Shell soon to join Samsun-Ceyhan pipeline: sources

By Ercan Ersoy

ISTANBUL (Reuters) - Royal Dutch Shell Plc (RDSa.L) is near signing a deal with Turkish Calik Energy and Italian Eni (ENI.MI) to join work on a oil pipeline between the Black and Mediterranean seas, sources close to the deal said on Monday.

The deal would ease financing concerns but more importantly assure supplies for the pipeline, probably from Kazakhstan's Kashagan field. Construction was started last year without securing the necessary throughput.

"Talks over feasibility are at the final phase. I think an agreement will be signed by the end of June," said one source.

Indian Oil (IOC.BO) announced it had bought a 12.5 percent stake in the pipeline in December 2006, but sources now say the state-run Indian oil company will not be taking part in the project.

The 550-km long (340 miles) pipeline is expected to cost $1.5 billion and will ship an initial 1 million barrels per day to the Turkish port of Ceyhan on the Mediterranean, with plans to raise the capacity to 1.5 million bpd.

The project, which will be carried out by the Trans Anatolian Pipeline Company (Tapco), was envisioned to reduce increasing traffic on the Bosphorus Straits in Istanbul.

Calik and Eni each has 50 percent in Tapco and under the new deal Shell will get "a considerable stake" from them, the source said.

Shell and Eni will also be able to use their shares in Kazakhstan's Kashagan fields, considered to be the biggest oil find since the 1960s, to fill up a portion of the Samsun-Ceyhan, said a second source.