UPDATE: Turkey: Trans Anadolu Pipeline Must Be Done By 2017-18

Turkey and Azerbaijan's new joint transit gas pipeline project, the Trans Anadolu, needs to be completed by 2017-2018, Turkey's energy minister said Friday.

"It's early to talk about the cost of the new pipeline project," Taner Yildiz told reporters, declining to provide further details.

Azerbaijan's state-oil company Socar said Thursday that it will build the 16 billion-cubic-meter standalone gas pipeline across Turkey to cater to the fast-growing economy's growing energy needs.

The announcement surprised energy executives and politicians involved in the European Union-backed Nabucco pipeline project, which is slated to bring natural gas from the Caspian Sea to Europe through Turkey, as a consortium of gas producers is in the final stage of deciding a decade-long contest to build the pipeline.

Socar said Thursday that the new pipeline wouldn't mean the end of Nabucco. However, many analysts and rivals, in particular Russia's gas giant OAO Gazprom (GAZP.RS), have long expressed skepticism that Nabucco would get built. The 3,900-kilometre pipeline would have a capacity of 31 billion cubic meters a year, twice as much gas as Azerbaijan could provide. Other planned sources, including Turkmenistan, Iran and Iraq, remain problematic due to concerns over security and political instability.

The Nabucco consortium has repeatedly sought to dispel growing skepticism about the pipeline's viability and the project retains strong political support in Brussels.

The U.S., a long-time backer of Nabucco, appears to be increasingly open to smaller-scale alternatives that would prioritize supply to the former communist states of south east Europe, where energy security remains a concern.

Richard Morningstar, State Department special envoy for Eurasian energy, said Wednesday that Nabucco continues to be a "desirable" project, but that it must be "commercially viable.

"If a smaller pipeline is chosen to ship the first Shah Deniz gas to Europe, we believe it should provide gas to the vulnerable countries in Europe and there should be concrete, written guarantees that the pipeline will be expanded as more gas becomes available," Morningstar said.

-By Yeliz Candemir, Dow Jones Newswires; [phone]; [e-mail]