Baku gas overtaking diplomacy
In recent years, the Republic of Azerbaijan has been able to become one of the most important players in the regional and world gas market with huge investments made with the help of other countries and international companies.
The economy of this northwestern neighbor of Iran is heavily dependent on gas revenues, and the country has established itself as a reliable producer by building strategic pipelines in the Caucasus region, and is now seeking to expand Aliaf’s offensive gas program. Baku’s plan to overtake Iran in the region targets the current Tehran markets in Ankara and Baghdad and is expanding to Central Asia from the east and Europe from the west.
Baku dominates the South Caucasus gas market
The Republic of Azerbaijan is emerging in the South Caucasus region as a small economy, and this economic-military growth is due to the gas dollars that have flowed to the country in recent years. In fact, more than 90% of Azerbaijan’s total exports are related to the gas sector.
In recent years, the Republic of Azerbaijan has been able to gain many allies through aggressive gas diplomacy. Relying on the Caspian Sea oil and gas resources, the country’s pipelines have become strategic gateways to endangering energy security in Europe. The Republic of Azerbaijan has three crude oil export pipelines, the largest of which is the famous 1768-kilometer Baku-Tbilisi-Ceyhan (BTC) pipeline, which transports oil and condensate to the city of Ceyhan in the Turkish province of Adana via Georgia. It also has two major gas export pipelines, one of which is the 693-kilometer South Caucasus Pipeline (SCP), which carries gas from the Shah Deniz field to Georgia and then to Turkey, parallel to the BTC pipeline.
The pipeline is important as part of the 40,000-kilometer Southern Gas Corridor, which was built with the support of the United States and a $ 40 billion consortium led by BP. In 2019, Azerbaijan exported about 9.2 billion cubic meters of gas through this pipeline. As Deutsche Welle puts it; The Republic of Azerbaijan also resumed oil exports from Russia to European markets in the second half of 2020 and intends to increase black gold exports through this route to one million tons this year.
Complex gas strategy in the region
The Republic of Azerbaijan has also sharply increased its oil and gas exports through the Georgian pipelines to Turkey and Europe, and seems to have exported at least 6.5 billion cubic meters of gas from the second phase of the Shah Deniz field since the first quarter of this year.
Of course, this was only part of Elham Aliyev’s government’s gas strategy to increase the power of the Republic of Azerbaijan in the Caucasus region, which led Turkey to reduce its dependence on Iranian gas. In previous years, explosions by the Turkish Kurdistan Workers’ Party (PKK) in the Turkish section of the Iranian-Turkish gas pipeline to Turkey have always cut off gas exports and created a crisis in the country.
Under such circumstances, Turkey, seeking to increase its influence in the South Caucasus, turned its attention to energy security to the Aliyev government. Now the Republic of Azerbaijan supplies most of the gas needed by Turkey at a much cheaper price than the European market price, and instead has access to European markets through Turkey. The Republic of Azerbaijan’s gas diplomacy and oil and gas pipeline have generated billions of dollars in revenue for strategic allies such as Turkey, Russia and Georgia, and strengthened its relations with them by creating trade opportunities. The complex gas diplomacy of the Republic of Azerbaijan has reached a stage where after the 44-day Nagorno-Karabakh war and in March, the Russian gas export pipeline to Armenia, which passed through Georgia, went out of service due to urgent repairs, and the Republic of Azerbaijan entered the field.
At that time, thanks to the efforts of Russian Gazprom officials and a short-term contract with the National Oil and Gas Company of the Republic of Azerbaijan (SOCAR), it supplied gas to Armenia only a few months after the war.
Aliyev’s government, on the other hand, has resolved its differences with Turkmenistan over a joint oil and gas field in the Caspian Sea after three decades, and the oil and gas field will soon be connected to Azerbaijan’s energy export network. Of course, this cooperation can help the Republic of Azerbaijan to strengthen its access to Central Asia and in the long run to the Far East and China, and the country will probably have a glimpse of markets such as Uzbekistan, Mongolia and China. They are also looking to enter the Iraqi gas market, another Iranian gas customer, through their strategic pipeline in Turkey, and have held consultations with the government of Mustafa al-Kazemi.
Overtaking Iran with Iranian capital
It should be noted that in recent years, the Republic of Azerbaijan has developed its gas sector with unprecedented acceleration and has been able to attract large investments from all over the world. The Shahdniz gas field, which is the beating heart of the economy of the Republic of Azerbaijan, has been developed with the huge investment of an international consortium led by BP, but also invested by Russia and Iran. In fact, the National Iranian Oil Trading Company owns 10% of the shares in this huge gas field, but has been denied access to its sources of revenue in this field due to sanctions. Iran’s revenue from the gas field on which the Aliyev government’s power base is based, in recent years in the Kimen Islands deposited and blocked. In recent months, Russia has announced that it will increase its investment in the gas field by 15%, which has given the Republic of Azerbaijan more hope for the further development of the energy sector and the support of the Kremlin. In such a situation, the Republic of Azerbaijan, with the help of huge investments it has attracted from all over the world for its energy sector, and on the other hand, with the cooperation of allies such as Russia, Turkey and Georgia, has bigger dreams and seeks to capture Iran’s gas export markets. . In fact, it can be said that Baku has taken advantage of sanctions as well as Tehran’s negligence regarding gas diplomacy in recent years, and seeks to overtake Iran in this regard. Undoubtedly, concluding new gas contracts and extending existing contracts with Turkey and Iraq should be one of the most important diplomatic priorities of the Ministry of Oil and the country’s diplomatic apparatus in the region. Failure to pay attention to this issue and establish new energy relations with its neighbors will only give Baku more opportunities to jeopardize Iran’s interests in the region.
Source: World Economy newspaper
