Sunday, 12 April 2009
On March 27, 2009, a memorandum was signed between the Azerbaijani oil company SOCAR and Russia's Gazprom. This memorandum includes a statement of deliveries, beginning in January 2010, of Azerbaijani natural gas to Russia on the boundary conditions, DAF Azerbaijan / Russia. In the near future the Baku - Novo Filya pipeline, part of the transmission system of Azerbaijan, which runs from Baku to the Russian border on the Caspian coast, will be inspected. The length of the pipeline is about 200 km; the diameter of the pipe is the same 1220 mm.
This agreement is important because for the first time since its independence Azerbaijan, which imported gas from Russia, has become an exporter to this country. The signing of this memorandum has led to a number of preconditions, which are the causes of events occurring in the region. The first is to note that Gazprom was particularly interested in signing such an agreement with Azerbaijan. This serves several reasons. The first reason is that in the past few years, production of natural gas in Russia has been decreased. Preferring not to invest large amounts of capital in the development of natural gas, Gazprom to date has preferred to operate with the Soviet Union deposits, although these deposits have begun to dry up over time. However, a treaty signed with European suppliers obliges Russia to search for additional volumes of gas. Therefore, first of all Russia has guaranteed the supply of gas from Central Asia, significantly increasing the price for it. Russia also extended the proposal to Azerbaijan, which opened the large Shahdeniz gas field in the late 90s.
Russia’s second reason lies in the problems of gas supplies to southern Russia. Thus, one could guarantee the stable supply in the North Caucasus republics. But the main reason is the desire of Russia to concentrate the supply of natural gas from former Soviet republics on its territory. Actually, Azerbaijan is the only state that could supply gas to the planned Nabucco pipeline. Proposed by the EU, this pipeline would transport natural gas from Azerbaijan and the Central Asia states through Turkey to south-eastern Europe. In reality, gas may come only from Azerbaijan.
Russia has proposed an alternative to Nabucco project, South Stream, which is also in need of Azerbaijani gas. In this case, Russia tries to prevent the realization of Nabucco.
With regard to Azerbaijan, it is the first time, after gaining its independence, that it shifted its energy exports from west to the north. There were several reasons for this.
The primary reason was the passive attitude of Western partners in the implementation of the project. Lack of coordination and understanding in the sphere of energy between the members countries of the EU led to the fact that this organization could not determine the strategy for the implementation of Nabucco. Paradoxically, the EU and its members are waiting for more concrete steps from potential exporters, hoping thereby to strengthen the project. However, Azerbaijan does not have a desire to pursue their own policies without the support of the West, and thereby worsen relations with Russia. This fact was especially true after the 5-day war in Georgia. Despite the fact that the political regime in Georgia came to power with broad support from the West, these countries did not provide the support it expected to receive. Azerbaijan also has the problem of separatism. In this case, in the interest of Azerbaijan is not to commit acts that could provoke Russia.
Another reason for signing the memorandum with Russia lies in the position of Turkey. Turkey is trying to address not only the transit of Azerbaijani gas through Nabucco, but also wants to become the seller. In particular, Turkey wants to purchase natural gas at the border with Azerbaijan and resell it to Western consumers at a several-fold price increase. This situation would not benefit Azerbaijan. In addition to that, Russia's proposal to buy Azerbaijani gas is commercially much more attractive. Azerbaijan profits more from selling gas in Russia than Turkey.
In addition, between Turkey and Azerbaijan, disagreements arose about the intentions of Turkey to open its border with Armenia. This border has been closed since 1993, after Armenian troops occupied the Azeri region of Kelbedzhar. Recently, however, the government of Turkey has decided to develop relations with Armenia, and the first step was the visit of President Gul to Armenia's capital Yerevan to watch a soccer qualifying match between the two national teams. The next step in the development of relations is to be the opening of borders between the two countries in mid-April. It should be noted that the prior condition for the opening of the border was the unconditional release of Armenian-occupied Azerbaijani territories.
This decision has received a sharp reaction in Azerbaijan. Public opinion in the country reacted negatively to the intentions of Turkey, which severely condemned the possible turn of events. Another reaction to the Turkish intention can be described with the signing of a contract between SOCAR and Gazprom. The President of SOCAR, Rovnaq Abdullayev, is also the president of the Football Federation of Azerbaijan. He arrived in Moscow on the eve of the qualifying soccer match between Azerbaijan and Russia. The signed contract has become a kind of symbolic response to Gul’s «football diplomacy» in Yerevan.
It should be noted that the signed memorandum negotiates gas exports to Russia for 2010. In this case, there is a certain amount of time to solve the problems of the realization of Nabucco, as the second phase of gas production at Shahdeniz has not yet begun. However, if there will be no concrete steps to implement Nabucco, gas for this pipeline could go in a northerly direction.
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