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The Economıc story ın Azerbaıjan-Armenıa Conflıct

Energy and trade corridors pass overland between Asia and Europe only in three ways: through Iran, Russia, and Azerbaijan. Considering that Europe has strained ties with Russia and Iran, Azerbaijan offers an enticing gamble. Russia does not want to risk its control over Azerbaijan.

Russia’s power over Azerbaijan’s rival neighbor Armenia is sufficient to potentially reignite the bloody Nagorno-Karabakh (Fariz, 2006) dispute of the late 1980s and early 1990s — giving them a dangerous opportunity to disrupt trade between Europe and Azerbaijan.

TANAP &TAP

 

Figure 1 (TAP, 2020)

Russian gas firm Gazprom’s volume of natural gas exports(Gazprom, 2020) by pipelines decreased to 46.6 billion cubic meters by 24 % in the January-March 2020 period compared to the same period last year. Gazprom said in the first quarter of 2020, its natural gas export revenues via pipelines dropped by 51.6 % to $6.8 billion year-on-year. The demand for Gazprom is expected to decrease more due to TANAP & TAP gas pipelines.

TANAP(TANAP, 2019) Natural gas  launched by SOCAR (Azerbaijan) and BOTAS (Turkey) has changed the region’s dynamics and strategies. The TANAP project has shaped not only a new market image from Nabucco versus South Stream to TANAP versus South Stream but also      the   pipeline   strategy   rivalry   between   Russia   and   Central   Asia.   Kazakhstan, Turkmenistan, and Uzbekistan are landlocked countries in the eastern Caspian region, and Azerbaijan is the only post-Soviet state to be active in reaching foreign markets via non-Russian routes. Russian gas accounted for 33 % of Turkey’s gas imports in 2019, down from 52 % in 2017 as Ankara raised Azerbaijan’s purchases of liquefied natural gas.

TAP (TAP, 2020) will ship natural gas from Azerbaijan’s giant Shah Deniz II field to Europe. The 878 km long pipeline will link to the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, crossing Greece, Albania, and the Adriatic Sea, before reaching ashore in Southern Italy. TAP’s routing will allow gas supply to many Southeastern European countries, including Bulgaria, Albania, Bosnia and Herzegovina, Montenegro, and Croatia. The landfall of TAP in Italy offers several prospects for more transportation of Caspian natural gas to some of Europe’s largest markets, such as Germany, France, the UK, Switzerland, and Austria.

TAP’s initial capacity of 10 billion cubic meters (bcm) of gas per year is equal to about seven million households in Europe’s energy consumption. In the future, the installation of two additional compressor stations will double throughput to more than 20 bcm as additional energy supplies come on stream in the broader Caspian region. The pipeline would also have the so-called ‘real reverse flow’ feature, allowing gas from Italy to be diverted to South-East Europe if energy supplies come interrupted or more pipeline capacity is needed to supply additional energy supplies.

The annual natural gas production of Azerbaijan is approximately equal to just 5 percent of that of Russia. Nevertheless, the completion of its Southern Gas Corridor — which is scheduled to start piping gas to Southern Italy through Georgia, Turkey, and Greece in 2019

  • would lead to market competitiveness in Europe and weaken Russia’s ability to use energy as a political tool, a stated aim of both EU and US policy. However, it also places Azerbaijan in the uncertain position of risking the wrath of Moscow, ensuring that Brussels and Washington have to serve as a loyal ally to Baku to keep Azerbaijani gas flowing west.

Trans Caspian Fiber Optic (TCFO)

Earlier this year (Azertelecom, 2020), The Memorandum of Understanding ( MoU) on the development of a fiber-optic cable extending through close to 300 km (186 mi) along the Caspian Sea was signed by Azerbaijan and Turkmenistan — two neighbors.

 

Figure 2 (Azertelecom, 2020)

This project is intended to expand internet and digital connectivity to 1.8 billion people in the Caucasus, Middle East, Central, and South Asia countries via Azerbaijan, a country located on the western coast of the Caspian Sea. Baku is added to the global web map, along with Paris, Frankfurt, Sofia, Istanbul, Moscow, Amsterdam, and Dubai, by turning Azerbaijan into a digital hub.

Baku-Tbilisi-Kars Railway

With a total length of 826 kilometers, the Baku-Tbilisi-Kars (BTK) railway aims to complete a transport corridor between Azerbaijan and Turkey (and thus link Central Asia and China to Europe) by rail. The railroad is built based on an intergovernmental agreement among Georgia, Azerbaijan, and Turkey. According to (UNECE, 2005) Report

TRANS/WP.24/2005/2 of the Committee on Economic Commission for Europe Inland Transport of 21 February 2005, the proposed railway junction project Baku-Tbilisi-Kars was included in Appendix I to ‘European Agreement on important lines  of  international combined transportations and corresponding objects.’

Figure 3

Throughout the Soviet period, Moscow operated the Caspian energy reserves and pipeline networks in line with the Kremlin’s interest. Since the fall of the Soviet Union, the Central Asian countries welcomed international powers and their multinational corporations. Geopolitical forecasts highlight that Russia is not going to welcome economic enhancements in former Soviet Union members.

Reference

  1. Fariz Ismailzade (2006). Russia’s energy interests in Azerbaijan : a comparative study of the 1990s and the 2000s. London: Gmb.
  1. Gazprom (2020). ООО «Газпром экспорт». [online] Available at: http://www.gazpromexport.ru [Accessed 28 Jul. 2020].
  1. com. (2019). TRANS ANATOLIAN NATURAL GAS PIPELINE PROJECT | TANAP. [online] Available at:

https://www.tanap.com/tanap-project/why-tanap/.[Accessed 28 Jul. 2020].

  1. TAP (2020). TANAP and TAP Complete Pipeline Connection. [online] TAP. Available at:

https://www.tap-ag.com/news-and-events/2018/11/27/tanap-and-tap-complete-pipelin e-connection [Accessed 28 Jul. 2020].

  1. azertelecom.az. (2020). AzerTelecom | AZERBAIJAN NETWORK. [online] Available at: https://www.azertelecom.az/en/aznetwork/ [Accessed 31 Jul. 2020].
  1. UNECE (2005) .Transport – UNECE. [online] Available at: https://www.unece.org/trans/wp24/wp24-official-docs/2005.html [Accessed 31 Jul. 2020].

Teymur NABİLİ

 

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