Vol. 4, No. 21 (November 01, 2011)

“No Obstacles Remain" to flow of Azerbaijani gas to Europe

Paul Goble
Publications Advisor
Azerbaijan Diplomatic Academy

Seventeen years ago, Azerbaijan signed an agreement with the Western major oil companies allowing its oil to flow to the West, a deal that has been celebrated as “the deal of the century” both in Baku and the West.  On October 25, however, President Ilham Aliyev and Turkish Prime Minister Recep Tayyip Erdogan signed an accord in Izmir that, in the words of Turkish Energy Minister Taner Yildiz, means that “no obstacles remain” to the flow of Azerbaijani gas to Europe and one that may thus prove just as important as its predecessor.

“By the end of 2017 or the beginning of 2018,” Yildiz said, the five billion US dollar pipeline the two agreed to will make possible the delivery to Europe every year of ten billion cubic meters of Azerbaijani natural gas to the West, a channel that is likely to continue for many years given the estimated 1.2 trillion cubic meters of gas reserves in the Shah Deniz fields and that will help provide for the energy needs and energy security of the European Union for decades ahead. [1] 

There are three reasons for concluding that this latest agreement between Azerbaijan and Turkey is especially significant.  First of all, it came at the first meeting of the Council of Strategic Cooperation between the leaders of the two countries; a meeting at which President Aliyev and Prime Minister Erdogan signed not only the accord on the gas pipeline, but also various agreements that link these two countries together more closely than at any point in the past

Second, this latest Azerbaijani-Turkish agreement sets the stage for the complete realization of the Southern Gas Corridor, which involves Nabucco, the Transcarpathian Gas Pipeline, and the Turkey-Greece-Italy pipeline.  Because the success of these projects is a priority for the European Union in its pursuit of energy security, the Azerbaijani-Turkish accord drew praise from European and other Western leaders and ensures that the relationship between the former and the latter will be intensified and even defined by the flow of Shah Deniz gas.

And third—and this is why the October 25 accord is especially important—gas deliveries are very different than oil.  Except for LNG, gas must be delivered through pipelines, which means that once they are built they tend to have a long life and far more significant geopolitical impact than is the case with oil, which can be shipped in a variety of ways and thus is fungible.  It is thus relatively easy for countries to shift suppliers of oil, but once countries reach agreement on gas pipelines, they tend to rely on them for long periods of time.  Western Europe has experienced that with Russian gas over the last 40 years; the EU’s support of the Southern Corridor and hence of the Izmir accords is thus an effort to break that dependence.

Given that, President Aliyev’s remarks at the signing ceremony are entirely appropriate.  He said that October 25 was “an unforgettable day in the history of Turkish-Azerbaijani relations,” not only because those ties will now be regularized through meetings of the Council of Strategic Cooperation at a High Level, but also because “the documents in the energy and gas spheres” signed there “open for us new possibilities and horizons and create conditions for our successful long-term cooperation.  I am certain,” the president said, “that this cooperation will benefit our peoples and the countries friendly to us.” 


[1] See http://news.day.az/politics/295351.html (accessed 29 October 2011).