As Iran Gets a Big Slice of Azerbaijan's Energy Pie, Europe Comes Knocking

With Europe, Russia, Turkey, Iran and Georgia all trying to jump the queue for its hydrocarbon riches, Azerbaijan has long been sitting in the catbird seat. Now, with a major natural gas deal with Iran under its belt, Azerbaijan has demonstrated yet again that it will be unsparing in distributing its riches East, West, North and South.

Based on a January 12 agreement signed by the two countries’ state energy companies, Azerbaijan will funnel 1 billion cubic meters of natural gas to the Islamic Republic this year. The exports will begin next month, and volumes will increase over time, said State Oil Company of the Azerbaijani Republic President Rovnag Abdulayev.

This could be bad news for Nabucco, an epic plan to bring gas to Europe without Russia levying a political and economic tax on exports. The Nabucco project already suffered a blow last year when Azerbaijan agreed to sell 2 billion cubic meters of gas to Russia in 2011. And now Iran adds insult to injury by grabbing a slice of Azerbaijan's gas wealth, energy that Europeans could certainly use. 

But Brussels is making its move. The day after the Iranians left Baku, the Azerbaijanis rolled out the red carpet for European Commission President Jose Manual Barroso and European Energy Commissioner Guenther Oettinger -- in town to talk energy exports.