Turkmenistan-Azerbaijan partnership in the Caspian region

by Shahmar Hajiyev 

Turkmenistan and Azerbaijan are two important resource rich countries in the Caspian region.  According to the BP Statistical Review of World Energy 2020 Turkmenistan’s total proved oil reserves are 0.6 thousand million barrels and 19.5 trillion cubic meters of natural gas reserves. Azerbaijan’s total proved oil reserves are 7.00 thousand million barrels and 2.8 trillion cubic meters of gas reserves. These two Caspian states can contribute significantly to the global energy markets.

After the dissolution of the Soviet Union, both countries became independent nations, and consequently started implementing a policy that supported their national interests.  Energy revenues became key a factor for economic development as these countries started to export crude oil and natural gas to global energy markets. In this regard, Turkmenistan is exporting energy sources mainly in the direction of China and Russia, while Azerbaijan built necessary energy infrastructure to export its energy sources to Europe and Transatlantic space. 

Touching upon Turkmenistan-Azerbaijan relations, it is worth noting that diplomatic relations between the Republic of Azerbaijan and Turkmenistan were established on June 9, 1992. However, the disputed Sardar/Kapaz offshore oil field in the Caspian Sea frequently led to tension between two countries. The offshore field called Kapaz by Azerbaijan and Sardar by Turkmenistan was discovered by Azerbaijan in 1959. The field has reserves of around 50 million tons of crude oil and 30 billion cubic meters of natural gas. The disputed field in the Caspian Sea has been the main problem in bilateral relations since the 1990s.

Bilateral relations between Turkmenistan and Azerbaijan started to develop consistently during the presidency of Gurbanguly Berdimuhamedov and Ilham Aliyev. Two countries cooperated successfully in the transport and trade sectors. Towards this end, Lapis Lazuli transport corridor supported Afghanistan, Turkey, Turkmenistan, Azerbaijan and Georgia format. In addition, in January, 2021 Turkmenistan, Azerbaijan and Afghanistan signed an agreement on a tripartite roadmap for deeper cooperation on the Lapis Lazuli Corridor. So far, this is a new format aimed to deepen cooperation between these states. Also, freight transport between Alat-Turkmenbashi ports is an important trade route to send containers to Europe.

In view of the above, official Baku and Ashgabat cooperate successfully in the Non-Alignment Movement (NAM). After NAM Baku Summit 2019, the Ministry of Foreign Affairs of Turkmenistan stated that “Baku Summit gave an opportunity to consider in a constructive manner the role and place of Non-Alignment Movement in the contemporary world, to discuss issues relating to realization of its goals and objectives with due regard for current realities and perspectives of long-term development of international cooperation in general”.

However, despite all afore-mentioned positive dynamics in bilateral relations, major achievement between two countries was marked on January 21, 2021 when Azerbaijan and Turkmenistan signed MoU on joint exploration and development of “Dostlug” field in Caspian Sea. This agreement put an end to long-lasting dispute between official Baku and Ashgabat. This energy agreement is very important from economic and political point of view.

Looking back, it is very important to mention that the Convention on the Legal Status of the Caspian Sea which was signed between five Caspian states – Russia, Azerbaijan, Iran, Kazakhstan and Turkmenistan on August 12, 2018 in Aktau, Kazakhstan created a backbone for the future cooperation in the Caspian Sea. So, the Caspian Convention resolved many disputed issues between the Caspian countries, and as a result, Turkmenistan and Azerbaijan opened a new era for regional economic cooperation.

Turkmenistan-Azerbaijan energy deal in the Caspian Sea is a real chance for the South Caucasus and Central Asian regions. From geo-economic point of view, all regional states can benefit from inter-regional projects. Joint development of “Dostlug” offshore field will resume Turkmen oil export via existing energy infrastructure of Azerbaijan.

This agreement also opened the window for Turkmenistan to join the Southern Gas Corridor (SGC) to supply natural gas to Europe. With the signing of the Caspian Convention which is supposed to facilitate the building of the undersea pipelines with the consent of the countries only involved in the project, Trans-Caspian Pipeline (TCP) again comes to the agenda.

Azerbaijan has already finalized the SGC to supply natural gas from the Caspian Sea to Turkey and Europe. The European leg of the SGC – Trans Adriatic Pipeline (TAP) started to deliver the first natural gas from Shah Deniz 2 to European energy consumers on December 31, 2020. This is a historic event after delivering the Caspian crude oil via Baku-Tbilisi-Ceyhan (BTC) oil pipeline directly to Western energy markets. TAP plays an important role in the EU’s diversification process.

BTC oil pipeline and SGC are two mega inter-regional energy projects which opened a window for the Caspian and Central Asian states to diversify their export routes. As noted by Vitaly Baylarbayov, deputy vice-president of the State Oil Company of the Republic of Azerbaijan (SOCAR), speaking in AIR Center webinar: “Azerbaijan will welcome other countries to use the pipeline systems to supply gas to Europe”. So, joining of Turkmenistan to SGC will be huge advantage to diversify its export routes by supplying natural gas to Europe.

It may be also beneficial for Azerbaijan to receive Turkmen gas. As noted by Matthew Bryza, former US Ambassador to Azerbaijan, speaking in the Central Asia and Caucasus Institute webinar: “Azerbaijan can use Turkmen gas for its developing petrochemical industry as well as to meet export commitments for SGC”. Now, it is very clear that Turkmenistan-Azerbaijan energy cooperation must be beneficial and reliable for both countries. New dynamics of cooperation will open new opportunities for broader cooperation in the Caspian region.  

In the end, after 44 days of military operations, Azerbaijan restored its territorial integrity, and such a situation created a new geopolitical equilibrium in the region. Turkmenistan sees the political and economic power of Azerbaijan, and it is in Ashgabat’s interest to cooperate with powerful player of the region. So, the 2nd Karabakh victory helped Azerbaijan to feel more confident, and created new realities for regional states. Armenia like other countries may benefit from various transport and connectivity projects by cooperating with regional countries. Azerbaijan has already proved itself as a reliable partner for both regional and non-regional states.

Shahmar Hajiyev, leading advisor at the Center of Analysis of International Relations (AIR Center) especially for News.Az


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