Azerbaijan Sees Positive Signs for Energy Partnership with Turkmenistan

Azerbaijani President Ilham Aliyev has recently stepped up his ongoing campaign to promote Azerbaijan as the key to Europe's energy security at a recent energy summit in Kyiv. But this is a role in which Baku needs a supporting actor. Azerbaijani experts believe that the Aliyev administration now has agreements with Turkmenistan to play that part.

At the May 23-24 energy summit, Azerbaijani President Ilham Aliyev emphasized Azerbaijan's role not only as an oil and gas exporter, but also as a transit country. "We consider the maximum diversification of oil and gas export and transit routes and we already have success in this area," Aliyev told summit participants, Ukrainian news agencies reported.

To promote that idea, Aliyev outlined other transit deals already in the works. The opening of a new terminal for Azerbaijani oil in Kulevi, Georgia, ties in with plans to ship Caspian Sea oil via a pipeline running from the Ukrainian Black Sea port of Odessa to Gdansk, Aliyev said. "[I]t is part of a new energy corridor to Europe," he said.

Turkmen President Gurbanguly Berdymukhammedov's first official visit to Baku on May 19-20, the first by a Turkmen leader in over a decade, appears to fuel much of this optimism. But one concrete action has taken those sentiments further.

On May 19 a ship owned by the State Oil Company of the Azerbaijan Republic (SOCAR) will deliver equipment to a Turkmenneftgaz offshore oil rig in the Turkmen-controlled sector of the Caspian Sea, SOCAR has announced.

Ilham Shaban, an energy expert and consultant, terms the deal "a very positive signal" that builds on Berdymukhammedov's "clear statement" during his visit to Baku that relations between the two countries are "very much about cooperation in the energy sector and transit of energy resources."

If that trend continues, Shaban believes, an agreement between Azerbaijan and Turkmenistan on delineation of their territorial lines could be forthcoming by the time of the summit of Caspian Sea littoral states (Azerbaijan, Iran, Kazakhstan, Russia, Turkmenistan) in Baku this September.

One prominent expert on Caspian Sea legal issues contends that such an agreement -- in broad terms -- could already exist.

"I think such an agreement foresees the division of the seabed based on the principles of a similar agreement on the Caspian's legal status between Azerbaijan, Kazakhstan and Russia," commented Dr. Rustam Mammadov, head of Baku State University's international law faculty. That agreement divided the Caspian seabed according to national sectors, but left the water in joint use.

Mammadov bases his belief on an impression of Berdymuhamedov as a pragmatic leader ready to leave Turkmenistan's differences with Azerbaijan in the past. "Since Berdymuhamedov came to power, relations [with Turkmenistan] have been constantly improving," Mammadov added. "Turkmenistan reopened its embassy in Baku, Azerbaijan fully paid its [$44.8 million gas] debt. Therefore, I believe that during the talks in Baku both sides seriously discussed the Caspian status issue and came to certain agreements."

Nonetheless, like Shaban, Mammadov believes that President Aliyev and Berdymukhammedov will "need some time to announce the deal officially."

Azerbaijani government officials have not commented on the likelihood of such an agreement, although remain resolutely upbeat about what the Baku meeting meant for relations between the two states.

Ownership of the Kapaz/Serdar offshore oil field has long been paired with the fight over territory lines. Both Shaban and Mammadov forecast that Baku and Ashgabat will soon announce a breakthrough on this sticky issue as well. The pair believe that the agreement will specify joint exploration of the field. Shaban projects that British Petroleum-Azerbaijan will be named the project's operator "since Kapaz is located just 40 kilometers from the Azeri field where BP already enjoys all the necessary infrastructure for oil transportation" to Baku and on for export via the Baku-Tbilisi-Ceyhan pipeline.

With those stumbling blocks removed, Azerbaijani experts believe that the deck would be cleared for agreement on the trans-Caspian pipeline project. Ashgabat, they say, has to prove that it has enough gas to offer the project.

"Nobody knows exactly how much gas Turkmenistan does really have," Shaban said. Existing obligations to Russia and China are cause for worry on this count, he added. "If an audit will prove that Turkmenistan has enough gas, interest in the trans-Caspian pipeline will be more serious," he said.

Turkmenistan has announced that it will conduct such an audit, but no date for the assessment has yet been set.

One political analyst, however, sees an additional obstacle. Ashgabat is absorbed with balancing its foreign and energy policies between the West, Russia and China -- a strategy that leaves little room for sudden upsets, noted Elhan Shahinoglu, head of the Atlas research center in Baku. As such, Turkmenistan, Shahinoglu predicted, will be careful and not rush to announce any agreement with Azerbaijan that could place at risk other interests.