Oil trade and policy of the Caucasus, with guest Shahmar Hajiyev

"Baku-Tbilisi-Ceyhan (BTC) Pipeline" by theglobalpanorama is licensed under CC BY-SA 2.0

Interview by Irina Tsukerman 

January 1, 2021

Image credit: “Baku-Tbilisi-Ceyhan (BTC) Pipeline” by theglobalpanorama is licensed under CC BY-SA 2.0

The interviewer’s questions as well as editorial notes are in bold text, and guest responses are in plain text throughout. 

Introduction our special guest: 

From the description at Center of Analysis of International Relations:

“Shahmar Hajiyev is a Leading Specialist at the Center of Analysis of International Relations. His field of research includes energy politics, transport and energy security issues, renewables and green economy.

He participated at the Analyst and Business Development Program of US-based STRATFOR, (Strategic Forecasting Inc.), and also worked as an individual consultant of the Asian Development Bank (ADB).  In addition, he is Vice-Chairman Azerbaijan-China Cooperation Public Union. Published numerous articles on politics, labor market, migration, energy security issues, energy economics, etc.. He holds MA degree in International Economic and Political Studies from Charles University in Prague.”

Regarding Caspian energy resources and European markets…

Actually the Caspian energy resources are important for European energy markets. Azerbaijan faced many difficulties to sign the Contract of Century, then the BTC pipeline. Russia was always against the idea to deliver Caspian energy bypassing Russia. But Azerbaijan was the first country that managed to realize that.

This mechanism allowed energy players to be more flexible vis a vis Russia. European energy markets depend heavily on Russian energy monopol. To deliver Caspian energy to global energy markets diversified both energy resources and supplies. The recent deal with Turkmenistan and SOCAR Trading showed that Azerbaijan wants to play an active role to deliver Central Asian energy to global markets. Turkmenistan always delivered oil by tankers to Novorossiysk using Transneft. But now they’ll use connection via Azerbaijan.

Regarding Kazakhstan…

Also Kazakhstan used the BTC oil pipeline to supply some oil sources to global markets. Azerbaijan is interested in becoming an energy hub to supply Caspian energy recourses, and doing that to strengthen its relationship with Europe

How do you see Russia reacting and what steps will it take to protect its oil monopoly to Europe?

However right now Azerbaijan can not replace Russian entirely, Europe Russian energy relationship ll continue. It’ll depend on the demand. We know that the oil market is in huge trouble, and the price is going down. But with the end of COVID-19, there is hope for market revival. Especially, Chinese and Indian economies ll demand more oil imports. So I think that Russia ll pay special attention to those markets. In Europe, Russia has political interests using its energy sources but mainly natural gas. They can reduce crude oil prices in order to save their share and save its monopoly.

Do you see China and India as also becoming potential customers for Azerbaijan?

Yes, especially China has huge potential, and Azerbaijan must diversify its exports. We see stagnation in Europe but it is vice versa in China. But again oil demands and prices will play a crucial role. We saw an oil price war between Russia and OPEC.

Did that affect Azerbaijan?

 Of course, the low oil prices affected all oil-exporting countries including Azerbaijan.

Azerbaijan is cooperating with OPEC and other partners to stabilize the market. Actually, it is in Azerbaijan’s interest to attract oil from various countries to supply via BTC. We want to use BTC as an inter-regional mega energy project which supports regional integration.

What countries are being targeted?

Countries from Central Asia: Turkmenistan, Kazakhstan, Uzbekistan…Mainly Kazakhstan and Turkmenistan.

How do you see this reshaping the regional geopolitical realities? Do you think Russia will view this economic cooperation as a threat?

Russia used always its energy recourses as a tool. Of course, different energy projects and regional cooperation are against Russian interests. However, the situation changed and they can not control fully the situation. Countries want diversification. Russia can not prevent that.