Azerbaijan could start production at the second stage of its Caspian offshore field Shah Deniz in 2016, if transit talks with Turkey are completed next year, an official from the Azerbaijani state oil firm Socar said Thursday.
"If we reach an agreement with Turkey on transit, we'll begin talks with potential customers and operators of transport systems at the beginning of next year," said Murat Heydarov, an advisor to the president of Socar.
Socar hopes to produce the first gas from Shah Deniz II in the third quarter of 2016 with peak production reaching 16 billion cubic meters a year in 2018, Heydarov said at an oild and gas conference in Almaty.
Turkey and Azerbaijan are in negotiations on gas price and transit. Turkey buys 6 billion cubic meters of natural gas a year from the Shah Deniz I field. The upper-limit of the gas price is $120 per 1,000 cubic meters, which is lower than international prices. Azerbaijan wants a higher price.
Both Russia and the European Union want to purchase gas from Shah Deniz for their respective pipeline projects, South Stream and Nabucco.