Academic Azerbaijan Caucasus Energy Geopolitics

The Azerbaijan- Armenia conflict will reshape the European gas corridor

By | Dr. Frank Musmar

November 21, 2020 

Above, image credit. “Oil Fields – Baku – Azerbaijan” by Adam Jones, Ph.D. – Global Photo Archive is licensed under CC BY-SA 2.0

Only three lands (oil roads) supply Europe with oil from Asia: through Iran, Russia, and Azerbaijan. The USA and European countries imposed sanctions on Iran and Russia’s oil sectors, which lacerated their relations. Accordingly, the Azerbaijan oil road became the most viable route.

Baku, Azerbaijan oil industry has its deep roots in history. Baku had the first oil pipeline in 1877, linking the Surakhany oil field to a refinery.13years later, Baku had 25 pipelines covering 286 Km. By 1901, half of the world’s oil (212,000 barrels of oil per day) was produced from 1900 Baku oil fields. Moreover, the Baku oil industry was the first to apply multi-stepped turbo drilling without a reducer and the first to use the electro-drilling construction in 1936. 

Baku oil was crucial to the victory of the allies in World War II. Four out of five Soviet aircraft, tanks, and trucks used in World War II ran on Baku fuel. During World War II, the control and cutting off oil supply from Baku and the Middle East played a large role in the allies’ victory.  

Azerbaijan Gas corridors

1- The northern corridor through Russia to the black sea (Baku–Grozny–Novorossiysk)  

2- The western corridor through Georgia to the black sea (South Caucasus Pipeline) Baku–Tbilisi–Supsa 

3- The South corridor through Georgia to Turkey (Baku–Tbilisi–Erzurum) and to (Ceyhan) in Turkey at the Mediterranean Sea)

4- The east corridor through the Caspian Sea to Turkmenistan (Baku–Trans-Caspian Gas Pipeline)

5- The Trans-Anatolian Natural Gas Pipeline (TANAP). This pipeline connects the Shah Deniz gas field to Europe through the South Caucasus Pipeline and the Trans Adriatic Pipeline. This pipeline supplies Europe and strengthens the role of Turkey as a regional energy hub.

6- Trans Adriatic Pipeline (TAP). This pipeline transports natural gas from Azerbaijan through The South Caucasus Pipeline through Turkey (The Trans-Anatolian Natural Gas Pipeline) to the Caspian Sea to Europe, starting from Greece through Albania Adriatic Sea to Italy. 

Russia-Turkey gas corridor

The Turk Stream (Gazprom) pipeline transport Russian natural gas from the Turkish landing point to southeastern and central European markets via Bulgaria, Serbia, and Hungary. The Bulgarian 295 miles pipeline crosses the country and connects to Serbia 250-mile segment of the pipeline. In June 2019, Serbia and Hungary reached an agreement to construct trans-border infrastructure that the Hungarian start forming in mid-2020. The Blue Stream gas pipeline is another pipeline that delivers Russian natural gas to Turkey across the Black Sea directly and ends in Ankara. 

Azerbaijan – Iran gas corridor

Iran and the Soviet Union agreed to establish the Kazi Magomed–Astara–Abadan pipeline in 1965 and inaugurated the agreement in October 1970 in Astara by Shāh Pahlavi and Nikolai Podgorny. The pipeline supplied the Southern Caucasus republics of the Soviet Union with natural gas from Iran from 1971–1979. After the Iranian Revolution, Iranian supplies were cut off. In 2006, Azerbaijan and Iran made a swap deal; Azerbaijan provides gas through the Baku-Astara pipeline to Iran, while Iran supplies Nakhichevan. 

Qatar-Turkey Gas corridor (Planned) 

The proposed pipelines for natural gas will connect the Iranian–Qatari South Pars/North Dome Gas-Condensate field with Turkey. From there, it will connect with the Nabucco pipeline to supply Europe and Turkey. The Turkey routes will go through Saudi Arabia, Jordan, Syria, and Saudi Arabia, Kuwait, and Iraq. Syria rejected the Qatari proposal to protect its Russian ally’s interests, which is Europe’s top supplier of natural gas.

East Mediterranean gas discovery and Israel gas corridor via Cyprus Greece to Europe

The $6 billion plan, formulated by the energy ministers of Israel, Cyprus, Greece, and Italy, is for a 1,900-kilometer (1,181 miles) corridor that will link discovered gas fields in the eastern Mediterranean basin with European markets through Cyprus, Greece, and Italy. A survey of the route is currently being performed to reach a final investment decision within two years and complete the project by 2025. The project has created friction with Turkey, which says it deprives Turkish Cypriots living in a breakaway state in northern Cyprus of proceeds from the island’s natural resources.

What about Armenia?

Armenia is a small Christian nation surrounded on three sides by Islam, possesses no oil or gas reserves, no oil production, no refineries, and no oil pipelines via its land. Refined oil products arrive in the country through rail or truck shipments. Russia is the only natural gas supplier of Armenia via Georgia. Armenia receives more United States aid than any other country except Israel. Azerbaijan, by contrast, gets no U.S. aid.

However, the U.S. has severe interests in Azerbaijan oil, making Russia cautious not to spoil its relations with Azerbaijan. The U.S. oil giants have 40 percent of the leading BP-led consortium developing Azerbaijan’s oil resources. Accordingly, Washington will favor Azerbaijan in their fight with Armenia.

Russia has a military base in Armenia, and the two countries are members of the Moscow-led Collective Security Treaty Organization. The treaty permits Russia’s military support if Armenia is attacked except Nagorno-Karabakh or the other Azerbaijani regions around it seized by Armenian forces. Moreover, Moscow has strong ties to Azerbaijan and sells weapons to both Armenia and Azerbaijan.

Nagorno-Karabakh

The Soviet Union government established the Nagorno-Karabakh Autonomous Region within Azerbaijan in 1920, a region where 95 percent of the population is ethnically Armenian. Despite the region’s legal location within Azerbaijan’s borders, the Nagorno-Karabakh legislature passed a resolution to join Armenia in 1988. Accordingly, a war erupted between Armenia and Azerbaijan over the region, leaving thirty thousand casualties and hundreds of thousands of refugees. At the end of the war, Armenia controlled Nagorno-Karabakh and occupied 20 percent of the Azerbaijani territory.

The fighting erupted again in 2016 for four days and agreed on a new cease-fire. Without a reasonable solution, the military conflict between the countries will destabilize the oil industry in the South Caucasus region since Azerbaijan, which produces about eight hundred thousand oil barrels per day, is a significant oil and gas exporter to Central Asia and Europe. Unfortunately, the ware erupted again in 2020. Nagorno-Karabakh is undeniable; Azerbaijan’s case under international law is more concrete. 

Why Azerbaijan has more allies

Azerbaijan, the rich in natural resources at the Caspian Sea, became independent in 1991 from the former Soviet Union. Accordingly, energy will play a catalyst in bringing the relations among Azerbaijan, Armenia, and Turkey.   

Turkey

Azerbaijan, Kyrgyzstan, and Turkey are Turkic countries; Turkey and Azerbaijan are bound by strong ethnic, cultural, and historical ties. Turkey was the first country to recognize Azerbaijan’s independence in 1991 after the collapse of the Soviet Union, and the two have forged robust and economic relations. Turkey is the main conduit for Azerbaijan’s oil and gas exports, and the ex-Soviet republic has become a significant investor in Turkey. Accordingly, Turkey put its weight behind the oil-rich Azerbaijan.

Azerbaijan and Turkey signed a military agreement for co-operation and education in 1992. Since then, the Azerbaijani and the Turkish governments have closely cooperated on defense, security, and large-scale military exercises in Azerbaijan. Turkey is also Azerbaijan’s third-largest supplier of military equipment after Russia and Israel. The two countries signed a range of treaties that makes each other a guarantor in case of an attack by foreign forces in 2010. The treaty would enter into force upon the exchange of instruments of ratification 

Russia

Armenia is Russia’s only ally in the strategically crucial Caucasus because Russia fears losing the entire Caucasus if Armenia joined NATO, especially after Georgia has favored the Western Bloc since independence, desires NATO membership, and no longer depends on Russian natural gas. Another threat to Russia is the Central Asian five Muslim and largely Turkic countries of Turkmenistan, Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan.

Moreover, Azerbaijan feels hemmed in by Russia and would like to join NATO. Azerbaijan sends its Caspian Sea oil and gas westward through Georgia, Turkey, and beyond. Another major gas pipeline is planned. If Russia loses Armenia and the Caucasus, the Western Bloc would penetrate Turkey straight to the Caspian and create a powerful NATO fleet. This explains Russia’s anxiety over what happens in Armenia.

Iran

Iran is secretly backing Armenia, the Christian-majority country, over the Shia-Muslim majority country, Azerbaijan. Iran sees the increase in Turkish nationalism among the Azeri Turks as a serious political problem. Connections and relations between the countries’ north, where a sizable Azeri Turkish population lives, have been essential in Tehran’s political issues with Azerbaijan. Iran’s Turkic-origin population, which includes Turkmen, Qashgais, and other Turkish-speaking groups, accounts for 40 percent of Iran’s population. 

While Iran has a Shia majority and Azeris are overwhelmingly Shia, Azeris speak a Turkish dialect, close to Turkey’s Turkish. They have established close connections with Turkey since the collapse of the communist Soviet Union and Azerbaijan’s independence. 

Israel 

For Israel, Iran’s threat will predominate for years to come, and Azerbaijan has much more to offer than Armenia. Azerbaijan has a 2,500year-old Jewish community that has benefited from religious tolerance. Azerbaijan was the rare majority-Muslim country to recognize Israel after the fall of the Soviet Union.

Accordingly, no country in Eurasia has closer or warmer ties with Israel than Azerbaijan. The relationship between the two countries is particularly surprising because Azerbaijan is a majority Muslim country. Over the 25-year history of diplomatic relations between Azerbaijan and Israel. Moreover, the top Jewish-American organizations quietly support Azerbaijan.

The Israeli economy is the most developed in the Middle East. To maintain the high standards of living, the economy needs uninterrupted and secure energy supplies. Searching for a new market for its military armaments and a new Muslim ally in the region, Israel found Azerbaijan. Since 2010, the two countries have formed a strategic alliance, backed by the U.S., against their mutual foe Iran.

Almost all the Israeli companies that make drones have sold their wares to the Azeri army. Israel’s Iron Dome anti-missile and rocket system was also sold to Azerbaijan. It may well be that it is already being used in the battlefields in Nagorno-Karabakh to intercept Russian-made rockets launched by Armenia. To cover and balance some of the rising cost of the weapons, Israel buys oil from Azerbaijan.

 

USA

Azerbaijani energy reduces Southern Europe’s dependency on Russia and serves American objectives. Azerbaijan is also an important U.S. counterterrorism and security partner in nearby Afghanistan. But for an American foreign policy that will increasingly take on the character of great-power competition, Azerbaijan’s strategic location between Europe and Asia and history of support for U.S. objectives are indispensable. 

Russia has promised to defend Armenia, Turkey has pledged to support Azerbaijan, and Iran has a sizeable Azeri minority, which could escalate a crisis and further complicate efforts to secure peace in the region