BACKGROUND: The building of BTC reconfigures the mental map with which political observers and decision-makers in the Caucasus look at the world. BTC constitutes an umbilical cord that will tie Azerbaijan and Georgia in ever closer relation to Europe. For Turkey, with its significant trade relations to Russia including the Blue Stream gas pipeline, BTC is a cause to revisit its eastern vocation. For Russia, BTC provides a further testimony to the fact that the states of the South Caucasus are independent and sovereign actors, where Russia has a natural right to influence, but not to dictate policy. For the United States and Europe, BTC provides a much needed source of additional energy reserves as well as a further impetus for western involvement in the energy and security sectors of the wider Caspian basin. Indeed, BTC proves that the lofty but near forgotten ambitions of building an east-west corridor linking Europe to Central Asia and beyond via the Caucasus are not only possible but are being realized. Already, BTC should be understood as part of, and driver of, the larger South Caucasus transport corridor. The BTC project in fact made it feasible to build the South Caucasus gas pipeline, which will carry natural gas from Azerbaijan’s Shah-Deniz field to Turkish and in the future European markets. In addition, as BTC is being developed, the project of building the Baku-Tbilisi-Akhalkalaki-Turkey Highway and the Tbilisi-Akhalkalaki-Kars Railroad are slowly materializing. The BTC pipeline is a major step in anchoring Georgia and Azerbaijan to Europe. By itself, it strengthens their economic security; and moreover, it is a sine qua non for the implementation of the wider East-West transportation and communications corridor. As such, it is a crucial factor in building true sovereignty and independence for these states and enabling them to freely choose their foreign and security policy strategy and orientation.

IMPLICATIONS: The completion of BTC will have implications that affect a larger area, most importantly Central Asia. The successful completion of BTC constitutes a first step toward providing the lands East of the Caspian Sea with a direct connection to Europe that does not depend on former colonial overlords. There is hence reason to eschew complacency and look ahead to the opportunities that the construction of BTC will generate. The production from the Azeri-Chirag-Guneshli fields will peak relatively quickly, and barring new discoveries and increased potential in the fields, production will fall below the 1 million bpd capacity of the BTC pipeline early in the next decade. This clearly raises the issue of other potential oil resources to be fed into the pipeline. The most immediate concern will be whether other oil projects in Azerbaijan will be realized in quantities that will affect the BTC pipeline’s operation. This question is crucial in terms of Azerbaijan’s future as a significant oil producer. As such, the completion of BTC raises the delicate question of the disputed oil fields along the still disputed Azerbaijani-Iranian and Azerbaijani-Turkmen maritime borders. With every passing year, the issue of delimiting this border will be more pressing. The same is true as concerns the status of the Kyapaz/Sardar field, claimed by both Turkmenistan and Azerbaijan. In the longer run, a major question is whether BTC and SCP will lead to the extension of the East-West energy corridor across the Caspian to Central Asia – in essence, whether Kazakhstani oil will feed into BTC, and whether Turkmenistani gas will complement the SCP. BTC may stimulate another big oil project to ship oil through the South Caucasus corridor: the elephantine Kazakh field of Kashagan, the largest single oil find in the past two decades, whose transportation to markets has not yet been determined. Two or three options can be considered for Kashagan’s oil. One is to export it through an expanded or aparallel CPC pipeline to Novorossiysk. Two further options require oil to be brought across the Caspian by tanker or pipeline from Aktau to Baku. One is enlarging the capacity of BTC or build a parallel line to Ceyhan; another is to greatly expand the pipeline from Baku to Supsa, Georgia. Routing this oil westwards would increase Kazakhstan’s security as an oil producer, strengthen the independence and statehood of Kazakhstan, and cement the expansion of the East-West corridor into Central Asia. This would further increase the geostrategic importance of the South Caucasus as a strategic link between Europe and Central Asia in energy and security terms. In practice, Kazakhstani and Azerbaijani officials confirm discussing a plan that would entail a large volume of Kazakh oil, primarily from Kashagan, to flow to western markets via BTC through a 700-km pipeline laid across the Caspian and an expansion of the BTC to handle 1.7 million b/d. Eventually, as with BTC, the eventual transportation of Kashagan oil will be decided by a mixture of economic and political concerns. Disagreements between Turkmenistan and Azerbaijan killed the Transcaspian gas pipeline project (TCP) in the late 1990s. In the longer term, reviving the TCP is clearly a possibility, though political developments in Turkmenistan hold key to its future prospects. Presently, Turkmenistan is forced to export gas through Russian pipeline systems at a price far below world market levels. There are nevertheless indications that the Turkmen leadership is becoming increasingly frustrated with this situation. As a result, Ashgabat has begun to look around for other options, primarily the possibility of resurrecting the equally stranded Trans-Afghan Pipeline (TAP), which would bring Turkmen gas to Pakistan and India via Afghanistan. Yet TAP suffers from many problems, most importantly the fact that the Indian market is commercially key for the project. As long as India is reluctant to rely on Pakistan for its energy security, the prospects of building TAP are remote. In addition, technical problems such as the absence of roads to bring equipment to site in Afghanistan are significant. TCP, in this light, seems an easier option given the existence of the SCP and its impending connection to European gas markets. In this light, TCP seems in the longer run the only possible answer to current European over-dependency on Russian gas.

CONCLUSIONS: Though many objective reasons exist why Kazakh oil and Turkmen gas should be exported westwards, it would be unwise for Turkish, European, or regional leaders to assume that America will once again intervene to ensure that projects to their benefit will be realized, as was the case with BTC. In particular, Europe is the player that stands to gain most from the building of an energy bridge to Central Asia, to such an extent that this may be termed crucial for Europe’s long-term energy security. European involvement will therefore be required for the realization of the ambitious vision of an energy corridor extending from Europe across the Caucasus to Central Asia, supplemented by a wider transportation and communications superhighway. If this is indeed accomplished, BTC will with hindsight be recalled as the historic, first major step in this direction.

AUTHOR’S BIO: Svante E. Cornell is Research Director of the Central Asia-Caucasus Institute and Silk Road Studies Program. Mamuka Tsereteli is Executive Director of the America-Georgia Business Council and Adjunct Professor at American University. They are co-editor and contributor, respectively, of the recently published The Baku-Tbilisi-Ceyhan Pipeline: Oil Window to the West.