Azerbaijani-Iranian energy cooperation: offer and their perspectives

Early this week at the Azerbaijani-Iranian intergovernmental session the Iranian delegation made different proposals to the Azerbaijani officials to strengthen cooperation in various fields of economy.

The most interesting ones were the proposals of energy cooperation. Iranian Minister of Communication and Information Technologies Mahmud Vayezi, head of the Iranian delegation, said at the meeting with SOCAR President Rovnag Abdullayev that Tehran is ready to consider the possibility of transportation of its gas to Europe via the trans-Anadolu (TANAP) pipeline. Minister added that the Azerbaijani and Iranian oil and gas companies need coordination to satisfy needs of the European market in gas.

Is this idea real and feasible? At first, the Azerbaijani government has repeatedly said that the gas infrastructure, which Azerbaijan is going to build towards Europe, is open and any third country can use export possibilities of the pipelines, if it does not infringe upon the commercial interests of the shareholders. In this case Baku could always tell its southern neighbor that “I am ready to transport your gas, first sign the commercial agreement with the European consumer and then we will solve the transit issues.” Iran could discuss issues with the European consumers (such Nabucco project) for 10-15 years.

“Both Azerbaijan and Iran have huge oil and gas resources, which means that they need to expand cooperation in this area as well as in the oil and gas industry,” Vayezi said.

This statement could be interpreted as Iran’s desire to bring SOCAR to its market. However, SOCAR will hardly agree to that, because of the western sanctions and unsettled Caspian legal status.

Iran has also urged to increase natural gas swap operations to supply Nakhchivan Autonomous Republic (NAR). At present Azerbaijan delivers about 360 million cub.m. of gas a year via Iran. In the future it is planned to create underground gas storage in NAR on the salt field with the storage volume of 200-300 million cub.m. Discussion of this issue started several years ago, but no concrete steps have been taken.—0—