GAS SCANDAL BETWEEN AZERBAIJAN AND TURKMENISTAN

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">Azerbaijan’s
State oil company’s president recently declared that the much-debated
Trans-Caspian pipeline will not be built. This puts another, perhaps final,
nail in the coffin of this project that has been marred by the deteriorating
relations between Turkmenistan and Azerbaijan

At the OPEC general secretariat in
Vienna,  Natig Aliev (head of the
State Oil Company of Azerbaijan Republic, SOCAR) released a statement on
October 9 announcing that the planned Trans-Caspian gas pipeline project that
was to supply Turkmenistan’s gas to Turkey via the territories of Azerbaijan
and Georgia will not be realized. The Trans-Caspian gas pipeline, was
scheduled to be laid from Turkmenistan to Turkey via the bottom of the Caspian
Sea, and the territories of Azerbaijan and Georgia, to a length of 1700 Km.
(ca. 1100 miles) In May 1999, Ashgabat and Ankara signed an intergovernmental
agreement to supply 16 billion cubic meters of natural gas per year beginning
from 2002. Azerbaijan and Turkey in May  of this year ratified the
agreement on supplying gas from the Azerbaijani field Shah-Deniz in the
Caspian. The document foresees the supply of 89.2 billion cubic meters of gas
to Turkey.

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">After
discovering the huge gas field at Shahdeniz in the Azerbaijani sector of the
Caspian Sea in the middle of 1999, it became an essential issue to plan the
export of Azeri gas to western markets. Baku demanded a share of export quote
to the amount of mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">half of the
Trans-Caspian pipeline’s capacity. However, authorities in Turkmenistan
regarded such demands by Baku as contrary to the interests of Ashgabat. Under
such conditions, the Trans Caspian pipeline project will not take place,
according to Natig Aliyev.

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">Baku’s
position got stronger after the signing on September 29 of an
Azerbaijani-Georgian package of intergovernmental agreements concerning the
transit of Azeri gas from the Shah-Deniz gas field via Georgian territory to
Turkey. Export of gas from Shahdeniz to Turkey is scheduled to begin in at the
end of 2004. The initial supply will be 2 billion cubic meters per year, while
from 2007-2018 the amount will increase to 6.6 billion cubic meters. 

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">The statement
by the SOCAR president can be explained by both economic and political
reasons. The statement must be viewed in the context of the long-standing
deterioration of relations between Azerbaijan and Turkmenistan. The problems
include debts for energy supplied by Turkmenistan to Azerbaijan,
Turkmenistan’s claims on the "Azeri" and "Chirag" oil
fields on Caspian Sea, and sharp differences in views on the determination of
the Caspian’s legal status. 

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">The SOCAR
president’s statement was an unpleasant surprise for Turkmenistan’s
Foreign Ministry, however there has still been no official reaction from
Turkmenistan. According to Ilham Aliyev, first vice president of SOCAR,
‘Even today Azerbaijan is ready to lay a gas pipeline via its territory to
help Turkmenistan to lessen its dependence on Russia. With respect to building
a Trans-Caspian gas pipeline, we are awaiting Turkmenistan’s decision, as it
is the owner of the gas and we, Azerbaijan and Georgia, are 
transit countries’. According to Aliyev, ‘When we used to begin
negotiations with Turkmenistan, we stated that the Turkmen side doesn't take
this project seriously and wants to win time, they always looked in direction
of Russia. Turkmenistan achieved its target and today it sells 50 billion
cubic meters of  "blue fuel" to Russia’. 

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">In the opinion
of Rustam Mamedov of the  Azerbaijani
President’s Executive Office, when Trans Caspian project just started,
Azerbaijan wanted to take part.. But Turkmenistan didn't allow it to feed
Azerbaijani gas into it in the amount desired. This situation led to intrigues
and eventually the present deadlock. 

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">This project
could give multibillion profits to Turkmenistan, but its policy in relations
toward Azerbaijan ultimately buried it. Not only did economic interests play a
fatal role for the Trans-Caspian pipeline project’s fate, but geopolitical
powers opposed to the improvement of relations between Azerbaijan and
Turkmenistan also played an important role, according to Rustam Mamedov. 

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">Rasim Musabekov,
an independent political scientist in Baku, sees Natig Aliyev’s statement as
protecting the national interests of Azerbaijan, most of all in economic
terms.  This statement is not
Azerbaijan response to some non-friendly actions from Turkmenistan side,
stressed Mr. Musabekov.

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">The Turkmen
claims to the Caspian oilfields "Azeri" and "Chirag",
which lie much closer to the Azerbaijani coast than to Turkmenistan, likely
played some role in the release of such statements. The Turkmenistani poicy
served to show Azerbaijan as the guilty party in negotiations. As a result of
this policy, Azerbaijan decided to go ahead with the construction of a
pipeline of its own to export its Shah-Deniz gas to Turkey. 

mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">In the near
future, the parliaments of Georgia and Azerbaijan should ratify the recently
achieved agreements, then a consortium on building the gas pipeline from Shah
Deniz to Erzurum, Turkey, will be assembled. This will be followed by
engineering studies, detailed engineering, and finally the actual construction
of this South Caucasian mso-bidi-font-size:12.0pt;font-family:"Lucida Bright"">gas pipeline.
Meanwhile, the Trans-Caspian project looks effectively shelved.

mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:"Times New Roman";
mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA">By Gulnara
Ismailova,  a freelance
journalist based in Baku, Azerbaijan