Azerbaijans role in the Euroasiatic energy chessboard geopolitical and strategic perspective

IntroductionThe presence in its territory of huge oil and gas reserves and its geographic-territorial location as a

kind of lsquoenergy bridgersquo between Caspian energy resources and European markets represent two

main geopolitical factors which have enhanced the strategic relevance of Azerbaijan in the regional

and international scenario

These conditions have attracted several energy projects aimed to cross Azeri republic or to use

Azeri oil and gas reserves through pipelines and LNG transport options the most famous is the

EU-backed Southern Gas Corridor (which includes pipeline projects like Nabucco TAP ITGI

White Stream) among others like AGRI or the recent Trans-Anatolia Gas Pipeline Project which

stress the rising importance of this Caucasian republic

Starting from the analysis and comparison of the Azerbaijan and EU energy diversification strategy

goals the aim of this paper is to evaluate if Azerbaijan could play both roles energy supplier and

energy hub in the lsquoEast-Westrsquo corridor in the next years and which geopolitical strategic and

economic gains could obtain considering following issues

Azerbaijan is a strategic key partner for EU in order to achieve its energy security strategy

focused on the diversification of export routes

Azerbaijan could be a relevant geopolitical partner in the Russian energy strategy aimed to

preserve the EU dependency from Russian gas hindering the realization of the Southern

Corridor

Azerbaijan is the obliged route for Central Asian states (mainly Kazakhstan and

Turkmenistan) which aimed to deliver their oil and gas exports towards Western and

European markets as a matter of fact the precondition for a full implementation of the

Southern Corridor is the Turkmen-Azeri appeasement

Nevertheless the concrete achievement of the Azeri geopolitical ambition to become a strategic

energy supplier and transit country depends on the solution of regional hindrances such as the

obliged Georgian export route the unsolved Caspian legal status relations with Turkmenistan to

realize the Trans Caspian energy corridor

Azerbaijans diversification strategy of energy exports between geopolitical issues and EU energy needs

Thanks to its strategic geographic position and to its huge oil and gas reserves Azerbaijan has

become a significant geopolitical player within the regional and international energetic chessboard

1

which will legitimate its role as transit country and energy supplier for the energy route defined

lsquoEast-Westrsquo corridor

Since the implosion of the Soviet Union in 1991 and the national independence of post-soviet states

the promotion of a westward energy route - allowing the transport of Caspian oil and gas reserves

towards EU markets bypassing Russian and Iranian territory ndash has represented an ambitious and

multi-faceted strategic card to play for both external geopolitical actors (mainly European Union

and United States) and new Caucasian and Central Asian independent states

On the one hand a westward energy export route could be conceived as a tool to strengthen the

political sovereignty and economic independence from Moscow of Azerbaijan and new post soviet

states On the other hand the huge hydrocarbons reserves located on the Caspian basin clearly

appear as the main attraction pole driving powerful external geopolitical players to focus their

strategic interests and goals on the area according to the International Energy Agency there are 48

billion barrels of proven oil reserves in the Caspian region while gas reserves are estimated 13

trillion cubic metres (tcm) 7 percent of the worlds total proven natural gas reserves1

If the US markets are too far to benefit from the Caspian energy the re-direction of the Caspian

hydrocarbons towards European markets could represent a relevant option for the EU

diversifications strategy of routes and supplies strengthening its energy security condition by

means of the reduction of the Russian energy imports dependency2

The Ukraine-Russia gas disputes in 2006 and 2009 and Belarus in 2007 for gas price and transit fee

ndash which caused the disruption in Russian gas supplies to European countries ndash dangerously stress

Europersquos vulnerability in its dependence on imported Russian gas pushing the EU 27 to develop

new alternative pipelines oriented to the European markets and bypassing Russian territories and

Gazprom control

Furthermore according to the different scenarios forecasting future levels of natural gas demand

and supply the EU natural gas demand will raise to range between 470 and 650 billion cubic metres

(bcm) in 2030 with a domestic production estimated to cover less than 20 percent of the EU

projected gas consumption the EU import requirements are likely to reach a level of 370 to 580

bcm by the end of 2030

In order to weaken these serious threats to its energy security condition EU has planned to promote

the realization of an energy lsquoEast-Westrsquo corridor conceived as a framework of infrastructures

known as Trans-Caspian Oil and Gas Transport System aimed to channel hydrocarbons from

Azerbaijan and Central Asian energy-rich countries (Turkmenistan Kazakhstan and Uzbekistan) in 1 International Energy Agency World Energy Outlook 2010 Paris OECDIEA 2010 pp 499-5252 Following the enlargement of the EU in 2004 with the integration of the Eastern European countries the issue of the

energy security became more relevant because their adhesion in the European Union has implied an increasing energy dependency on Russian imports Indeed most of these nations (Estonia Latvia Lithuania Bulgaria Slovakia) are completely dependent on one supplier for gas and oil imports which is Russia

2

a westward direction to the European markets

The implementation of this energy alternative route has allowed Azerbaijan to become a strategic

pawn mainly because of its geopolitical centrality in connection with the EU plans of energy routes

diversification and benefiting of other relevant assets which enhance its position

Firstly in a geographic-geopolitical perspective Azerbaijan is an obliged route for energy corridors

transporting Caspian resources planned to bypass Russian and Iranian territoriesas a matter of fact

the 1979 US sanctions on Iran and the international opposition against Teherans decision to develop

a nuclear policy have hindered any attempt to exploit an energy Iranian route (potentially shorter

and easier to realize) or use Iranian reserves Moreover also the ecological and security concerns

based on the necessity to reduce oil tankers traffic through the Bosporus and the Dardanelles straits

have contributed to rise the Azerbaijans importance as an alternative transit route and strategic hub

for Caspian energy exports

Secondly the huge oil and gas reserves located in its soil has allowed Azerbaijan to also become a

potential supplier country of this lsquoEast-Westrsquo corridor according to the 2013 British Petroleum

Statistical Review of World Energy Azerbaijans proven reserves of gas amount to 09 tcm (05

percent of the worlds total proven natural gas reserves) while Baku also holds 7 thousand million

barrels of oil proved reserves (04 percent of the world total of proven oil reserves)3 Following the

projections of the new discovered gas fields (ACG Deep Absheron Umid and Shafag-Asiman)

Azeri gas reserves could easily double and reach 25 tcm enhancing Bakus ambitions to play both

roles (transit and supplier country) within the EU strategy of diversification

Furthermore Azerbaijan could benefit from another strategic advantage linked to its geographic

position unlike Turkmenistan and Kazakhstan Azeri energy exports dont have to cross the Caspian

Sea in order to reach Western markets If tankers transport could solve the problems for Central

Asian oil exports the unsolved legal status of the Caspian basin and the geopolitical rivalry of the

five littoral states have set back until now the realization of a Trans-Caspian Gas Pipeline (TCGP)

In addition to these strategic atouts since its national independence the Azeri republic has adopted a

profitable multiple pipeline strategy in the energy sector - aimed to diversify its exports options

lessening at the same time the Russian traditional role as a transit country of Caspian energy

suppliers ndash which has clearly contributed to enhance its position as strategic bridge linking Caspian

resources and EU markets with profitable gains for both

Consequently Azerbaijan rejected the possibility to use the existent Russian-oriented pipeline

realizing two new export routes a northern route from Baku to the Russian Black Sea port of

Novorossiisk (completed in 1997 with a capacity of 100000 barrels of oil per day) and a Western

route from Baku to to Georgiarsquos Black Sea coast of Supsa (completed in 1999 with a capacity of

3 British Petroleum British Petroleum Statistical Review of World Energy 2013 pp 6203

120000 barrels per day) The BakundashSupsa pipeline marked the beginning of reorienting Azeri

energy exports away from Russia and created the first alternative route bypassing Russian territory

for Caspian energy exports

In 2006 the realization of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-

Erzurum (BTE also known as the South Caucasus Pipeline SCP) gas pipeline have represented the

first concrete steps in order to implement the lsquoEast-Westrsquo corridor Both these infrastructures have a

strong geopolitical impact the BTC (with a capacity of 12 million of barrel per day) must be

conceived as a potential realization of the Trans-Caspian oil corridor because also Kazakhstan and

Turkmenistan commit themselves to channel oil in this project (respectively with 53 million tonnes

per year since 2006 and 31 million tonnes in 2012) transported by tankers through the Caspian

Sea Even if the BTE has a limited capacity (about 6-8 bcm per year) this pipeline is the first gas

export route which bypass Russian territory engendering hopes for the future realization of a wider

TCGP

Through these initiatives Baku has strongly showed to the EU its commitment to implement an

alternative energy corridor from the Caspian basin delivering its oil and gas in this projects and

hosting in its territory the first trunk of the export route

Azerbaijans role in the Southern Gas Corridor strategic gains

The diversification of export energy routes is an essential stronghold also for a supplier country

because it ensures a condition of energy security avoiding the total dependency on a single export

energy route In the achievement of this strategic goal Azerbaijan has also agreed to sell a limited

part of its gas (1-3 bcm) towards Russia preferring to maintain open all export routes and

economically lucrative opportunities

The convergence of strategic interests between Azerbaijan and EU focused on the energy

diversification concept has set up the Caucasian republic in the role of key partner for EU in order

to achieve its energy security through the implementation of the Southern Gas Corridor (SGC)

In addition to its strategic geographic position as a feasible transit route for the SGC Azerbaijan

also appears the only supplier country which could concretely fill this energy corridor with its gas

reserves according to the estimates Shah Deniz gas field alone ndash which until now is the only

identified source to supply SGC - holds reserves of 1 tcm In 2030 Azeri production of gas should

reach 55 bcm considering a domestic consume of 145 bcm Baku could hypothetically commit to

export from 35 to 40 bcm of gas4

In the last years Baku has undertaken three fundamental steps aimed to support the SGCs

realization in January 2011 Azeri President Aliyev signed with the President of the European 4 At present Baku exports 6 bcm of gas to Turkey and Russia markets

4

Commission Barroso a Joint Declaration on the Southern Gas Corridor which commits Azerbaijan

to deliver 10 bcm of gas per year to the EU markets in September 2011 Azerbaijan agreed to allow

EU to adopt a mandate to negotiate a legally binding treaty between the EU Azerbaijan and

Turkmenistan to build a Trans Caspian Pipeline System This initiative represents a political

institutionalisation of the energy dialogue aimed to reach the necessary bilateral arrangements

between Azerbaijan and Turkmenistan in order to legally solve their border disputes concerning the

Caspian offshore energy fields

The third crucial step was the so-called Izmir Agreement in October 2011 based on the bilateral

agreement between Azerbaijan and Shah Deniz producers with Turkey for the delivery and transit of

Azeri gas to Turkey and onward to European Union territory

We can observe that the Southern Gas Corridor is structured in a multitude of pipeline projects

which in some case are competing themselves the Nabucco pipeline is the most famous but there

are also the Turkey-Greece-Italy Interconnector (ITGI) the Trans-Adriatic Pipeline (TAP) the

White Stream and the Azerbaijan-Georgia-Romania-Hungary Interconnector (AGRI) All these

projects shared the geopolitical goal to transport Azeri gas towards European markets through a

southern route and bypassing Russian territory and control even if the potential implementation of

White Stream and AGRI could also open a western route crossing the Black Sea

The ITGI pipeline is composed by the already operational interconnector Turkey-Greece and the

planned extensions to Italy (Interconnector Greece-Italy IGI) and Bulgaria (the Interconnector

Greece-Bulgaria IGB) this project will be full operational in 2017 and will deliver 10 bcm of Azeri

gas

The Trans-Adriatic Pipeline (which is in competition with Nabucco West in order to transport the

Azeri gas extracted from the Shah Deniz Phase 2 of development) should have a capacity from 10

to 20 bcm of gas and will cross Greece-Albania and Italy furthermore TAP consortium has planned

to realize additional trunks connecting TAP to the proposed Ionian-Adriatic pipeline (aimed to

supply gas to the Western Balkans) and to Bulgaria through the realization of the Greece-Bulgaria

interconnector

For the EU Commission Nabucco represents the lsquothe flag project of the diversification efforts of

the EU for our security of supplyrsquo5 even if several hurdles have postponed until now its realization

the lack of a EU shared energy strategy the unsolved Caspian legal status the lack of gas suppliers

- with the exception of Azerbaijan ndash able to fill the planned capacity of 31 bcm per year the

competition with the Russian-backed South Stream project growing financial costs The potential

strategic relevance of the Nabuccos original version was based on its planned capacity three time

bigger than the other proposed routes of the SGC such as ITGI or TAP The original project foresaw

5 This statement was pronounced by the former EU Energy Commissioner Andris Piebalgs5

a route running from Turkey to the European gas hub of Baumgarten in Austria via Bulgaria

Romania and Hungary

The White Stream is an unclear project aimed to build a Georgia-Ukraine-EU gas pipeline - with an

offshore route linking Georgian port of Supsa and Romanian port of Constanta - to transport 8 bcm

of Azeri gas supplying Romania as well as European markets

The Azerbaijan-Georgia-Romania-Hungary Interconnector represents one of the main and more

interesting options for the export of Azeri gas it could be the first LNG (Liquefied Natural Gas)

project in the Black Sea with a planned capacity of 7 bcm that it should be upgraded to 20 bcm 6

Together with White Stream these projects have a strategic rationale for the Azeri energy

diversification policy because they represent an alternative export corridor compared to the

Southern route which also bypass both Russian and Turkish territory Also Ukraine expressed the

will to be involved in the project planning the realization of a LNG terminal in Odessa which could

arise additional geopolitical issues involving Russian-Ukraine relations (80 percent of Russian gas

exports to Europe crosses Ukraine territory) A potential participation of Turkmenistan in the AGRI

project as a gas supplier could transform this route in one of the main gas supply route oriented

towards EU also downplaying the energy-bridge role played by Turkey

The Bakus commitment to feed these projects with own gas will legitimate its strategic position

towards European attempts of energy diversification

Furthermore the regional geo-energetic scenario has suddenly changed following the Azeri-Turkish

agreement to realize the Trans Anatolia Gas Pipeline (TANAP) in December 2011 the two parts

signed a Memorandum of Understanding and in June 2012 they signed the intergovernmental

agreement aimed to realize this pipeline

This planned pipeline will be operational in 2017-2018 (when Shah Deniz Phase Two of production

comes on stream) with an initial capacity of 16-17 bcm whom 10 bcm will deliver to EU markets

and 6 bcm will feed Turkish markets the TANAP consortium (Azerbaijanrsquos State Oil Company

SOCAR will hold 80 percent of the ownership shares Turkeyrsquos state pipeline company Botas 10

percent and TPAO 5 percent in the TANAP) foresees a rising capacity aimed to reach 30 bcm in

2026 and 60 bcm after 2030 even if this ambitious output could be reached only with the

participation of Turkmenistan and others suppliers like Kazakhstan and potentially Uzbekistan

The TANAP represents a concrete and feasible opportunity for Azerbaijan to play both role of

transit and supplier country within the SGC also benefiting of several economic political and

6 AGRI will be designed to transport Azeri gas by pipeline to a Black Sea port in Georgia for liquefaction Further transport will take place via tanker to the Romanian Black Sea port of Constanta From there the gas will be pumped through Romanias pipeline system to Hungary and on to the rest of the European market The project envisages the construction of a liquefaction plant for LNG exports at the Azerbaijan-owned oil export terminal of Kulevi in Georgia as well as the construction of a terminal for importing liquefied gas to a re-gasification plant in Romania

6

strategic gains Moreover Baku will also play a third important role as financial investor of this

infrastructure committing huge revenues obtained through oil exports in order to realize a strategic

export route which allow to diversify Azeri economic gains

Considering that the consortiums partners will finance the pipelinersquos construction proportionately to

their respective stakes Azerbaijan will become the pipelinersquos main owner through which Baku will

sell its gas produced in Shah Deniz

The SCP will be the connecting link between Azerbaijan and TANAP after the upgrading of its

capacity from currently 7 bcm to 23 bcm per year by 2017

The Azeri ownership of the pipeline dispenses from paying transit fees also offering competitive

gas prices for European customers Moreover Azerbaijan would collect transit fees from other gas

producers and shippers that would use this pipeline such as Turkmenistan and Kazakhstan their

future involvement and commitment in the full implementation of the Trans-Caspian Pipeline will

be necessary in order to expand the TANAPs capacity As a matter of fact similarly to the oil

exports Azerbaijan could easily exploit its role as transit country also in the gas energy chessboard

in 2011 Azerbaijan earned $53 million from the transit of oil from Kazakhstan and $128 million

from oil coming from Turkmenistan supplies destined to fuel the BTC pipeline

In geopolitical terms Azerbaijan offers its strategic contribution directly helping EU to achieve its

energy security goals by means of a diversification of export routes and supplies the Azeri

commitment to finance and to build its own pipeline fuelling it with its own gas and selling it in the

European markets shows a concrete political will of Baku to cooperate with Bruxelles As the BTC

also TANAP is a strategic project for both Baku and Bruxelles because conceived to transport gas

out of Russian control within a pipeline exclusively dedicated to Caspian hydrocarbons

In the EU perspective the launch of TANAP project has imposed a substantial rethinking of the

original Nabucco project in order to revitalize the SGC Nabucco consortium decided to reconfigure

its project for a new role as a European continuation of the TANAP project proposing a shortened

version of the lsquoEU flag projectrsquo

On 28 June 2013 the Shah Deniz international consortium finally selected the Trans Adriatic

Pipeline project as the main export energy corridor for the Azeri gas to Europe The development of

TAP project strongly highlights the enhancement of the energy cooperation between EU and

Azerbaijan a country which has showed to be a reliable partner in the last years

However if on the one hand TAPs implementation will allow the start of the Southern Energy

Corridor on the other hand it can be defined as anti-strategic compared to Nabucco West mainly

because it will divert gas supplies away from countries that strongly depend on Gazpromrsquos

monopoly (Central Europe and South-eastern countries such as Bulgaria Hungary Austria) Italian

market (as well as Switzerland) is highly diversified and amply supplied and it could also benefit of 7

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

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Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

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Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

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12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

which will legitimate its role as transit country and energy supplier for the energy route defined

lsquoEast-Westrsquo corridor

Since the implosion of the Soviet Union in 1991 and the national independence of post-soviet states

the promotion of a westward energy route - allowing the transport of Caspian oil and gas reserves

towards EU markets bypassing Russian and Iranian territory ndash has represented an ambitious and

multi-faceted strategic card to play for both external geopolitical actors (mainly European Union

and United States) and new Caucasian and Central Asian independent states

On the one hand a westward energy export route could be conceived as a tool to strengthen the

political sovereignty and economic independence from Moscow of Azerbaijan and new post soviet

states On the other hand the huge hydrocarbons reserves located on the Caspian basin clearly

appear as the main attraction pole driving powerful external geopolitical players to focus their

strategic interests and goals on the area according to the International Energy Agency there are 48

billion barrels of proven oil reserves in the Caspian region while gas reserves are estimated 13

trillion cubic metres (tcm) 7 percent of the worlds total proven natural gas reserves1

If the US markets are too far to benefit from the Caspian energy the re-direction of the Caspian

hydrocarbons towards European markets could represent a relevant option for the EU

diversifications strategy of routes and supplies strengthening its energy security condition by

means of the reduction of the Russian energy imports dependency2

The Ukraine-Russia gas disputes in 2006 and 2009 and Belarus in 2007 for gas price and transit fee

ndash which caused the disruption in Russian gas supplies to European countries ndash dangerously stress

Europersquos vulnerability in its dependence on imported Russian gas pushing the EU 27 to develop

new alternative pipelines oriented to the European markets and bypassing Russian territories and

Gazprom control

Furthermore according to the different scenarios forecasting future levels of natural gas demand

and supply the EU natural gas demand will raise to range between 470 and 650 billion cubic metres

(bcm) in 2030 with a domestic production estimated to cover less than 20 percent of the EU

projected gas consumption the EU import requirements are likely to reach a level of 370 to 580

bcm by the end of 2030

In order to weaken these serious threats to its energy security condition EU has planned to promote

the realization of an energy lsquoEast-Westrsquo corridor conceived as a framework of infrastructures

known as Trans-Caspian Oil and Gas Transport System aimed to channel hydrocarbons from

Azerbaijan and Central Asian energy-rich countries (Turkmenistan Kazakhstan and Uzbekistan) in 1 International Energy Agency World Energy Outlook 2010 Paris OECDIEA 2010 pp 499-5252 Following the enlargement of the EU in 2004 with the integration of the Eastern European countries the issue of the

energy security became more relevant because their adhesion in the European Union has implied an increasing energy dependency on Russian imports Indeed most of these nations (Estonia Latvia Lithuania Bulgaria Slovakia) are completely dependent on one supplier for gas and oil imports which is Russia

2

a westward direction to the European markets

The implementation of this energy alternative route has allowed Azerbaijan to become a strategic

pawn mainly because of its geopolitical centrality in connection with the EU plans of energy routes

diversification and benefiting of other relevant assets which enhance its position

Firstly in a geographic-geopolitical perspective Azerbaijan is an obliged route for energy corridors

transporting Caspian resources planned to bypass Russian and Iranian territoriesas a matter of fact

the 1979 US sanctions on Iran and the international opposition against Teherans decision to develop

a nuclear policy have hindered any attempt to exploit an energy Iranian route (potentially shorter

and easier to realize) or use Iranian reserves Moreover also the ecological and security concerns

based on the necessity to reduce oil tankers traffic through the Bosporus and the Dardanelles straits

have contributed to rise the Azerbaijans importance as an alternative transit route and strategic hub

for Caspian energy exports

Secondly the huge oil and gas reserves located in its soil has allowed Azerbaijan to also become a

potential supplier country of this lsquoEast-Westrsquo corridor according to the 2013 British Petroleum

Statistical Review of World Energy Azerbaijans proven reserves of gas amount to 09 tcm (05

percent of the worlds total proven natural gas reserves) while Baku also holds 7 thousand million

barrels of oil proved reserves (04 percent of the world total of proven oil reserves)3 Following the

projections of the new discovered gas fields (ACG Deep Absheron Umid and Shafag-Asiman)

Azeri gas reserves could easily double and reach 25 tcm enhancing Bakus ambitions to play both

roles (transit and supplier country) within the EU strategy of diversification

Furthermore Azerbaijan could benefit from another strategic advantage linked to its geographic

position unlike Turkmenistan and Kazakhstan Azeri energy exports dont have to cross the Caspian

Sea in order to reach Western markets If tankers transport could solve the problems for Central

Asian oil exports the unsolved legal status of the Caspian basin and the geopolitical rivalry of the

five littoral states have set back until now the realization of a Trans-Caspian Gas Pipeline (TCGP)

In addition to these strategic atouts since its national independence the Azeri republic has adopted a

profitable multiple pipeline strategy in the energy sector - aimed to diversify its exports options

lessening at the same time the Russian traditional role as a transit country of Caspian energy

suppliers ndash which has clearly contributed to enhance its position as strategic bridge linking Caspian

resources and EU markets with profitable gains for both

Consequently Azerbaijan rejected the possibility to use the existent Russian-oriented pipeline

realizing two new export routes a northern route from Baku to the Russian Black Sea port of

Novorossiisk (completed in 1997 with a capacity of 100000 barrels of oil per day) and a Western

route from Baku to to Georgiarsquos Black Sea coast of Supsa (completed in 1999 with a capacity of

3 British Petroleum British Petroleum Statistical Review of World Energy 2013 pp 6203

120000 barrels per day) The BakundashSupsa pipeline marked the beginning of reorienting Azeri

energy exports away from Russia and created the first alternative route bypassing Russian territory

for Caspian energy exports

In 2006 the realization of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-

Erzurum (BTE also known as the South Caucasus Pipeline SCP) gas pipeline have represented the

first concrete steps in order to implement the lsquoEast-Westrsquo corridor Both these infrastructures have a

strong geopolitical impact the BTC (with a capacity of 12 million of barrel per day) must be

conceived as a potential realization of the Trans-Caspian oil corridor because also Kazakhstan and

Turkmenistan commit themselves to channel oil in this project (respectively with 53 million tonnes

per year since 2006 and 31 million tonnes in 2012) transported by tankers through the Caspian

Sea Even if the BTE has a limited capacity (about 6-8 bcm per year) this pipeline is the first gas

export route which bypass Russian territory engendering hopes for the future realization of a wider

TCGP

Through these initiatives Baku has strongly showed to the EU its commitment to implement an

alternative energy corridor from the Caspian basin delivering its oil and gas in this projects and

hosting in its territory the first trunk of the export route

Azerbaijans role in the Southern Gas Corridor strategic gains

The diversification of export energy routes is an essential stronghold also for a supplier country

because it ensures a condition of energy security avoiding the total dependency on a single export

energy route In the achievement of this strategic goal Azerbaijan has also agreed to sell a limited

part of its gas (1-3 bcm) towards Russia preferring to maintain open all export routes and

economically lucrative opportunities

The convergence of strategic interests between Azerbaijan and EU focused on the energy

diversification concept has set up the Caucasian republic in the role of key partner for EU in order

to achieve its energy security through the implementation of the Southern Gas Corridor (SGC)

In addition to its strategic geographic position as a feasible transit route for the SGC Azerbaijan

also appears the only supplier country which could concretely fill this energy corridor with its gas

reserves according to the estimates Shah Deniz gas field alone ndash which until now is the only

identified source to supply SGC - holds reserves of 1 tcm In 2030 Azeri production of gas should

reach 55 bcm considering a domestic consume of 145 bcm Baku could hypothetically commit to

export from 35 to 40 bcm of gas4

In the last years Baku has undertaken three fundamental steps aimed to support the SGCs

realization in January 2011 Azeri President Aliyev signed with the President of the European 4 At present Baku exports 6 bcm of gas to Turkey and Russia markets

4

Commission Barroso a Joint Declaration on the Southern Gas Corridor which commits Azerbaijan

to deliver 10 bcm of gas per year to the EU markets in September 2011 Azerbaijan agreed to allow

EU to adopt a mandate to negotiate a legally binding treaty between the EU Azerbaijan and

Turkmenistan to build a Trans Caspian Pipeline System This initiative represents a political

institutionalisation of the energy dialogue aimed to reach the necessary bilateral arrangements

between Azerbaijan and Turkmenistan in order to legally solve their border disputes concerning the

Caspian offshore energy fields

The third crucial step was the so-called Izmir Agreement in October 2011 based on the bilateral

agreement between Azerbaijan and Shah Deniz producers with Turkey for the delivery and transit of

Azeri gas to Turkey and onward to European Union territory

We can observe that the Southern Gas Corridor is structured in a multitude of pipeline projects

which in some case are competing themselves the Nabucco pipeline is the most famous but there

are also the Turkey-Greece-Italy Interconnector (ITGI) the Trans-Adriatic Pipeline (TAP) the

White Stream and the Azerbaijan-Georgia-Romania-Hungary Interconnector (AGRI) All these

projects shared the geopolitical goal to transport Azeri gas towards European markets through a

southern route and bypassing Russian territory and control even if the potential implementation of

White Stream and AGRI could also open a western route crossing the Black Sea

The ITGI pipeline is composed by the already operational interconnector Turkey-Greece and the

planned extensions to Italy (Interconnector Greece-Italy IGI) and Bulgaria (the Interconnector

Greece-Bulgaria IGB) this project will be full operational in 2017 and will deliver 10 bcm of Azeri

gas

The Trans-Adriatic Pipeline (which is in competition with Nabucco West in order to transport the

Azeri gas extracted from the Shah Deniz Phase 2 of development) should have a capacity from 10

to 20 bcm of gas and will cross Greece-Albania and Italy furthermore TAP consortium has planned

to realize additional trunks connecting TAP to the proposed Ionian-Adriatic pipeline (aimed to

supply gas to the Western Balkans) and to Bulgaria through the realization of the Greece-Bulgaria

interconnector

For the EU Commission Nabucco represents the lsquothe flag project of the diversification efforts of

the EU for our security of supplyrsquo5 even if several hurdles have postponed until now its realization

the lack of a EU shared energy strategy the unsolved Caspian legal status the lack of gas suppliers

- with the exception of Azerbaijan ndash able to fill the planned capacity of 31 bcm per year the

competition with the Russian-backed South Stream project growing financial costs The potential

strategic relevance of the Nabuccos original version was based on its planned capacity three time

bigger than the other proposed routes of the SGC such as ITGI or TAP The original project foresaw

5 This statement was pronounced by the former EU Energy Commissioner Andris Piebalgs5

a route running from Turkey to the European gas hub of Baumgarten in Austria via Bulgaria

Romania and Hungary

The White Stream is an unclear project aimed to build a Georgia-Ukraine-EU gas pipeline - with an

offshore route linking Georgian port of Supsa and Romanian port of Constanta - to transport 8 bcm

of Azeri gas supplying Romania as well as European markets

The Azerbaijan-Georgia-Romania-Hungary Interconnector represents one of the main and more

interesting options for the export of Azeri gas it could be the first LNG (Liquefied Natural Gas)

project in the Black Sea with a planned capacity of 7 bcm that it should be upgraded to 20 bcm 6

Together with White Stream these projects have a strategic rationale for the Azeri energy

diversification policy because they represent an alternative export corridor compared to the

Southern route which also bypass both Russian and Turkish territory Also Ukraine expressed the

will to be involved in the project planning the realization of a LNG terminal in Odessa which could

arise additional geopolitical issues involving Russian-Ukraine relations (80 percent of Russian gas

exports to Europe crosses Ukraine territory) A potential participation of Turkmenistan in the AGRI

project as a gas supplier could transform this route in one of the main gas supply route oriented

towards EU also downplaying the energy-bridge role played by Turkey

The Bakus commitment to feed these projects with own gas will legitimate its strategic position

towards European attempts of energy diversification

Furthermore the regional geo-energetic scenario has suddenly changed following the Azeri-Turkish

agreement to realize the Trans Anatolia Gas Pipeline (TANAP) in December 2011 the two parts

signed a Memorandum of Understanding and in June 2012 they signed the intergovernmental

agreement aimed to realize this pipeline

This planned pipeline will be operational in 2017-2018 (when Shah Deniz Phase Two of production

comes on stream) with an initial capacity of 16-17 bcm whom 10 bcm will deliver to EU markets

and 6 bcm will feed Turkish markets the TANAP consortium (Azerbaijanrsquos State Oil Company

SOCAR will hold 80 percent of the ownership shares Turkeyrsquos state pipeline company Botas 10

percent and TPAO 5 percent in the TANAP) foresees a rising capacity aimed to reach 30 bcm in

2026 and 60 bcm after 2030 even if this ambitious output could be reached only with the

participation of Turkmenistan and others suppliers like Kazakhstan and potentially Uzbekistan

The TANAP represents a concrete and feasible opportunity for Azerbaijan to play both role of

transit and supplier country within the SGC also benefiting of several economic political and

6 AGRI will be designed to transport Azeri gas by pipeline to a Black Sea port in Georgia for liquefaction Further transport will take place via tanker to the Romanian Black Sea port of Constanta From there the gas will be pumped through Romanias pipeline system to Hungary and on to the rest of the European market The project envisages the construction of a liquefaction plant for LNG exports at the Azerbaijan-owned oil export terminal of Kulevi in Georgia as well as the construction of a terminal for importing liquefied gas to a re-gasification plant in Romania

6

strategic gains Moreover Baku will also play a third important role as financial investor of this

infrastructure committing huge revenues obtained through oil exports in order to realize a strategic

export route which allow to diversify Azeri economic gains

Considering that the consortiums partners will finance the pipelinersquos construction proportionately to

their respective stakes Azerbaijan will become the pipelinersquos main owner through which Baku will

sell its gas produced in Shah Deniz

The SCP will be the connecting link between Azerbaijan and TANAP after the upgrading of its

capacity from currently 7 bcm to 23 bcm per year by 2017

The Azeri ownership of the pipeline dispenses from paying transit fees also offering competitive

gas prices for European customers Moreover Azerbaijan would collect transit fees from other gas

producers and shippers that would use this pipeline such as Turkmenistan and Kazakhstan their

future involvement and commitment in the full implementation of the Trans-Caspian Pipeline will

be necessary in order to expand the TANAPs capacity As a matter of fact similarly to the oil

exports Azerbaijan could easily exploit its role as transit country also in the gas energy chessboard

in 2011 Azerbaijan earned $53 million from the transit of oil from Kazakhstan and $128 million

from oil coming from Turkmenistan supplies destined to fuel the BTC pipeline

In geopolitical terms Azerbaijan offers its strategic contribution directly helping EU to achieve its

energy security goals by means of a diversification of export routes and supplies the Azeri

commitment to finance and to build its own pipeline fuelling it with its own gas and selling it in the

European markets shows a concrete political will of Baku to cooperate with Bruxelles As the BTC

also TANAP is a strategic project for both Baku and Bruxelles because conceived to transport gas

out of Russian control within a pipeline exclusively dedicated to Caspian hydrocarbons

In the EU perspective the launch of TANAP project has imposed a substantial rethinking of the

original Nabucco project in order to revitalize the SGC Nabucco consortium decided to reconfigure

its project for a new role as a European continuation of the TANAP project proposing a shortened

version of the lsquoEU flag projectrsquo

On 28 June 2013 the Shah Deniz international consortium finally selected the Trans Adriatic

Pipeline project as the main export energy corridor for the Azeri gas to Europe The development of

TAP project strongly highlights the enhancement of the energy cooperation between EU and

Azerbaijan a country which has showed to be a reliable partner in the last years

However if on the one hand TAPs implementation will allow the start of the Southern Energy

Corridor on the other hand it can be defined as anti-strategic compared to Nabucco West mainly

because it will divert gas supplies away from countries that strongly depend on Gazpromrsquos

monopoly (Central Europe and South-eastern countries such as Bulgaria Hungary Austria) Italian

market (as well as Switzerland) is highly diversified and amply supplied and it could also benefit of 7

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

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Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

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Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

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European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

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Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

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12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

a westward direction to the European markets

The implementation of this energy alternative route has allowed Azerbaijan to become a strategic

pawn mainly because of its geopolitical centrality in connection with the EU plans of energy routes

diversification and benefiting of other relevant assets which enhance its position

Firstly in a geographic-geopolitical perspective Azerbaijan is an obliged route for energy corridors

transporting Caspian resources planned to bypass Russian and Iranian territoriesas a matter of fact

the 1979 US sanctions on Iran and the international opposition against Teherans decision to develop

a nuclear policy have hindered any attempt to exploit an energy Iranian route (potentially shorter

and easier to realize) or use Iranian reserves Moreover also the ecological and security concerns

based on the necessity to reduce oil tankers traffic through the Bosporus and the Dardanelles straits

have contributed to rise the Azerbaijans importance as an alternative transit route and strategic hub

for Caspian energy exports

Secondly the huge oil and gas reserves located in its soil has allowed Azerbaijan to also become a

potential supplier country of this lsquoEast-Westrsquo corridor according to the 2013 British Petroleum

Statistical Review of World Energy Azerbaijans proven reserves of gas amount to 09 tcm (05

percent of the worlds total proven natural gas reserves) while Baku also holds 7 thousand million

barrels of oil proved reserves (04 percent of the world total of proven oil reserves)3 Following the

projections of the new discovered gas fields (ACG Deep Absheron Umid and Shafag-Asiman)

Azeri gas reserves could easily double and reach 25 tcm enhancing Bakus ambitions to play both

roles (transit and supplier country) within the EU strategy of diversification

Furthermore Azerbaijan could benefit from another strategic advantage linked to its geographic

position unlike Turkmenistan and Kazakhstan Azeri energy exports dont have to cross the Caspian

Sea in order to reach Western markets If tankers transport could solve the problems for Central

Asian oil exports the unsolved legal status of the Caspian basin and the geopolitical rivalry of the

five littoral states have set back until now the realization of a Trans-Caspian Gas Pipeline (TCGP)

In addition to these strategic atouts since its national independence the Azeri republic has adopted a

profitable multiple pipeline strategy in the energy sector - aimed to diversify its exports options

lessening at the same time the Russian traditional role as a transit country of Caspian energy

suppliers ndash which has clearly contributed to enhance its position as strategic bridge linking Caspian

resources and EU markets with profitable gains for both

Consequently Azerbaijan rejected the possibility to use the existent Russian-oriented pipeline

realizing two new export routes a northern route from Baku to the Russian Black Sea port of

Novorossiisk (completed in 1997 with a capacity of 100000 barrels of oil per day) and a Western

route from Baku to to Georgiarsquos Black Sea coast of Supsa (completed in 1999 with a capacity of

3 British Petroleum British Petroleum Statistical Review of World Energy 2013 pp 6203

120000 barrels per day) The BakundashSupsa pipeline marked the beginning of reorienting Azeri

energy exports away from Russia and created the first alternative route bypassing Russian territory

for Caspian energy exports

In 2006 the realization of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-

Erzurum (BTE also known as the South Caucasus Pipeline SCP) gas pipeline have represented the

first concrete steps in order to implement the lsquoEast-Westrsquo corridor Both these infrastructures have a

strong geopolitical impact the BTC (with a capacity of 12 million of barrel per day) must be

conceived as a potential realization of the Trans-Caspian oil corridor because also Kazakhstan and

Turkmenistan commit themselves to channel oil in this project (respectively with 53 million tonnes

per year since 2006 and 31 million tonnes in 2012) transported by tankers through the Caspian

Sea Even if the BTE has a limited capacity (about 6-8 bcm per year) this pipeline is the first gas

export route which bypass Russian territory engendering hopes for the future realization of a wider

TCGP

Through these initiatives Baku has strongly showed to the EU its commitment to implement an

alternative energy corridor from the Caspian basin delivering its oil and gas in this projects and

hosting in its territory the first trunk of the export route

Azerbaijans role in the Southern Gas Corridor strategic gains

The diversification of export energy routes is an essential stronghold also for a supplier country

because it ensures a condition of energy security avoiding the total dependency on a single export

energy route In the achievement of this strategic goal Azerbaijan has also agreed to sell a limited

part of its gas (1-3 bcm) towards Russia preferring to maintain open all export routes and

economically lucrative opportunities

The convergence of strategic interests between Azerbaijan and EU focused on the energy

diversification concept has set up the Caucasian republic in the role of key partner for EU in order

to achieve its energy security through the implementation of the Southern Gas Corridor (SGC)

In addition to its strategic geographic position as a feasible transit route for the SGC Azerbaijan

also appears the only supplier country which could concretely fill this energy corridor with its gas

reserves according to the estimates Shah Deniz gas field alone ndash which until now is the only

identified source to supply SGC - holds reserves of 1 tcm In 2030 Azeri production of gas should

reach 55 bcm considering a domestic consume of 145 bcm Baku could hypothetically commit to

export from 35 to 40 bcm of gas4

In the last years Baku has undertaken three fundamental steps aimed to support the SGCs

realization in January 2011 Azeri President Aliyev signed with the President of the European 4 At present Baku exports 6 bcm of gas to Turkey and Russia markets

4

Commission Barroso a Joint Declaration on the Southern Gas Corridor which commits Azerbaijan

to deliver 10 bcm of gas per year to the EU markets in September 2011 Azerbaijan agreed to allow

EU to adopt a mandate to negotiate a legally binding treaty between the EU Azerbaijan and

Turkmenistan to build a Trans Caspian Pipeline System This initiative represents a political

institutionalisation of the energy dialogue aimed to reach the necessary bilateral arrangements

between Azerbaijan and Turkmenistan in order to legally solve their border disputes concerning the

Caspian offshore energy fields

The third crucial step was the so-called Izmir Agreement in October 2011 based on the bilateral

agreement between Azerbaijan and Shah Deniz producers with Turkey for the delivery and transit of

Azeri gas to Turkey and onward to European Union territory

We can observe that the Southern Gas Corridor is structured in a multitude of pipeline projects

which in some case are competing themselves the Nabucco pipeline is the most famous but there

are also the Turkey-Greece-Italy Interconnector (ITGI) the Trans-Adriatic Pipeline (TAP) the

White Stream and the Azerbaijan-Georgia-Romania-Hungary Interconnector (AGRI) All these

projects shared the geopolitical goal to transport Azeri gas towards European markets through a

southern route and bypassing Russian territory and control even if the potential implementation of

White Stream and AGRI could also open a western route crossing the Black Sea

The ITGI pipeline is composed by the already operational interconnector Turkey-Greece and the

planned extensions to Italy (Interconnector Greece-Italy IGI) and Bulgaria (the Interconnector

Greece-Bulgaria IGB) this project will be full operational in 2017 and will deliver 10 bcm of Azeri

gas

The Trans-Adriatic Pipeline (which is in competition with Nabucco West in order to transport the

Azeri gas extracted from the Shah Deniz Phase 2 of development) should have a capacity from 10

to 20 bcm of gas and will cross Greece-Albania and Italy furthermore TAP consortium has planned

to realize additional trunks connecting TAP to the proposed Ionian-Adriatic pipeline (aimed to

supply gas to the Western Balkans) and to Bulgaria through the realization of the Greece-Bulgaria

interconnector

For the EU Commission Nabucco represents the lsquothe flag project of the diversification efforts of

the EU for our security of supplyrsquo5 even if several hurdles have postponed until now its realization

the lack of a EU shared energy strategy the unsolved Caspian legal status the lack of gas suppliers

- with the exception of Azerbaijan ndash able to fill the planned capacity of 31 bcm per year the

competition with the Russian-backed South Stream project growing financial costs The potential

strategic relevance of the Nabuccos original version was based on its planned capacity three time

bigger than the other proposed routes of the SGC such as ITGI or TAP The original project foresaw

5 This statement was pronounced by the former EU Energy Commissioner Andris Piebalgs5

a route running from Turkey to the European gas hub of Baumgarten in Austria via Bulgaria

Romania and Hungary

The White Stream is an unclear project aimed to build a Georgia-Ukraine-EU gas pipeline - with an

offshore route linking Georgian port of Supsa and Romanian port of Constanta - to transport 8 bcm

of Azeri gas supplying Romania as well as European markets

The Azerbaijan-Georgia-Romania-Hungary Interconnector represents one of the main and more

interesting options for the export of Azeri gas it could be the first LNG (Liquefied Natural Gas)

project in the Black Sea with a planned capacity of 7 bcm that it should be upgraded to 20 bcm 6

Together with White Stream these projects have a strategic rationale for the Azeri energy

diversification policy because they represent an alternative export corridor compared to the

Southern route which also bypass both Russian and Turkish territory Also Ukraine expressed the

will to be involved in the project planning the realization of a LNG terminal in Odessa which could

arise additional geopolitical issues involving Russian-Ukraine relations (80 percent of Russian gas

exports to Europe crosses Ukraine territory) A potential participation of Turkmenistan in the AGRI

project as a gas supplier could transform this route in one of the main gas supply route oriented

towards EU also downplaying the energy-bridge role played by Turkey

The Bakus commitment to feed these projects with own gas will legitimate its strategic position

towards European attempts of energy diversification

Furthermore the regional geo-energetic scenario has suddenly changed following the Azeri-Turkish

agreement to realize the Trans Anatolia Gas Pipeline (TANAP) in December 2011 the two parts

signed a Memorandum of Understanding and in June 2012 they signed the intergovernmental

agreement aimed to realize this pipeline

This planned pipeline will be operational in 2017-2018 (when Shah Deniz Phase Two of production

comes on stream) with an initial capacity of 16-17 bcm whom 10 bcm will deliver to EU markets

and 6 bcm will feed Turkish markets the TANAP consortium (Azerbaijanrsquos State Oil Company

SOCAR will hold 80 percent of the ownership shares Turkeyrsquos state pipeline company Botas 10

percent and TPAO 5 percent in the TANAP) foresees a rising capacity aimed to reach 30 bcm in

2026 and 60 bcm after 2030 even if this ambitious output could be reached only with the

participation of Turkmenistan and others suppliers like Kazakhstan and potentially Uzbekistan

The TANAP represents a concrete and feasible opportunity for Azerbaijan to play both role of

transit and supplier country within the SGC also benefiting of several economic political and

6 AGRI will be designed to transport Azeri gas by pipeline to a Black Sea port in Georgia for liquefaction Further transport will take place via tanker to the Romanian Black Sea port of Constanta From there the gas will be pumped through Romanias pipeline system to Hungary and on to the rest of the European market The project envisages the construction of a liquefaction plant for LNG exports at the Azerbaijan-owned oil export terminal of Kulevi in Georgia as well as the construction of a terminal for importing liquefied gas to a re-gasification plant in Romania

6

strategic gains Moreover Baku will also play a third important role as financial investor of this

infrastructure committing huge revenues obtained through oil exports in order to realize a strategic

export route which allow to diversify Azeri economic gains

Considering that the consortiums partners will finance the pipelinersquos construction proportionately to

their respective stakes Azerbaijan will become the pipelinersquos main owner through which Baku will

sell its gas produced in Shah Deniz

The SCP will be the connecting link between Azerbaijan and TANAP after the upgrading of its

capacity from currently 7 bcm to 23 bcm per year by 2017

The Azeri ownership of the pipeline dispenses from paying transit fees also offering competitive

gas prices for European customers Moreover Azerbaijan would collect transit fees from other gas

producers and shippers that would use this pipeline such as Turkmenistan and Kazakhstan their

future involvement and commitment in the full implementation of the Trans-Caspian Pipeline will

be necessary in order to expand the TANAPs capacity As a matter of fact similarly to the oil

exports Azerbaijan could easily exploit its role as transit country also in the gas energy chessboard

in 2011 Azerbaijan earned $53 million from the transit of oil from Kazakhstan and $128 million

from oil coming from Turkmenistan supplies destined to fuel the BTC pipeline

In geopolitical terms Azerbaijan offers its strategic contribution directly helping EU to achieve its

energy security goals by means of a diversification of export routes and supplies the Azeri

commitment to finance and to build its own pipeline fuelling it with its own gas and selling it in the

European markets shows a concrete political will of Baku to cooperate with Bruxelles As the BTC

also TANAP is a strategic project for both Baku and Bruxelles because conceived to transport gas

out of Russian control within a pipeline exclusively dedicated to Caspian hydrocarbons

In the EU perspective the launch of TANAP project has imposed a substantial rethinking of the

original Nabucco project in order to revitalize the SGC Nabucco consortium decided to reconfigure

its project for a new role as a European continuation of the TANAP project proposing a shortened

version of the lsquoEU flag projectrsquo

On 28 June 2013 the Shah Deniz international consortium finally selected the Trans Adriatic

Pipeline project as the main export energy corridor for the Azeri gas to Europe The development of

TAP project strongly highlights the enhancement of the energy cooperation between EU and

Azerbaijan a country which has showed to be a reliable partner in the last years

However if on the one hand TAPs implementation will allow the start of the Southern Energy

Corridor on the other hand it can be defined as anti-strategic compared to Nabucco West mainly

because it will divert gas supplies away from countries that strongly depend on Gazpromrsquos

monopoly (Central Europe and South-eastern countries such as Bulgaria Hungary Austria) Italian

market (as well as Switzerland) is highly diversified and amply supplied and it could also benefit of 7

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

120000 barrels per day) The BakundashSupsa pipeline marked the beginning of reorienting Azeri

energy exports away from Russia and created the first alternative route bypassing Russian territory

for Caspian energy exports

In 2006 the realization of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-

Erzurum (BTE also known as the South Caucasus Pipeline SCP) gas pipeline have represented the

first concrete steps in order to implement the lsquoEast-Westrsquo corridor Both these infrastructures have a

strong geopolitical impact the BTC (with a capacity of 12 million of barrel per day) must be

conceived as a potential realization of the Trans-Caspian oil corridor because also Kazakhstan and

Turkmenistan commit themselves to channel oil in this project (respectively with 53 million tonnes

per year since 2006 and 31 million tonnes in 2012) transported by tankers through the Caspian

Sea Even if the BTE has a limited capacity (about 6-8 bcm per year) this pipeline is the first gas

export route which bypass Russian territory engendering hopes for the future realization of a wider

TCGP

Through these initiatives Baku has strongly showed to the EU its commitment to implement an

alternative energy corridor from the Caspian basin delivering its oil and gas in this projects and

hosting in its territory the first trunk of the export route

Azerbaijans role in the Southern Gas Corridor strategic gains

The diversification of export energy routes is an essential stronghold also for a supplier country

because it ensures a condition of energy security avoiding the total dependency on a single export

energy route In the achievement of this strategic goal Azerbaijan has also agreed to sell a limited

part of its gas (1-3 bcm) towards Russia preferring to maintain open all export routes and

economically lucrative opportunities

The convergence of strategic interests between Azerbaijan and EU focused on the energy

diversification concept has set up the Caucasian republic in the role of key partner for EU in order

to achieve its energy security through the implementation of the Southern Gas Corridor (SGC)

In addition to its strategic geographic position as a feasible transit route for the SGC Azerbaijan

also appears the only supplier country which could concretely fill this energy corridor with its gas

reserves according to the estimates Shah Deniz gas field alone ndash which until now is the only

identified source to supply SGC - holds reserves of 1 tcm In 2030 Azeri production of gas should

reach 55 bcm considering a domestic consume of 145 bcm Baku could hypothetically commit to

export from 35 to 40 bcm of gas4

In the last years Baku has undertaken three fundamental steps aimed to support the SGCs

realization in January 2011 Azeri President Aliyev signed with the President of the European 4 At present Baku exports 6 bcm of gas to Turkey and Russia markets

4

Commission Barroso a Joint Declaration on the Southern Gas Corridor which commits Azerbaijan

to deliver 10 bcm of gas per year to the EU markets in September 2011 Azerbaijan agreed to allow

EU to adopt a mandate to negotiate a legally binding treaty between the EU Azerbaijan and

Turkmenistan to build a Trans Caspian Pipeline System This initiative represents a political

institutionalisation of the energy dialogue aimed to reach the necessary bilateral arrangements

between Azerbaijan and Turkmenistan in order to legally solve their border disputes concerning the

Caspian offshore energy fields

The third crucial step was the so-called Izmir Agreement in October 2011 based on the bilateral

agreement between Azerbaijan and Shah Deniz producers with Turkey for the delivery and transit of

Azeri gas to Turkey and onward to European Union territory

We can observe that the Southern Gas Corridor is structured in a multitude of pipeline projects

which in some case are competing themselves the Nabucco pipeline is the most famous but there

are also the Turkey-Greece-Italy Interconnector (ITGI) the Trans-Adriatic Pipeline (TAP) the

White Stream and the Azerbaijan-Georgia-Romania-Hungary Interconnector (AGRI) All these

projects shared the geopolitical goal to transport Azeri gas towards European markets through a

southern route and bypassing Russian territory and control even if the potential implementation of

White Stream and AGRI could also open a western route crossing the Black Sea

The ITGI pipeline is composed by the already operational interconnector Turkey-Greece and the

planned extensions to Italy (Interconnector Greece-Italy IGI) and Bulgaria (the Interconnector

Greece-Bulgaria IGB) this project will be full operational in 2017 and will deliver 10 bcm of Azeri

gas

The Trans-Adriatic Pipeline (which is in competition with Nabucco West in order to transport the

Azeri gas extracted from the Shah Deniz Phase 2 of development) should have a capacity from 10

to 20 bcm of gas and will cross Greece-Albania and Italy furthermore TAP consortium has planned

to realize additional trunks connecting TAP to the proposed Ionian-Adriatic pipeline (aimed to

supply gas to the Western Balkans) and to Bulgaria through the realization of the Greece-Bulgaria

interconnector

For the EU Commission Nabucco represents the lsquothe flag project of the diversification efforts of

the EU for our security of supplyrsquo5 even if several hurdles have postponed until now its realization

the lack of a EU shared energy strategy the unsolved Caspian legal status the lack of gas suppliers

- with the exception of Azerbaijan ndash able to fill the planned capacity of 31 bcm per year the

competition with the Russian-backed South Stream project growing financial costs The potential

strategic relevance of the Nabuccos original version was based on its planned capacity three time

bigger than the other proposed routes of the SGC such as ITGI or TAP The original project foresaw

5 This statement was pronounced by the former EU Energy Commissioner Andris Piebalgs5

a route running from Turkey to the European gas hub of Baumgarten in Austria via Bulgaria

Romania and Hungary

The White Stream is an unclear project aimed to build a Georgia-Ukraine-EU gas pipeline - with an

offshore route linking Georgian port of Supsa and Romanian port of Constanta - to transport 8 bcm

of Azeri gas supplying Romania as well as European markets

The Azerbaijan-Georgia-Romania-Hungary Interconnector represents one of the main and more

interesting options for the export of Azeri gas it could be the first LNG (Liquefied Natural Gas)

project in the Black Sea with a planned capacity of 7 bcm that it should be upgraded to 20 bcm 6

Together with White Stream these projects have a strategic rationale for the Azeri energy

diversification policy because they represent an alternative export corridor compared to the

Southern route which also bypass both Russian and Turkish territory Also Ukraine expressed the

will to be involved in the project planning the realization of a LNG terminal in Odessa which could

arise additional geopolitical issues involving Russian-Ukraine relations (80 percent of Russian gas

exports to Europe crosses Ukraine territory) A potential participation of Turkmenistan in the AGRI

project as a gas supplier could transform this route in one of the main gas supply route oriented

towards EU also downplaying the energy-bridge role played by Turkey

The Bakus commitment to feed these projects with own gas will legitimate its strategic position

towards European attempts of energy diversification

Furthermore the regional geo-energetic scenario has suddenly changed following the Azeri-Turkish

agreement to realize the Trans Anatolia Gas Pipeline (TANAP) in December 2011 the two parts

signed a Memorandum of Understanding and in June 2012 they signed the intergovernmental

agreement aimed to realize this pipeline

This planned pipeline will be operational in 2017-2018 (when Shah Deniz Phase Two of production

comes on stream) with an initial capacity of 16-17 bcm whom 10 bcm will deliver to EU markets

and 6 bcm will feed Turkish markets the TANAP consortium (Azerbaijanrsquos State Oil Company

SOCAR will hold 80 percent of the ownership shares Turkeyrsquos state pipeline company Botas 10

percent and TPAO 5 percent in the TANAP) foresees a rising capacity aimed to reach 30 bcm in

2026 and 60 bcm after 2030 even if this ambitious output could be reached only with the

participation of Turkmenistan and others suppliers like Kazakhstan and potentially Uzbekistan

The TANAP represents a concrete and feasible opportunity for Azerbaijan to play both role of

transit and supplier country within the SGC also benefiting of several economic political and

6 AGRI will be designed to transport Azeri gas by pipeline to a Black Sea port in Georgia for liquefaction Further transport will take place via tanker to the Romanian Black Sea port of Constanta From there the gas will be pumped through Romanias pipeline system to Hungary and on to the rest of the European market The project envisages the construction of a liquefaction plant for LNG exports at the Azerbaijan-owned oil export terminal of Kulevi in Georgia as well as the construction of a terminal for importing liquefied gas to a re-gasification plant in Romania

6

strategic gains Moreover Baku will also play a third important role as financial investor of this

infrastructure committing huge revenues obtained through oil exports in order to realize a strategic

export route which allow to diversify Azeri economic gains

Considering that the consortiums partners will finance the pipelinersquos construction proportionately to

their respective stakes Azerbaijan will become the pipelinersquos main owner through which Baku will

sell its gas produced in Shah Deniz

The SCP will be the connecting link between Azerbaijan and TANAP after the upgrading of its

capacity from currently 7 bcm to 23 bcm per year by 2017

The Azeri ownership of the pipeline dispenses from paying transit fees also offering competitive

gas prices for European customers Moreover Azerbaijan would collect transit fees from other gas

producers and shippers that would use this pipeline such as Turkmenistan and Kazakhstan their

future involvement and commitment in the full implementation of the Trans-Caspian Pipeline will

be necessary in order to expand the TANAPs capacity As a matter of fact similarly to the oil

exports Azerbaijan could easily exploit its role as transit country also in the gas energy chessboard

in 2011 Azerbaijan earned $53 million from the transit of oil from Kazakhstan and $128 million

from oil coming from Turkmenistan supplies destined to fuel the BTC pipeline

In geopolitical terms Azerbaijan offers its strategic contribution directly helping EU to achieve its

energy security goals by means of a diversification of export routes and supplies the Azeri

commitment to finance and to build its own pipeline fuelling it with its own gas and selling it in the

European markets shows a concrete political will of Baku to cooperate with Bruxelles As the BTC

also TANAP is a strategic project for both Baku and Bruxelles because conceived to transport gas

out of Russian control within a pipeline exclusively dedicated to Caspian hydrocarbons

In the EU perspective the launch of TANAP project has imposed a substantial rethinking of the

original Nabucco project in order to revitalize the SGC Nabucco consortium decided to reconfigure

its project for a new role as a European continuation of the TANAP project proposing a shortened

version of the lsquoEU flag projectrsquo

On 28 June 2013 the Shah Deniz international consortium finally selected the Trans Adriatic

Pipeline project as the main export energy corridor for the Azeri gas to Europe The development of

TAP project strongly highlights the enhancement of the energy cooperation between EU and

Azerbaijan a country which has showed to be a reliable partner in the last years

However if on the one hand TAPs implementation will allow the start of the Southern Energy

Corridor on the other hand it can be defined as anti-strategic compared to Nabucco West mainly

because it will divert gas supplies away from countries that strongly depend on Gazpromrsquos

monopoly (Central Europe and South-eastern countries such as Bulgaria Hungary Austria) Italian

market (as well as Switzerland) is highly diversified and amply supplied and it could also benefit of 7

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

Commission Barroso a Joint Declaration on the Southern Gas Corridor which commits Azerbaijan

to deliver 10 bcm of gas per year to the EU markets in September 2011 Azerbaijan agreed to allow

EU to adopt a mandate to negotiate a legally binding treaty between the EU Azerbaijan and

Turkmenistan to build a Trans Caspian Pipeline System This initiative represents a political

institutionalisation of the energy dialogue aimed to reach the necessary bilateral arrangements

between Azerbaijan and Turkmenistan in order to legally solve their border disputes concerning the

Caspian offshore energy fields

The third crucial step was the so-called Izmir Agreement in October 2011 based on the bilateral

agreement between Azerbaijan and Shah Deniz producers with Turkey for the delivery and transit of

Azeri gas to Turkey and onward to European Union territory

We can observe that the Southern Gas Corridor is structured in a multitude of pipeline projects

which in some case are competing themselves the Nabucco pipeline is the most famous but there

are also the Turkey-Greece-Italy Interconnector (ITGI) the Trans-Adriatic Pipeline (TAP) the

White Stream and the Azerbaijan-Georgia-Romania-Hungary Interconnector (AGRI) All these

projects shared the geopolitical goal to transport Azeri gas towards European markets through a

southern route and bypassing Russian territory and control even if the potential implementation of

White Stream and AGRI could also open a western route crossing the Black Sea

The ITGI pipeline is composed by the already operational interconnector Turkey-Greece and the

planned extensions to Italy (Interconnector Greece-Italy IGI) and Bulgaria (the Interconnector

Greece-Bulgaria IGB) this project will be full operational in 2017 and will deliver 10 bcm of Azeri

gas

The Trans-Adriatic Pipeline (which is in competition with Nabucco West in order to transport the

Azeri gas extracted from the Shah Deniz Phase 2 of development) should have a capacity from 10

to 20 bcm of gas and will cross Greece-Albania and Italy furthermore TAP consortium has planned

to realize additional trunks connecting TAP to the proposed Ionian-Adriatic pipeline (aimed to

supply gas to the Western Balkans) and to Bulgaria through the realization of the Greece-Bulgaria

interconnector

For the EU Commission Nabucco represents the lsquothe flag project of the diversification efforts of

the EU for our security of supplyrsquo5 even if several hurdles have postponed until now its realization

the lack of a EU shared energy strategy the unsolved Caspian legal status the lack of gas suppliers

- with the exception of Azerbaijan ndash able to fill the planned capacity of 31 bcm per year the

competition with the Russian-backed South Stream project growing financial costs The potential

strategic relevance of the Nabuccos original version was based on its planned capacity three time

bigger than the other proposed routes of the SGC such as ITGI or TAP The original project foresaw

5 This statement was pronounced by the former EU Energy Commissioner Andris Piebalgs5

a route running from Turkey to the European gas hub of Baumgarten in Austria via Bulgaria

Romania and Hungary

The White Stream is an unclear project aimed to build a Georgia-Ukraine-EU gas pipeline - with an

offshore route linking Georgian port of Supsa and Romanian port of Constanta - to transport 8 bcm

of Azeri gas supplying Romania as well as European markets

The Azerbaijan-Georgia-Romania-Hungary Interconnector represents one of the main and more

interesting options for the export of Azeri gas it could be the first LNG (Liquefied Natural Gas)

project in the Black Sea with a planned capacity of 7 bcm that it should be upgraded to 20 bcm 6

Together with White Stream these projects have a strategic rationale for the Azeri energy

diversification policy because they represent an alternative export corridor compared to the

Southern route which also bypass both Russian and Turkish territory Also Ukraine expressed the

will to be involved in the project planning the realization of a LNG terminal in Odessa which could

arise additional geopolitical issues involving Russian-Ukraine relations (80 percent of Russian gas

exports to Europe crosses Ukraine territory) A potential participation of Turkmenistan in the AGRI

project as a gas supplier could transform this route in one of the main gas supply route oriented

towards EU also downplaying the energy-bridge role played by Turkey

The Bakus commitment to feed these projects with own gas will legitimate its strategic position

towards European attempts of energy diversification

Furthermore the regional geo-energetic scenario has suddenly changed following the Azeri-Turkish

agreement to realize the Trans Anatolia Gas Pipeline (TANAP) in December 2011 the two parts

signed a Memorandum of Understanding and in June 2012 they signed the intergovernmental

agreement aimed to realize this pipeline

This planned pipeline will be operational in 2017-2018 (when Shah Deniz Phase Two of production

comes on stream) with an initial capacity of 16-17 bcm whom 10 bcm will deliver to EU markets

and 6 bcm will feed Turkish markets the TANAP consortium (Azerbaijanrsquos State Oil Company

SOCAR will hold 80 percent of the ownership shares Turkeyrsquos state pipeline company Botas 10

percent and TPAO 5 percent in the TANAP) foresees a rising capacity aimed to reach 30 bcm in

2026 and 60 bcm after 2030 even if this ambitious output could be reached only with the

participation of Turkmenistan and others suppliers like Kazakhstan and potentially Uzbekistan

The TANAP represents a concrete and feasible opportunity for Azerbaijan to play both role of

transit and supplier country within the SGC also benefiting of several economic political and

6 AGRI will be designed to transport Azeri gas by pipeline to a Black Sea port in Georgia for liquefaction Further transport will take place via tanker to the Romanian Black Sea port of Constanta From there the gas will be pumped through Romanias pipeline system to Hungary and on to the rest of the European market The project envisages the construction of a liquefaction plant for LNG exports at the Azerbaijan-owned oil export terminal of Kulevi in Georgia as well as the construction of a terminal for importing liquefied gas to a re-gasification plant in Romania

6

strategic gains Moreover Baku will also play a third important role as financial investor of this

infrastructure committing huge revenues obtained through oil exports in order to realize a strategic

export route which allow to diversify Azeri economic gains

Considering that the consortiums partners will finance the pipelinersquos construction proportionately to

their respective stakes Azerbaijan will become the pipelinersquos main owner through which Baku will

sell its gas produced in Shah Deniz

The SCP will be the connecting link between Azerbaijan and TANAP after the upgrading of its

capacity from currently 7 bcm to 23 bcm per year by 2017

The Azeri ownership of the pipeline dispenses from paying transit fees also offering competitive

gas prices for European customers Moreover Azerbaijan would collect transit fees from other gas

producers and shippers that would use this pipeline such as Turkmenistan and Kazakhstan their

future involvement and commitment in the full implementation of the Trans-Caspian Pipeline will

be necessary in order to expand the TANAPs capacity As a matter of fact similarly to the oil

exports Azerbaijan could easily exploit its role as transit country also in the gas energy chessboard

in 2011 Azerbaijan earned $53 million from the transit of oil from Kazakhstan and $128 million

from oil coming from Turkmenistan supplies destined to fuel the BTC pipeline

In geopolitical terms Azerbaijan offers its strategic contribution directly helping EU to achieve its

energy security goals by means of a diversification of export routes and supplies the Azeri

commitment to finance and to build its own pipeline fuelling it with its own gas and selling it in the

European markets shows a concrete political will of Baku to cooperate with Bruxelles As the BTC

also TANAP is a strategic project for both Baku and Bruxelles because conceived to transport gas

out of Russian control within a pipeline exclusively dedicated to Caspian hydrocarbons

In the EU perspective the launch of TANAP project has imposed a substantial rethinking of the

original Nabucco project in order to revitalize the SGC Nabucco consortium decided to reconfigure

its project for a new role as a European continuation of the TANAP project proposing a shortened

version of the lsquoEU flag projectrsquo

On 28 June 2013 the Shah Deniz international consortium finally selected the Trans Adriatic

Pipeline project as the main export energy corridor for the Azeri gas to Europe The development of

TAP project strongly highlights the enhancement of the energy cooperation between EU and

Azerbaijan a country which has showed to be a reliable partner in the last years

However if on the one hand TAPs implementation will allow the start of the Southern Energy

Corridor on the other hand it can be defined as anti-strategic compared to Nabucco West mainly

because it will divert gas supplies away from countries that strongly depend on Gazpromrsquos

monopoly (Central Europe and South-eastern countries such as Bulgaria Hungary Austria) Italian

market (as well as Switzerland) is highly diversified and amply supplied and it could also benefit of 7

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

a route running from Turkey to the European gas hub of Baumgarten in Austria via Bulgaria

Romania and Hungary

The White Stream is an unclear project aimed to build a Georgia-Ukraine-EU gas pipeline - with an

offshore route linking Georgian port of Supsa and Romanian port of Constanta - to transport 8 bcm

of Azeri gas supplying Romania as well as European markets

The Azerbaijan-Georgia-Romania-Hungary Interconnector represents one of the main and more

interesting options for the export of Azeri gas it could be the first LNG (Liquefied Natural Gas)

project in the Black Sea with a planned capacity of 7 bcm that it should be upgraded to 20 bcm 6

Together with White Stream these projects have a strategic rationale for the Azeri energy

diversification policy because they represent an alternative export corridor compared to the

Southern route which also bypass both Russian and Turkish territory Also Ukraine expressed the

will to be involved in the project planning the realization of a LNG terminal in Odessa which could

arise additional geopolitical issues involving Russian-Ukraine relations (80 percent of Russian gas

exports to Europe crosses Ukraine territory) A potential participation of Turkmenistan in the AGRI

project as a gas supplier could transform this route in one of the main gas supply route oriented

towards EU also downplaying the energy-bridge role played by Turkey

The Bakus commitment to feed these projects with own gas will legitimate its strategic position

towards European attempts of energy diversification

Furthermore the regional geo-energetic scenario has suddenly changed following the Azeri-Turkish

agreement to realize the Trans Anatolia Gas Pipeline (TANAP) in December 2011 the two parts

signed a Memorandum of Understanding and in June 2012 they signed the intergovernmental

agreement aimed to realize this pipeline

This planned pipeline will be operational in 2017-2018 (when Shah Deniz Phase Two of production

comes on stream) with an initial capacity of 16-17 bcm whom 10 bcm will deliver to EU markets

and 6 bcm will feed Turkish markets the TANAP consortium (Azerbaijanrsquos State Oil Company

SOCAR will hold 80 percent of the ownership shares Turkeyrsquos state pipeline company Botas 10

percent and TPAO 5 percent in the TANAP) foresees a rising capacity aimed to reach 30 bcm in

2026 and 60 bcm after 2030 even if this ambitious output could be reached only with the

participation of Turkmenistan and others suppliers like Kazakhstan and potentially Uzbekistan

The TANAP represents a concrete and feasible opportunity for Azerbaijan to play both role of

transit and supplier country within the SGC also benefiting of several economic political and

6 AGRI will be designed to transport Azeri gas by pipeline to a Black Sea port in Georgia for liquefaction Further transport will take place via tanker to the Romanian Black Sea port of Constanta From there the gas will be pumped through Romanias pipeline system to Hungary and on to the rest of the European market The project envisages the construction of a liquefaction plant for LNG exports at the Azerbaijan-owned oil export terminal of Kulevi in Georgia as well as the construction of a terminal for importing liquefied gas to a re-gasification plant in Romania

6

strategic gains Moreover Baku will also play a third important role as financial investor of this

infrastructure committing huge revenues obtained through oil exports in order to realize a strategic

export route which allow to diversify Azeri economic gains

Considering that the consortiums partners will finance the pipelinersquos construction proportionately to

their respective stakes Azerbaijan will become the pipelinersquos main owner through which Baku will

sell its gas produced in Shah Deniz

The SCP will be the connecting link between Azerbaijan and TANAP after the upgrading of its

capacity from currently 7 bcm to 23 bcm per year by 2017

The Azeri ownership of the pipeline dispenses from paying transit fees also offering competitive

gas prices for European customers Moreover Azerbaijan would collect transit fees from other gas

producers and shippers that would use this pipeline such as Turkmenistan and Kazakhstan their

future involvement and commitment in the full implementation of the Trans-Caspian Pipeline will

be necessary in order to expand the TANAPs capacity As a matter of fact similarly to the oil

exports Azerbaijan could easily exploit its role as transit country also in the gas energy chessboard

in 2011 Azerbaijan earned $53 million from the transit of oil from Kazakhstan and $128 million

from oil coming from Turkmenistan supplies destined to fuel the BTC pipeline

In geopolitical terms Azerbaijan offers its strategic contribution directly helping EU to achieve its

energy security goals by means of a diversification of export routes and supplies the Azeri

commitment to finance and to build its own pipeline fuelling it with its own gas and selling it in the

European markets shows a concrete political will of Baku to cooperate with Bruxelles As the BTC

also TANAP is a strategic project for both Baku and Bruxelles because conceived to transport gas

out of Russian control within a pipeline exclusively dedicated to Caspian hydrocarbons

In the EU perspective the launch of TANAP project has imposed a substantial rethinking of the

original Nabucco project in order to revitalize the SGC Nabucco consortium decided to reconfigure

its project for a new role as a European continuation of the TANAP project proposing a shortened

version of the lsquoEU flag projectrsquo

On 28 June 2013 the Shah Deniz international consortium finally selected the Trans Adriatic

Pipeline project as the main export energy corridor for the Azeri gas to Europe The development of

TAP project strongly highlights the enhancement of the energy cooperation between EU and

Azerbaijan a country which has showed to be a reliable partner in the last years

However if on the one hand TAPs implementation will allow the start of the Southern Energy

Corridor on the other hand it can be defined as anti-strategic compared to Nabucco West mainly

because it will divert gas supplies away from countries that strongly depend on Gazpromrsquos

monopoly (Central Europe and South-eastern countries such as Bulgaria Hungary Austria) Italian

market (as well as Switzerland) is highly diversified and amply supplied and it could also benefit of 7

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

strategic gains Moreover Baku will also play a third important role as financial investor of this

infrastructure committing huge revenues obtained through oil exports in order to realize a strategic

export route which allow to diversify Azeri economic gains

Considering that the consortiums partners will finance the pipelinersquos construction proportionately to

their respective stakes Azerbaijan will become the pipelinersquos main owner through which Baku will

sell its gas produced in Shah Deniz

The SCP will be the connecting link between Azerbaijan and TANAP after the upgrading of its

capacity from currently 7 bcm to 23 bcm per year by 2017

The Azeri ownership of the pipeline dispenses from paying transit fees also offering competitive

gas prices for European customers Moreover Azerbaijan would collect transit fees from other gas

producers and shippers that would use this pipeline such as Turkmenistan and Kazakhstan their

future involvement and commitment in the full implementation of the Trans-Caspian Pipeline will

be necessary in order to expand the TANAPs capacity As a matter of fact similarly to the oil

exports Azerbaijan could easily exploit its role as transit country also in the gas energy chessboard

in 2011 Azerbaijan earned $53 million from the transit of oil from Kazakhstan and $128 million

from oil coming from Turkmenistan supplies destined to fuel the BTC pipeline

In geopolitical terms Azerbaijan offers its strategic contribution directly helping EU to achieve its

energy security goals by means of a diversification of export routes and supplies the Azeri

commitment to finance and to build its own pipeline fuelling it with its own gas and selling it in the

European markets shows a concrete political will of Baku to cooperate with Bruxelles As the BTC

also TANAP is a strategic project for both Baku and Bruxelles because conceived to transport gas

out of Russian control within a pipeline exclusively dedicated to Caspian hydrocarbons

In the EU perspective the launch of TANAP project has imposed a substantial rethinking of the

original Nabucco project in order to revitalize the SGC Nabucco consortium decided to reconfigure

its project for a new role as a European continuation of the TANAP project proposing a shortened

version of the lsquoEU flag projectrsquo

On 28 June 2013 the Shah Deniz international consortium finally selected the Trans Adriatic

Pipeline project as the main export energy corridor for the Azeri gas to Europe The development of

TAP project strongly highlights the enhancement of the energy cooperation between EU and

Azerbaijan a country which has showed to be a reliable partner in the last years

However if on the one hand TAPs implementation will allow the start of the Southern Energy

Corridor on the other hand it can be defined as anti-strategic compared to Nabucco West mainly

because it will divert gas supplies away from countries that strongly depend on Gazpromrsquos

monopoly (Central Europe and South-eastern countries such as Bulgaria Hungary Austria) Italian

market (as well as Switzerland) is highly diversified and amply supplied and it could also benefit of 7

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

the LNG option (Socor 2012b) Moreover the TAP planned capacity will be 10 bcm of gas per year

in 2018 potentially doubling its capacity after 2020 while Nabucco old project had a planned

capacity of 31 bcm also higher than Nabucco West (the first-stage capacity of this failed project

was 10 bcm per year scalable to at least 23 bcm through additional looping)

The TAP planned capacity (maximum 20 bcm) could not fully satisfy Azeri export ambitions even

if to reach this goal Baku could support and feed other projects like AGRI opening an additional

export route Potentially the future increase of Azeri gas exports could also feed Nabucco however

in the last years the history of Nabucco project has been characterized by several hurdles and

problems (ie lack of political and economic support) which downplay any positive outlook The

marked geopolitical weakness of Nabucco consortiums composition is one of the most relevant

problems because the main powerful EU energy companies have never showed interest to be

involved in the consortium7 On the contrary the simultaneous presence of the Norwegian energy

company Statoil in both Shah Deniz (together with British Petroleum the Azeri company Socar and

the French Total) and TAP consortium ndash besides as a lead company of the project together with

Axpo of Switzerland while German company EON holds the remaining stakes ndash has surely

contributed to privilege the TAP project Moreover the partners of Shah Deniz field consortium

have the option to join TAP (BP and Socar percent each and Total 10 percent) further reinforcing

the geopolitical impact of this corridor

Geopolitical hindrances in the regional scenarioNotwithstanding the TANAPs implementation the growing interests of the international energy

companies and geopolitical state players on the Azeri resources some relevant hindrances linked to

the regional scenario could seriously threat the Azeris ambition to become a strategic supplier and

transit country for EU

The Azeris opportunities to export in a westward direction highly depend on the transit in Georgia

both in the pipeline and LNG options Consequently Azerbaijan shows its potential vulnerability

and a lack of concrete diversification of its energy routes this obliged Georgian export route

exposes the national energy sector at the serious threats of an interruption of export supplies in the

case of Georgias political instability This happened in 2008 when following the Russia-Georgia

war (involving Ossetia and Abkhazia) the Azeri oil and gas flows through BTC and BTE were

temporarily blocked

In addition to this geographic hindrance Russian geopolitical and energy ambitions and the

unsolved Caspian legal status are two other main issues which could set back Azerbaijans strategy

7 Nabucco consortium is composed by Turkish company Botas Hungarian Mol Austrian OMV Romanian Transgaz Bulgarian Energy Holding while the German company RWE withdrew the consortium in 2012

8

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

in the energy sector

Since 2009 Russia developed an energy partnership with Azerbaijan aimed to acquire 15 bcm of

gas per year but this amount doubled following the new deal signed on January 2012 This gas is

channelled into the existent Gazi-Magomed-Mozdok pipeline which potentially represents an

additional option of diversification export oriented to north bypassing Georgia and Turkish

territory Gazprom has periodically proposed its intention to purchase all Azeri gas destined to

export for two main reasons firstly to obtain a reliable and closer energy source in order to fill the

South Stream pipeline project which should deliver 63 bcm of gas per year towards EU markets by

2015

Secondly the real Russian goal is to prevent the realization of the Trans-Caspian gas corridor and a

Turkmenistans involvement setting back the building of the so-called lsquomissing linkrsquo (a subsea

pipeline) between the two shores of the Caspian Sea As mentioned before the full implementation

of the TANAP will depend on the commitment of Turkmen gas in order to enhance the pipelines

capacity over 30 bcm of gas per year Russia is trying to avoid that the planned East-West Turkmen

pipeline ndash with a capacity of 30-40 bcm of gas ndash could fuel the TCGP offering to purchase growing

volumes of Turkmen gas which would be also diverted to fuel the South Stream project

The realization of TCGP as well as the implementation of the TANAP economically undermines

Russian export plans as a matter of fact 30 bcm of gas delivered towards the EU markets (through

the SGC) represents one-third of the lucrative Gazprom business based on the European strong

dependency on Russian gas imports

Bilateral tense relations between Azerbaijan and Turkmenistan are another issue which could

damage Azeri energy ambitions until 1991 Baku and Ashgabat have claimed the ownership of three

Caspian oilfields even if currently two of these ndash the Azeri field (Omar to Turkmenistan) and the

ChiragOsman ndash currently represent the main source of oil-wealth for Azerbaijan

The third disputed oilfield KyapazSerdar frequently exacerbates tensions between these two

countries in June 2012 Azerbaijan diplomatically reacted against Turkmen attempts to undertake

geological exploration initiatives on KyapazSerdar which were perceived by the Azeri Foreign

Ministry as a clear violation of the 2008 agreement within which the two Caspian littoral states

agreed to suspend all explorations or work activities on the disputed field until all issues on the

division of the seabed are resolved

Following the 2010 Caspian summit Azerbaijan and Turkmenistan share a common position

concerning the possibility to build an underwater Caspian pipeline with the consensus of the nations

directly involved however Russia and Iran oppose at this solution privileging the consensus among

all the littoral states and their right to veto for all Caspian pipeline energy projects

In spite of negotiations on a Trilateral Agreement to realize the Trans-Caspian-Pipeline are currently 9

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

on-going ndash through the EU tripartite meetings ndash Turkmen president Berdymukhammedov continues

to postpone the decision to commit some volumes of national gas on the implementation of this

energy corridor during the visit of EU energy commissioner Guumlnther Oettinger in Azerbaijan and

Turkmenistan in September 2012 Turkmen president stressed the relevance of TSCP for national

aims of energy diversification avoiding however to clearly and openly support the project

Moreover also the tense relations and the historical rivalry with Iran could set back Azerbaijans key

energy role these regional tensions contribute to fuel a condition of instability in the Caspian

region which will prevent the development of the planned energy projects and the exploitation of

the offshore fields located in the disputed territorial waters a scenario which favours Russias

energy interests in the area

Following the intergovernmental agreement to realize TANAP pipeline Turkish-Azeri political

relations and energy cooperation appear at the highest level overcoming past disagreements on gas

prices at present both countries have the geopolitical opportunity to become a strategic bridge for

the alternative energy corridors towards the EU

However Russias energy interests could weaken Azeri-Turkish relations considering that Turkey is

strongly dependent on Russias gas imports through the Balkan route and the Blue Stream pipeline

(that links Russia to Turkey across the Black Sea with a transport capacity of 16 bcm) in 2012

Turkey imported 349 bcm of gas by pipeline 245 bcm of which delivered by Gazprom

Consequently Russia is seeking to strengthen the energy cooperation with Turkey - through the

proposal to enhance the Blue Streams capacity ndash in order to make Azeri gas option less attractive

in 2011 Russia obtained to build the planned South Stream pipeline through Turkeyrsquos Black Sea

exclusive economic zone aimed to compete with Nabucco project and the EU Southern Corridor

At present the unsolved Caspian legal status and Russian colliding energy interests are substantially

freezing the achievement of a win to win appeasement with Turkmenistan strategic precondition for

a full implementation of the SGC

Conclusion The EU dependence on imported natural gas is destined to rise in the next years in this scenario

the diversifications strategy of routes and supplies will become the main geopolitical goal to

achieve for the EU foreign policy Thanks to its geographic position and to the political decision to

commit its gas reserves in a westward energy route direction Azerbaijan could concretely become

in the next years a key partner for the EU in order to enhance its condition of energy security

However Azerbaijan will successfully achieve its ambition to play this double strategic role of

energy hub and supplier only within an internal and regional condition of stability and security

In the regional scenario the traditional tense relations with Iran and Armenia will not help Azeris 10

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

strategy contributing to spread a perceived condition of instability and intraregional rivalry able to

hinder the development of energy project in the Caspian basin

The preservation of good political relations and cooperation with Turkey and Georgia represents a

key factor in the Azeri geopolitical strategy because obliged transit countries for its westward

energy deliveries In the Azeri strategic perspective it is fundamental to preserve the cooperation

with Turkey which represents the main and feasible energy route to reach European markets

allowing Baku to reinforce relations with a powerful geopolitical player in the regional context

However the implementation of TANAP and ndash in lesser extent - AGRI projects will negatively

affect Russian energy interests in the region pushing Moscow to enhance its presence in the

Caspian-Caucasus region in order to balance this adverse situation Azerbaijan wants to avoid a

cooling of relations with Russia is spite of regional concerns the expired agreement on the Gabala

radar has neither affected bilateral relations nor introduced element of tension in the geopolitical

regional scenario

Currently Russia appears the geopolitical winner of this evolving scenario mainly because the

implementation of the SGC through the TAP gas pipeline (with a planned initial capacity of 10 bcm

of gas per year) does not seriously affect Russiarsquos interests in Central and South Eastern Europe

The Azeri-Turkmen tensions on Kyapaz-Serdar seem postpone the realization of the TCGP

progressively downplaying Azeri geo-energetic ambitions in 2030 without Turkmen gas supplies

Azerbaijan could not fill the TANAP planned capacity of 60 bcm reducing the strategic relevance

of its supplier and transit role with regards to the EU energy needs Notwithstanding even a

TANAP pipeline with a reduced capacity and carrying only Azeri gas will represent a concrete

success for the Azerbaijan diversification strategy of exports allowing Baku to fuel lucrative

European markets through the future rise of national production and exports

Bibliography

Abbasov S (2012) Azerbaijan Possible Iran Sanctions Offer Baku No Golden Energy Opportunity Eurasianet Online wwweurasianetorgnode64923[accessed 28062013]

Anar V (2012) Azerbaijan-Turkmenistan Relations Shattered Brotherhood Eurasia Daily Monitor No9122 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=39548ampcHash=6a125c6590a825caa7aeac2f8b821080 [accessed 22062013]

Azernews (2012) Russiarsquos Gazprom to double Azerbaijan gas imports Azernews Online httpwwwazernewsazoil_and_gas40570html [accessed 22062013]

Badalyan L (2011) Interlinked Energy Supply and Security Challenges in the South Caucasus Caucasus Analytical Digest 333

Baev P K and I Oslashverland (2010) The South Stream versus Nabucco pipeline race geopolitical

11

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

and economic (ir)rationales and political stakes in mega-projects International Affairs 86 (5) 1075ndash1090

Bagirov S (2001) Azerbaijans strategic choice in the Caspian Sea In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (190-194) British Petroleum (2012) BP Statistical Review of World Energy 6 20

British Petroleum (2013) BP Statistical Review of World Energy 28

British Petroleum (2012) Shah Deniz Online httpwwwbpcomsectiongenericarticledocategoryId=9006668ampcontentId=7015092 [accessed 22062012]

Cornell SE et al (2005) Geostrategic Implications of the Baku-Tbilisi-Ceyhan Pipeline In Starr FS and SE Cornell (eds) The Baku-Tbilisi-Ceyhan Pipeline Oil Window to the West WashingtonUppsala Central Asia-Caucasus Institute amp Silk Road Studies Program (18-24 31-36)

Cutler R (2012) Azerbaijan And Turkey Tilt Towards New ldquoTrans-Anatolianrdquo Natural Gas Pipeline Central Asia-Caucasus Institute Analyst Online httpwwwcacianalystorgq=node5720 [accessed 15062013]

EurActiv (2010) Europersquos southern gas corridor The great pipeline race Euractiv Online httpwwweuractivcomenenergyeuropes-southern-gas-corridor-great-pipeline-race-linksdossier-498558 [accessed 15062013]

European Commission (2010) EU Energy Trends to 2030 (update 2009) Luxembourg Publications Office of the European Union

European Commission (2011a) Joint Declaration on the Southern Gas Corridor Online httpeceuropaeuenergyinfrastructurestrategydoc2011_01_13_joint_declaration_southern_corridorpdf[accessed 17062013]

European Commission (2011b) EU starts negotiations on Caspian pipeline to bring gas to Europe Brussels European Commission - Press release IP111023

Fitzpatrick CA (2011) Turkmenistan Weekly Roundup Eurasianet Online httpwwweurasianetorgnode64477 [accessed 17062013]

Geropoulos K (2012) EU bets on gas from Azerbaijan Turkmenistan for Trans-Caspian pipe New Europe Online Online httpwwwneuropeeuarticleeu-bets-gas-azerbaijan-turkmenistan-trans-caspian-pipe [accessed 23062013]

Geropoulos K (2013) Shah Deniz Members to Join TAP New Europe Online Online httpwwwneuropeeuarticleshah-deniz-members-join-tap

Institut fuumlr Europaumlische Politik (2011) Europes energy futurenatural gas supply between geopolitics and the markets Berlin Institut fuumlr Europaumlische Politik (1113-35)

International Energy Agency (2010) World Energy Outlook 2010 Paris OECDIEA (499-530)

International Energy Agency (2011) World Energy Outlook 2011 Paris OECDIEA (165)

12

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13

Ismayilov E (2012) Azerbaijanrsquos estimated gas reserves exceed 25 trillion cubic meters Trend Az Online httpentrendazcapitalenergy2036361html [accessed 17062013]

Jonson L (2001) The new geopolitical situation in the Caspian region In Chufrin G (ed) The security of the Caspian region Oxford Oxford University PressSIPRI (16-19)

Muradova M (2013) Shah Deniz Consortium Opts For Westward Gas Exports Through Trans-Adriatic Pipeline Central Asia-Caucasus Institute Analyst Onlinehttpwwwcacianalystorgpublicationsfield-reportsitem12778-shah-deniz-consortium-opts-for-westward-gas-exports-through-trans-adriatic-pipelinehtml [accessed 17072013]

Nuriyev E (2008) Azerbaijan and the European Union new landmarks of strategic partnership in the South Caucasus-Caspian basin Southeast European and Black Sea Studies 8(2) 159-160

Socor V (2011) Azerbaijan and Its Gas Consortium Partners Sign Agreements With Turkey Eurasia Daily Monitor No 8201 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=38603amptx_ttnews[backPid]=7ampcHash=6bc581ad046414cd39c92f5db174f9fc [accessed 22062013]

Socor V (2012) Trans-Anatolia Nabucco-West Pipeline Projects An Optimal Fit Eurasia Daily Monitor No 962 Online httpwwwjamestownorgsingleno_cache=1amptx_ttnews[tt_news]=39189 [accessed 22062013]

Socor V (2013) The Curtain Falls on Nabuccorsquos Last Act Eurasia Daily Monitor No10123 Online httpwwwjamestownorgprogramsedmsingletx_ttnews[tt_news]=41089amptx_ttnews[backPid]=685ampno_cache=1UdvYfW3wrUZ [accessed 22072013]

Tsereteli M (2009) The impact of Russia-Georgia war on the South Caucasus transportation corridor Washington The Jamestown Foundation

The Journal of Turkish Weekly (2012) BTC Ups Turkmen Oil Transportation The Journal of Turkish Weekly Online httpwwwturkishweeklynetnews138657btc-ups-turkmen-oil-transportation-html [accessed 22072013]

United States Energy Information Administration (2010) International Energy Outlook 2010 Washington DOEEIA

13