Ahead of Baku visit: Berdymukhamedov and Aliyev to divide Caspian deposit

President of Turkmenistan Gurbanguly Berdymukhamedov is to pay an official visit to Azerbaijan, on August 8-9. It is anticipated that the Turkmen leader and his Azerbaijani counterpart Ilham Aliyev will address the disputable deposit Serdar (or Kyapaz, as Azerbaijanis call it) in the Caspian Sea. In case of successful talks, Azerbaijan may weigh investments in economy of Turkmenistan. Ilgar Velizade, the head of South Caucasus Club of Political Analysts, answers EADaily’s questions about the upcoming visit and the Azerbaijani-Turkmen relations.

What will be on agenda of the talks?

The talks will address the two countries’ relations in the energy field and the terms of possible transit of Turkmenistan’s energy resources via Azerbaijan. This issue was discussed at the recent meeting of the foreign ministers of Azerbaijan, Turkey and Turkmenistan. The ministers made a preliminary agreement on the volumes of oil supply, terms and taxes. There is a corridor between Azerbaijan, Georgia and Turkey and things are relatively clear about it. There is a tried-and-tested route Turkmenbashi-Baku: tanks are loaded in Turkmenbashi and then dispatched to Baku by ferry boats and farther to Batumi by railway and only than to Europe via Black Sea routes. They plan to launch the Baku-Tbilisi-Ceyhan railway in November.

Are you speaking about oil only?

No agreement is needed for oil transit. It does not require construction of Trans-Caspian subsea pipeline either. The situation with gas is more complicated. Everything depends on the Caspian region status and the need to construct subsea pipeline. Therefore, they decided to postpone the gas issue for a while. There were suggestions to liquefy gas in the territory of Turkmenistan and export it. However, it is an expensive project and the issue is left hanging in the air.

The European Union sought alternative routes of gas supply and the supplies from Turkmenistan seemed more important…

In EU, everything is at the stage of technical consultations. It has not gone beyond that format. Therefore, gas supply from Turkmenistan via Azerbaijan is not possible in the short-term outlook. The issue will be resolved also after the status of the Caspian region is determined.

What about the statements that consent of two or three Caspian countries will be enough?

The issue is too politicized. Russia and Iran will not be happy with the implementation of the Trans-Caspian pipeline. No one will go on a risk and make hasty decisions concerning a project that may impede preparations for the upcoming Summit of the Caspian States that may adopt a Convention on the Caspian Region status. Astana will be hosting the summit and it will prefer that things run smoothly. They cannot but reckon with the political aspect of the issue. Technically, construction of the Trans-Caspian pipeline is not an extra difficult task. It is important to settle the political problems. After all, Turkmenistan is the only country seeking implementation of that project. Azerbaijan may come out as a transit country, but it will avoid additional political risks. The sides are negotiating, perhaps, discussing some technical details, but the project will not be implementation unless there are political decisions.

Is construction of gas liquefaction plants a way out for Turkmenistan?

If such plants are built, Ashgabat may get an opportunity to export gas in tanks through the route I was speaking about. In such case, no political issue will arise. If they can load oil in tanks, why couldn’t they do the same for gas? Yet, there is a slight problem – Turkmenistan needs a real consumer of natural gas. For instance, before launching TANAR/TAP project, Azerbaijan gained consumers for up to 2040. Meantime, Turkmen gas marketing in Europe is conceptual. We do not see who potential consumers of the Turkmen gas are; there are no such contracts. President Berdymukhamedov traveled to Germany and held talks there… However, talks did not reveal if Germany will be consuming the Turkmen gas. EU’s energy committee once delegated representatives to Ashgabat to discuss gas supplies to Europe, but things remained unclear. The European Commission cannot sponsor the project. The situation with oil is much easier. Oil is liquid goods.

Will Berdymukhamedov and Aliyev discuss disputable deposits Kyapaz/Serdar?

They will discuss in details sea bed demarcation and that disputable deposit. Azerbaijan suggests joint operation of the deposit. Both Turkmenistan and Azerbaijan come out for determination of modified medial line. Their stances are certainly identical. The question is where that line will be. It is in the area of Kyapaz/Serdar deposit. The sides need to put an end to that issue to further develop their energy cooperation. If Ashgabat accepts Baku’s suggestion to operate the deposit jointly, it will be a breakthrough.

Turkmenistan is experiencing hard times. Some experts say the country has economic problems and lacks funds even to host the Asian Games in mid-September. Will Ashgabat appeal to Baku for assistance? What kind of assistance it may be?

It depends on price. In case of real breakthroughs in the economic and political issues and certain dividends for Baku, the latter will probably help Ashgabat and make economic investments, specifically, in the oil and gas sector. Azerbaijani specialists have relevant experience and technical capacities. I am speaking about possible joint projects in the Caspian Sea. If Azerbaijan needs this, the sides may make progress on other issues too. They will sign at least a framework declaration to define the range of interests for the current period. Considering that the presidents do not meet frequently, it may be a new page in history of the two countries. The preliminary work is done. They will sign certain documents and a political declaration as a basic one.

EADaily’s Central Asian Bureau