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Turkey to give up share of giant gas field to Georgia

Turkey has agreed to give up some of its share of a giant Caspian gas field to Georgia, allowing the small Caucasus nation to reduce its need for expensive Russian gas, the Georgian energy minister said yesterday.

Nika Gilauri said in televised comments that Turkey had agreed to transfer 800 million cubic meters of natural gas to Georgia next year that it was entitled to from the giant Shah Deniz field off Azerbaijan's Caspian coast.

The minister said that the price remained to be fixed. Georgia has faced a doubling of the price it pays for Russian natural gas and is seeking alternative sources of supply.

Russian state-controlled gas monopoly Gazprom said on Friday that Georgia had agreed to buy 1.1 billion cubic meters of gas next year at US$235 per 1,000m3 -- an amount that falls about 700 million cubic meters short the country's expected demand for next year.

Georgia now pays US$110 for its Russian gas.

Shah Deniz's operator, BP PLC, on Friday said that output had been halted at the offshore field because of unspecified technical problems. Production began just under two weeks ago.

But output is expected to increase considerably over the course of next year at Shah Deniz, which eventually should have a peak capacity of 8.5 billion cubic meters of gas and 2 million tonnes of gas condensate per year.

Turkey has been in talks on reallocating quotas from Shah Deniz with both Georgia and Azerbaijan, former Soviet republics, which are eager to avoid importing expensive Russian gas.

Energy supplies from Azerbaijan's Caspian fields are playing an increasingly important role in the region, as Russia has dramatically raised prices for its natural gas.

Gilauri, together with Georgian Prime Minister Zurab Nogaideli, were due to leave for the Azerbaijani capital, Baku, yesterday to coordinate all technical details of additional gas deliveries from the Shah Deniz field to Georgia next year.
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