OREANDA-NEWS. October 21, 2009. Turkey is ready to pay more for transit of Azeri gas across its territory, Turkey’s Energy Minister said on Monday after Azerbaijan said the terms on offer were unacceptable. "We are ready for talks. We have made our offer. This offer is also favourable to Azerbaijan," Taner Yildiz said on the sidelines of a signing ceremony for the Samsun-Ceyhan pipeline.

 Azerbaijan said Turkish terms for gas transit to Europe were unacceptable and the country was considering other routes to Europe, heightening tensions over a thaw between Ankara and Azeri foe Armenia.

Russia is competing with the West for access to Azeri oil and gas reserves in the Caspian Sea, and particularly the second phase of the multibillion-dollar Shah Deniz deposit from which Europe hopes to draw gas for its planned Nabucco pipeline.

But traditionally close ties between Turkey and Azerbaijan have become strained by a thaw in relations between Turkey and neighbouring Armenia, Azerbaijan’s enemy in a festering conflict over the breakaway Nagorno-Karabakh region.

"The Azeri side is preparing new proposals for Turkey on the transit of gas from Shah Deniz 2," Rovnag Abdullayev, president of Azeri state energy company SOCAR, told reporters on Monday in the Azeri capital, Baku.

"If talks with Turkey don’t end in success, we might return to the idea of exporting Azeri gas to Europe in a liquefied form via the Black Sea," he said. "We are ready to review this forward-looking proposal in detail," Abdullayev said.

Russian energy giant Gazprom has secured a deal to import a modest 500 million cubic metres of Azeri gas from next year but says it intends to increase volumes.

Shah Deniz reserves are estimated at 1.2 trillion cubic metres of gas. Current production is 18 million cubic metres per day, but is expected to increase to 22-23 million cubic metres by the end of the year.

Azeri President Ilham Aliyev expressed concern over delays in the start of production at the second phase of Shah Deniz from 2013 to 2016.