BAKU. March 1 (Interfax) - State Oil Company of the Azerbaijani Republic (SOCAR) will transfer a portion of its interest in the project to build the Trans-Anatolian gas pipeline (TANAP) to the State Oil Fund, SOCAR President Rovnag Abdullayev told journalists on Friday.
"The State Oil Fund will receive a share in the TANAP project from the 51% stake that SOCAR retains [after bringing new partners into the project]. However, the relative proportion of stakes held by SOCAR and the State Oil Fund is still undefined. Discussions are underway," Abdullayev said.
"The State Oil Fund will receive dividends down the road in proportion to its holdings in the project," he said.
Toward the end of March, SOCAR will begin "major talks" on concluding long-term contracts with potential buyers of Azerbaijani gas, to be delivered to Europe from the Shah Deniz-2 project in the Caspian, he added.
TANAP project documents were signed in Istanbul on June 26, 2012.
TANAP will transport gas from the Shah Deniz-2 project in Azerbaijan's Caspian sector, from the Georgian-Turkish border to western Turkey. Of the pipeline's capacity of 16 billion cubic meters, 10 bcm will be earmarked for Europe and the remaining 6 bcm for Turkey.
SOCAR will have an 80% interest in the consortium and Turkish BOTAS and TPAO - 20%. SOCAR plans to retain a 51% interest in the project. It is in talks with BP, Total and Statoil on transfer of the other 29%.
The contract to develop Shah Deniz was signed on June 4, 1996 in Baku and ratified by the Milli Majlis (parliament) on October 17 of that year. The Shah Deniz project members are BP (operator, 25.5%), Statoil (25.5%), the State Oil Company of the Azerbaijani Republic (SOCAR) (10%), LUKOIL (RTS: LKOH) (10%), NICO (10%), Total (10%), and TPAO (9%).
Shah Deniz stage 2 is expected to cost $28 billion. Gas production is scheduled to commence in 2018. Annual production will equal 16 bcm.
Azerbaijan's State Oil Fund accumulates earnings from oil contracts, particularly proceeds from sale of the state's profit oil, the fees it collects for transportation of oil and gas, rent from state property, etc.
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