkey.

Turkmenistan is anxious the deal should proceed so it can export directly to Turkey and to European markets. Until now it relied on the Russian pipeline network to export gas. Last year it was cut off from its markets when a price row prompted Gazprom to close pipeline access.

Turkmenistan and the US consortium in charge of the project, PSG, aim to complete the 2000 km pipeline by 2002. However, financing has yet to be completed. A dispute between Turkmenistan and Azerbaijan over ownership of two Caspian Sea gas fields has affected negotiations. An agreement between the four nations involved in the project should remove any remaining hurdles according to a US adviser to the project.

PSG, which owns 50 per cent of the project, includes Bechtel Enterprises and GE Capital Structure Finance Group. Royal Dutch/Shell has also been mentioned as a potential partner. Project managers are hoping to raise financial support from the US Export-Import Bank, French, Japanese, German and Italian credit organizations and the World Bank. The project has the support of the US government which would like to see Russian and Iranian influence in the Caspian region reduced.



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