Azerbaijan and Turkey on Monday agreed to build a pipeline to carry up to ten billion cubic meters of Azerbaijani gas to European markets starting in 2017.
The deal comes as European plans to build a Southern Gas Corridor to transport Azerbaijani, Iraqi and Turkmen gas to the West has struggled to sign up suppliers.
Azerbaijan’s huge gas reserves are crucial to the success of Europe’s plans. A foreign consortium including BP, Norway’s Statoil and Italy’s Eni is developing one trillion cubic meters of gas reserves there. Two pipelines, the Trans Caspian and Nabucco, are supposed to circumvent the South Stream project which is a join venture of Eni and Russia’s Gazprom, to bring gas into Europe.
The €20 billion South Stream pipeline is to run under the Black Sea from Russia to Bulgaria, Serbia and Hungary before branching out into Western Europe by 2015. Nabucco plans to transport Caspian Sea gas along a similar route, into Austria.
Iran and Russia have both tried to obstruct Azerbaijan’s gas exploitation in recent years. When Azerbaijani-Turkish relations were at low over an energy dispute in 2009, the two authoritarian nations tried to take advantage of the situation. Iran moved an oil rig into disputed waters in November of that year to test Azerbaijani authorities whom, three months ago, put the leader of an openly pro-Iranian opposition party on trial for suspected anti-government activity. The Iranian army chief at the time predicted that Azerbaijan’s president would “face a grim future” if he continued his anti-Iranian policy.
The Russians earlier tried to prevent the construction of the Baku-Tbilisi-Ceyhan pipeline which became operational in May 2006 and can transport up to fifty million tons of crude oil from the Caspian to Turkey every year.
The recent Azerbaijani-Turkish agreement is another blow to Russia’s energy politics. If Europe can come together heated by Azerbaijani and Turkmen gas, it will diminish the Kremlin’s ability to play divide and conquer in Central and Eastern Europe where transit countries fear a Russian resurgence and wonder whether Germany won’t put its own energy security before the common European interest.