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Azerbaijan bolstering positions as energy transit country

4 August 2015 16:12 (UTC+04:00)
Azerbaijan bolstering positions as energy transit country

By Gulgiz Dadashova

In Azerbaijan, the high-stakes nuclear deal between the country’s southern neighbor Iran and world powers presents new ways to open up transit opportunities, from which the country seeks to gain big dividends.

The energy-rich Azerbaijan is already on the path to exporting not only its own natural gas to Europe, but Iran’s as well. Although international sanctions are still in place, Tehran seems willing to consider the idea.

The Trans Anatolian Pipeline, which will later be linked to the Trans-Adriatic Pipeline, can become a reliable route for supplying Iranian gas to Europe.

“Iran is examining various routes for supplying its gas to other countries, and TAP is one of those routes,” Mehdi Mohtashami, the head of the secretariat of the Azerbaijan-Iran Intergovernmental Commission for cooperation in trade, economic, and humanitarian spheres, earlier told Trend 3. “We have already had preliminary talks with Azerbaijan and have done certain work in this regard.”

In particular, as Mohtashami said, Iran conducted research on the supply of its gas to Europe via Azerbaijan.

“Iran has one of the world’s largest gas reserves, therefore has interest in its exports,” he said, adding that his country is currently supplying gas to Turkey.

Baku also voiced readiness to transport Iranian oil and gas to world.

"Iran can use the infrastructure of Azerbaijan, especially Baku-Tbilisi-Ceyhan pipeline to export its oil," Azerbaijan’s Economy and Industry Minister Shahin Mustafayev said addressing a meeting with Iranian Oil Minister Bijan Namdar Zanganeh in Tehran on August 4.

The minister recalled that Iran in the future could also join the TANAP, a part of the Southern Gas Corridor designed to bring Azerbaijan’s Shah-Deniz gas to Europe.

Iran boasts about 18 percent of the world’s natural gas supplies, according to Fitch Ratings.

But when exactly Iran will be able to export its energy to Europe is a subject of speculation, as the Islamic Republic first needs to fulfill its obligations in the joint comprehensive plan of action and wait for the lifting of the sanctions.

Also, Iran possibly joining the Western route opens some potentially interesting scenarios in the region’s high-stakes energy game, which also piques the interests of energy-rich nations Turkmenistan and Russia – the world’s second biggest gas producer on which Europe depends – and Turkey, an ambitious player able to alter the energy landscape of the region.

Baku, which has offered an energy partnership to Tehran even before the nuclear deal, is also eager to help Turkmenistan to bring its gas to the world market, and the country cooperates with its strategic ally Turkey in this regard.

Turkey is the key country for bringing Azerbaijani, Iranian, and Turkmen gas to Europe. Azerbaijan and Turkey are working to construct the TANAP. Once finished, the pipeline would carry some 16 bcm of gas, of which 6 bcm would go to Turkey and 10 bcm to TAP.

Turkmenistan has already launched a large-scale preparation for the diversification of its gas supplies, to Europe in particular. To do so, it will be necessary to create the missing Trans-Caspian segment, join the TANAP and use the opportunities of the Southern Gas Corridor initiated by Azerbaijan.

The West has long been waiting for this step, lobbying for the idea of the Trans-Caspian Pipeline as a part of the Southern Gas Corridor, and working to bring Ankara, Baku, and Ashgabat together to work out the project.

One of the objectives of the EU’s policy in the Southern Gas Corridor is to enable other gas sources in the corridor to deliver significant gas volumes to the EU and to end dependence on Russian gas.

The 3,500-kilometer Southern Gas Corridor which would finally end Europe’s dependence on a single pipeline was initially launched as part of the South Caucasus Pipeline Expansion, which will connect the Sangachal terminal with eastern Turkey through Georgia. It will link up with the SOCAR-led TANAP to be connected with a third pipeline TAP on the Turkish-Greek border.

“While Azerbaijan is widely perceived as the enabler of the Southern Gas Corridor to the EU, another objective of the EU’s policy in the Southern Gas Corridor is to enable other sources of gas in the corridor to deliver significant volumes of gas to the EU and provide significant benefits in terms of diversification of supply, competition, and security of supply,” a source in the European Commission told Trend on July 31.

Thus, Turkmenistan and Iran joining TANAP and TAP would surely strengthen Azerbaijan’s regional position as a transit country. This will not only bring economic benefits, but also political dividends that will be much more significant.

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Follow Gulgiz Dadashova on Twitter: @GulgizD

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