Azerbaijan-Turkmenistan gas deal marks new era of cooperation at Caspian [EXCLUSIVE]

By Ayya Lmahamad

Azerbaijan and the Central Asian country of Turkmenistan entered a new stage of cooperation last month after the two countries agreed to jointly develop the once-disputed energy field in the Caspian Sea.

On January 21, the two countries’ foreign ministers signed a memorandum of understanding on joint exploration of Dostlug field.

Called Kapaz in Azerbaijan and Sardar in Turkmenistan until the signing of the agreement, Dostlug filed has estimated 60 million oil reserves and 100 billion cubic meters natural gas reserves.

The deal will enable future transport of Turkmen hydrocarbons to Europe via Azerbaijan, thereby bolstering Azerbaijan’s position as a regional energy hub and Europe’s energy provider.

Meeting his Turkmen counterpart Gurbanguly Berdimuhamedov via video conferencing on January 21, following the signing of the memorandum of understanding, Aliyev reminded that Azerbaijan and Turkmenistan are starting joint work on the development of a field in the Caspian Sea for the first time in history and the deal will benefit both the Turkmen and Azerbaijani peoples.  

“Today's signing ceremony opens a new page in the development of the Caspian's hydrocarbon resources. This project will contribute to the strengthening of the energy security of our countries, as well as our neighbors. This project opens up great export opportunities, thereby contributing to the growth of the well-being of our peoples,” Aliyev said.

Turkmenistan President Gurbanguly Berdimuhamedov noted that the signing of the memorandum marks a a new stage in the energy cooperation between two countries in the Caspian Sea.

“New opportunities for joint work based on a solid international legal framework are opening up and additional serious incentives are emerging for the inflow of major foreign investments into our region on a systematic and long-term basis,” he underlined.

Discovered in 1986 by Azerbaijani specialists, Dostlug field locates on the maritime border between Azerbaijan and Turkmenistan.

Experts believe that joint exploration of Dostlug field will bolster subsea Trans-Caspian natural gas pipeline between Baku (Azerbaijan) and Turkmenbashi (Turkmenistan) that might also be joined by Kazakhstan.

Expert Ilham Shaban in his interview with Azernews noted that signing of this agreement will open possibilities for mutual cooperation not only between Azerbaijan and Turkmenistan but for other countries too, even those that are not part of the Caspian basin.

He underlined that after the adoption of the convention on the Caspian Sea status at the Aktau summit in August 2018, this is the first time when the resolution has been made on a disputed field.

“This once again proves that through this convention issues can be resolved in the legal field,” he said.

Shaban stated that with the start of production and exporting works, this deposit will generate additional income for both countries and companies involved, boosting and bringing additional assets to the countries’ economies.

“For example, the deposit is estimated to have reserves of 50 million tons of oil, so if we assume it will produce 2 million tons of oil annually, in most pessimistic forecasts, Azerbaijan’s share in it will be 1 million ton or around 7 million barrels of oil. And if we take an average oil price of $50, then Azerbaijan’s revenues from this deposit will be around $350 million,” the expert noted.

He emphasized that for Azerbaijan, which is now in a period when its oil production volumes are decreasing, the development of this field will play a stabilizing role in its oil industry.

Additionally, the expert noted that the signing of this agreement is an important step for both Azerbaijan and Turkmenistan, as both economies are dominated by energy, and will bring an additional income to the countries’ economies.

It should be noted that Turkmenistan is the world’s fourth-largest gas exporter and the new memorandum of understanding with Azerbaijan paves a way for direct gas connection between the two countries.

Europe started importing Azerbaijani gas through the Southern Gas Corridor on December 31, as a part of the EU strategy to diversify its gas supplies. The EU has long been discussing with Turkmenistan supply of Turkmen gas to Europe via Trans-Caspian pipeline that could join the Southern Gas Corridor in Azerbaijan. Azerbaijan’s energy infrastructure will enable to transport Turkmen gas to Europe without building new pipelines.

It should be noted that apart from joint development of Dostlug field, Azerbaijan and Turkmenistan are also cooperating on the Lapis Lazuli corridor, which ensures the delivery of goods from Afghanistan through Turkmenistan, Azerbaijan and beyond. Transit and Transport Cooperation Agreement (Lapis Lazuli) between Turkmenistan, Azerbaijan, Georgia, Turkey, and Afghanistan was signed in November 2017 at the Ministerial Meeting of the 7th Regional Cooperation Conference on Afghanistan. Among the main objectives of the partnership in this format is to increase the economic integration of the region.

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Ayya Lmahamad is AzerNews’ staff journalist, follow her on Twitter: @AyyaLmahamad

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