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.

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 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.

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. 

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. 

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’. 

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. 

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. 

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.

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. 

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 gas pipeline. Meanwhile, the Trans-Caspian project looks effectively shelved.

By Gulnara Ismailova,  a freelance journalist based in Baku, Azerbaijan