Aliyev was speaking to reporters on the sidelines of the World Economic Forum (WEF) in Davos. He complained that no resolution has been reached despite some 20 months of negotiations between Turkey and Azerbaijan on new natural gas prices. The price Turkey pays for the natural gas it purchases from Azerbaijan is too low, Aliyev stressed, adding that it is not possible to continue natural gas trade under such conditions.

Turkey continues to pay $120 for 1,000 cubic meters of Azerbaijani natural gas, this according to a contract that "ended on April 15, 2008," the president noted. Azerbaijan sells Russia natural gas at a price of $300 for 1,000 cubic meters and wants to raise the price for Turkey, which is far below global prices, to these levels. However, the price Turkey is offering is only $200. If the two countries reach an agreement on natural gas prices, Turkey will retroactively pay for the past 20 months.

In regard to the Nabucco natural gas pipeline project, Aliyev said there are scores of unanswered question concerning the project. "Who will lead the talks for gas production and its transportation? Who will market the gas? How will the price be determined? We still do not know the answers to these questions," he complained. The issue of gas transmission to European Union countries still awaits answers, Aliyev said.

The EU must get "serious" about its Nabucco pipeline to compete with Russia's OAO Gazprom for Caspian natural gas, Aliyev was reported as saying by Bloomberg. "If we are offered a good price and a serious approach, then it can happen," he said about Azerbaijan's potential role as a supplier. "Political statements damage the process. We do not want to find ourselves in the middle of a battle between various forces that cannot agree."

The Nabucco project is headed by Austria's OMV AG with shareholders RWE AG of Germany, Hungary's Mol Nyrt., Romania's Transgaz SA, Bulgaria's Bulgargaz AD and Turkey's BOTAŞ. The group lacks a clear leader able to attract the necessary financing or conduct talks with suppliers and transit countries, Aliyev said. The participation by some Nabucco countries in a rival Gazprom project "creates a kind of ambiguity," he said.

US envoy regrets failure to reach agreement on Shah Deniz gas

Meanwhile, United States Secretary of State Special Envoy for Eurasian Energy Ambassador Richard L. Morningstar said on Thursday that the failure of Turkey and Azerbaijan to conclude an agreement on Shah Deniz gas purchases and transit was disappointing.

Speaking at a conference organized by an American think tank in Washington, D.C., Morningstar said the US supports opening a southern corridor to carry natural gas from the Caspian Sea to Europe. The corridor might include both Nabucco and the Turkey-Greece-Italy natural gas pipelines, he added, emphasizing the importance of both projects to diversify gas sources and open new supply routes to Europe.

"A Southern Corridor would provide commercial benefit for the countries of the Caucasus and Central Asia and also create a long-term partnership based on mutual interests with Europe," the envoy said.

Stressing that the agreement is to the advantage of both sides, Morningstar said he believes a deal will be reached, hopefully sooner rather than later, so that confidence in the Southern Corridor is not undermined.