Category: Azerbaijan

Progress in Turkish-Azeri Talks on Gas Prices and Transit

Progress in Turkish-Azeri Talks on Gas Prices and Transit

Publication: Eurasia Daily Monitor Volume: 6 Issue: 153

August 10, 2009

By: Saban Kardas

Following the signing of energy cooperation agreements between Turkey and Russia, Turkish Energy Minister Taner Yildiz continued his “energy diplomacy,” by visiting Azerbaijan. Prior to departing for the Nakhchivan Autonomous Republic, the Azerbaijani enclave between Turkey and Armenia, on August 8 Yildiz stressed that his trip followed the agreements Turkey recently signed on both the Nabucco project and South Stream. He also added that as part of intensive energy diplomacy, he will travel to Syria this week to sign an agreement for the construction of a pipeline that will connect the Arab gas pipeline with the Turkish grid (Anadolu Ajansi, August 8).

In Nakhchivan, Yildiz met with the President of Nakhchivan Vasif Talibov and the head of the Azerbaijani oil company SOCAR, Rovnag Abdullayev. Turkey and Nakhchivan signed a memorandum of understanding on laying a pipeline from the East Anatolian city of Igdir to Nakhchivan, which will carry half a billion cubic meters (bcm) of Azeri gas annually to Nakhchivan (Cihan, August 8).

Another major part of Yildiz’s agenda were talks between Turkey and Azerbaijan concerning the gas trade and transportation. Although the negotiations have been under way for some time, Ankara and Baku have been unable to reach an agreement on three inter-related issues: re-pricing the gas Turkey imports from Azerbaijan’s Shah Deniz I reserves, setting the price and volume for Turkey’s imports from the Shah Deniz II, and developing a regime for the transit of the gas through the Turkish territory (www.cnnturk.com, August 8).

These issues have implications beyond bilateral relations between Ankara and Baku. In the context of the discussions concerning the construction of alternative pipelines carrying Caspian basin gas to European markets, there is growing interest in tapping into Azerbaijan’s resources, particularly the Shah Deniz II field, which is expected to be operational by 2016. Whereas the European companies are interested in purchasing Azeri gas to feed Nabucco, Russia has been trying to lock in the same resources through a long-term contract to supply its alternative South Stream project and to pre-empt Nabucco. Baku is looking to secure the best deal from this competition, and diversify its export routes as much as possible, which led it to export a symbolic volume of gas to Russia through a non-binding agreement in June, which seems to have paid some tactical dividends (EDM, July 17).

Azerbaijan’s decision is considered as a “flexible tactical move” on Baku’s part (EDM, July 2). The agreement demonstrated to Ankara and its Nabucco partners that Azerbaijan was not short of options for the sale and transport of its gas. Indeed, the urgency induced by the agreement served as a wake-up call for Turkey and other European countries, which helped convince Ankara to end its stalling and open the way to sign the Nabucco inter-governmental agreement (EDM, July 6).

Nonetheless, a second tactical goal of the Azeri-Russian agreement has yet to bear concrete results: “the $350 price offer [which Russia will pay for the Azeri gas] has set a benchmark that other importers of Azerbaijani gas may have to bid against” (EDM, July 2). Indeed, Baku’s sudden move surprised many in Ankara at the time, leading to speculation that Turkey might have to pay higher prices. Nonetheless, when asked about the impact of the Azeri-Russian deal on the Turkish-Azeri talks on re-pricing, Yildiz preferred to decouple the two processes from each other. “How much does the [Azeri-Russian agreement] affect the price? This question should be directed to Abdullayev. We had submitted our offer before the agreement with Russia, and we are still at the same position. Because, [we believe] our price offer takes into account both sides’ interests, and ensures that the project remains feasible” (www.haberturk.com, July 10).

Ankara claimed that it offered a “fair” price to Baku, and it expected this to be accepted (EDM, June 4). Apparently Turkey proved unable to satisfy the expectations of the Azeri side, and Yildiz and Abdullayev have held several meetings to discuss this issue. Ankara’s reluctance to revise the price for Azeri gas raises suspicions that, using its geographic position as leverage, Ankara is resorting to “tactics of extortion” to maximize its benefits at Azerbaijan’s expense, which might eventually undermine the prospects for Nabucco (EDM, July 2).

Nonetheless, Azerbaijan’s ongoing talks with Turkey demonstrate its willingness to export its gas to European markets independent of Russian-controlled pipelines and its treatment of Nabucco as an overriding national interest. However, the conditions that Ankara will attach to the use of its territory for exports, including transit fees and re-export rights, are a major factor influencing Baku’s decision, which raises a larger question about the Turkish government’s position on pipeline diplomacy.

After signing agreements on both Nabucco and South Stream, Ankara maintains that the two projects are not necessarily exclusive. Moreover, in response to charges that Turkey’s agreement with Russia, which granted South Stream the right to conduct seismic feasibility studies in the Turkish zone of the Black Sea, was a serious blow to Nabucco, Turkish officials maintain that “Turkey is not a partner in the South Stream project and only allowed the use of its territorial waters in the Black Sea, while the country is a partner state in Nabucco.” They also added that Turkey still considers Nabucco as a strategic priority (Hurriyet Daily News, August 7).

If Turkey indeed treats Nabucco as a priority project, one area where it could tilt the balance in favor of Nabucco is to facilitate the westward flow of Azeri gas. In this way, it could cement its ties to Baku and reassure its Western partners of its commitment to Nabucco. No agreement was signed during Yildiz’s meeting, but the statements by Azeri officials signaled a promising future. Abdullayev said that, “we came close to concluding Turkey-Azerbaijan gas agreements. We can soon finalize the issue of transit prices. Gas from Shah Deniz will also come to Turkey, and will flow to Europe through Turkey. This will support the two sister nations” (www.ntvturk.com, August 8).

https://jamestown.org/program/progress-in-turkish-azeri-talks-on-gas-prices-and-transit/

August 12, 2009
Turkey’s diplomatic missions will provide services to Azeri citizens

Turkey’s diplomatic missions will provide services to Azeri citizens. Turkey’s Ambassador in Baku, Hulusi Kılıç, said that in countries where Azerbaijan has no diplomatic mission Azeri citizens could receive diplomatic services from Turkish missions. Elhan Poluhov, spokesman for the Azeri Foreign Ministry, said that Turkey’s friendly proposal for providing services to Azeri citizens was accepted by his ministry.

Source: Newspot, No 95, June 2009

August 10, 2009
The call of the pipes: Putin in Turkey

15:48 07/08/2009

MOSCOW. (RIA Novosti political commentator Andrei Fedyashin) – Things are now so mixed up in the pipe and gas business that it is difficult to see where pipes begin and politics ends.

Vladimir Putin’s one-day visit to Ankara was balanced on precisely such pipe and politics considerations. Plus the peaceful atom: Russia will now be building for Turkey its first nuclear power plant near Akkuyu on the Mediterranean coast.

To judge from the scale and trend of the documents signed, Ankara will soon turn into a huge energy-handling hub between Russia and the European Union in the southern sector. Now in the north we have Germany and Nord Stream, and in the south, Turkey and South Stream. Two friendships, Nordic and Ottoman.

Turkey has long been a regional heavyweight, and Porte’s added “gas weight” will only strengthen it in this role. In recent years Ankara has been increasingly urging Russia to join in a regional forum it conceived for solving crucial Caucasian issues.

The Caucasus war greatly puzzled Ankara, which has close economic ties both with Georgia and Russia. As a NATO country, Turkey “quietly” supported Georgia, to which it sent its military instructors and is now supplying equipment. But Turkey does not want to lose, let alone reduce or weaken, its ties with Russia either, especially in the current hard economic times. After all, Moscow satisfies 64% of Turkey’s requirements in gas, and can deliver even more.

If that is not enough, let us bear in mind that more than one million Russians visit Mediterranean Turkish resorts every year, leaving more than $1.42 billion there. Moscow is Turkey’s top foreign economic partner – last year Turkey’s trade with Russia totaled $38 billion. In the next four years, Ankara hopes to bring the figure to $100 billion. One should not mess about with such things.

By offering itself as a regional platform for settling Russia’s “Caucasian problems,” Ankara is perfectly aware that the Kremlin will not conduct parleys with Mikheil Saakashvili.

But the Turks, offering their mediating services, very much hope to get Russia’s help in an area where such help cannot be dispensed with: That is a settlement in Nagorny Karabakh and normalization of relations with Armenia. In its turn, this means the involvement of Azerbaijan, which Turkey is also proposing to include, “on the kinship principle,” in the membership of the Caucasian regional forum. Unless the Nagorny Karabakh issue is settled, Turkey will be unable to normalize its relations with Armenia.

Turkey is being prodded in the same direction by the European Union, or rather Turkey’s hope for admission to the EU (one of Brussels’ conditions is settlement of relations with Armenia), and its own regional economic interests. But the way to a Turkish-Armenian diplomatic thaw is blocked by Azerbaijan, which has long staked out its claim: It will not welcome Turkish diplomatic overtures to Armenia as long as the Nagorny Karabakh issue remains unsolved.

Only Russia, and this is something everyone realizes, can push Armenia to a softer stance on Nagorny Karabakh. True, Russia will never nudge Armenia to surrender all its interests in Nagorny Karabakh, implying its return to Azerbaijan with broad autonomy rights. That is especially true in the wake of recognizing Abkhazia’s and South Ossetia’s independence. So, whether we like it or not, our friendship will only thrive on gas, oil and the peaceful atom.

South Stream will make Russia and its customers less dependent on transit countries, in particular, Ukraine, because Turkey will not be a transit country technically. In 2013, the pipe will transport 63 billion cubic meters of gas. Investments in the project are estimated at 25 billion euros. Contractors are Russia’s Gazprom and Italy’s ENI, acting on a parity basis. In fact, South Stream’s inauguration ceremony was an affair for three: Italian Prime Minister Silvio Berlusconi also arrived for the occasion.

The opinions expressed in this article are the author’s and do not necessarily represent those of RIA Novosti.

August 8, 2009
Geopolitical Diary: Shades of a Second War

August 6, 2009

One year on from the outbreak of war between Georgia and Russia, events precipitating that conflict bear a striking resemblance to the situation today.
First, it must be said that things are never quiet in the Caucasus. Russo-Georgian relations are cold in the best of times, and they certainly are not going to warm while the pro-Western government that took power Georgia in the 2003 Rose Revolution remains in place. Under this “Rose” government, Tbilisi has courted the West politically, economically and militarily in order to solidify its independence of Russia, with the goal of joining the NATO alliance – something that Russia has resisted at every turn.
In 2008, the Russians shifted from resistance to invasion. The reasons are many, but one stands out: 2008 marked the final dissolution of Serbia, with Western institutions recognizing the independence of Kosovo. Serbia was Russia’s last ally in Europe, and the idea that Russia’s protests could not sway the West’s actions in the least was daunting for Moscow. Russia had to prove that not only was it still relevant, but that it could and would move militarily against an American and European ally. The target was Georgia, and the five-day war that followed was as decisive as it was swift.
Events appear to be moving along a similar track in the early days of August 2009.
Last month, following a trip to Georgia, U.S. Vice President Joseph Biden gave an interview in which he called Russia out not only for being weak but, to put it bluntly, doomed to collapse. Needless to say, the Russians might be feeling the urge to prove Biden wrong in the court of global opinion. Russian officials are loudly and regularly warning that they stand ready for war, while Vladislav Surkov – a Kremlinite arguably second in power only to Prime Minister Vladimir Putin himself – has spent some personal time of late in South Ossetia, the tiny (Russian-allied) breakaway province of Georgia that was the proximate cause for the 2008 war.
Biden’s comments are only one possible reason why the war drums are being beaten; there are others.
The United States appears to be sliding toward conflict with Iran, and Russia has invested no small amount of political capital in bolstering the Iranians against the Americans. In Moscow’s mind, a United States fixated on the Persian Gulf is one that cannot fixate on Russia, and a United States that is at war with Iran is one that cannot stop Russia from adjusting borders in places like Georgia.
And of course, there is Georgia itself. President Mikhail Saakashvili is no stranger to dramatic performances, and as the leader of a fractured country with next to no military capability (even before Georgia’s defeat in August 2008), he has few means of countering Russia at all. One option is to provoke a crisis with his northern neighbor in the hopes that the West will ride to the rescue. Considering what happened a year ago, this is perhaps not the wisest strategy, but it is not as though Saakashvili – personally or as Georgia’s president – has a wide array of options to peruse.
War is not a process that Russia would choose carelessly, even if it would be a very, very easy war to win. What simply doesn’t fit in current circumstances is the boldness with which the Russians are acting. They have all but stated that war is imminent, they are backing the Iranians to the hilt, sending top Kremlin strategists to the region to coordinate with allies, and have even resumed nuclear submarine patrols off the east coast of the United States. The Russians have a well-earned reputation for being far more circumspect than this in the shell game that is international relations. It is almost as if all of this is simply noise designed to keep the Americans off balance while something else, something no one is watching, is quietly put into play.
STRATFOR doesn’t have a good answer for this. All we can say is that the Russians are up to something – and if it is not a war, it is something big enough that a war would seem to make a good distraction. Now that bears some watching.

August 8, 2009
Turkey and Russia Conclude Energy Deals

By SEBNEM ARSU

Published: August 6, 2009

ISTANBUL — Russia and Turkey concluded energy agreements on Thursday that will support Turkey’s drive to become a regional hub for fuel transshipments while helping Moscow maintain its monopoly on natural gas shipments from Asia to Europe.

Turkey granted the Russian natural gas giant Gazprom use of its territorial waters in the Black Sea, under which the company wants to route its so-called South Stream pipeline to gas markets in Eastern and Southern Europe.

In return, a Russian oil pipeline operator agreed to join a consortium to build a pipeline across the Anatolian Peninsula, from the Black Sea to the Mediterranean, and Gazprom affirmed a commitment to expand an existing Black Sea gas pipeline for possible transshipment across Turkey to Cyprus or Israel.

Energy companies in both countries agreed to a joint venture to build conventional electric power plants, and the Interfax news agency in Russia reported that Prime MinisterVladimir V. Putin offered to reopen talks on Russian assistance to Turkey in building nuclear power reactors.

The agreements were signed in Ankara, the Turkish capital, in meetings between Mr. Putin and his Turkish counterpart, Recep Tayyip Erdogan. Italy’s prime minister, Silvio Berlusconi, who has joined Mr. Putin on several energy projects, attended the ceremony. The Italian company Eni broke ground on the trans-Anatolian oil pipeline this year.

While the offer of specific pipeline deals and nuclear cooperation represented a new tactic by Mr. Putin, the wider struggle for dominance of the Eurasian pipelines is a long-running chess match in which he has often excelled.

As he has in the past, Mr. Putin traveled to Turkey with his basket of tempting strategic and economic benefits immediately after a similar mission by his opponents. A month ago, European governments signed an agreement in Turkey to support the Western-backed Nabucco pipeline, which would compete directly with the South Stream project.

By skirting Russian territory, the Nabucco pipeline would undercut Moscow’s monopoly on European natural gas shipments and the pricing power and political clout that come with it. That may explain why Nabucco, which cannot go forward without Turkey’s support, has encountered a variety of obstacles thrown up by the Russian government, including efforts to deny it vital gas supplies in the East and a customer base in the West.

Turkey and other countries in the path of Nabucco have been eager players in this geopolitical drama, entertaining offers from both sides. Turkish authorities have even tried, without much success, to leverage the pipeline negotiations to further Turkey’s bid to join the European Union, while keeping options with Russia open, too.

“These countries are more than happy to sign agreements with both parties,” Ana Jelenkovic, an analyst at Eurasia Group, a political risk consultancy, said in a telephone interview from London. “There’s no political benefit to shutting out or ceasing energy relations with Russia.”

Under the deal Mr. Putin obtained Thursday, Gazprom will be allowed to proceed with seismic and environmental tests in Turkey’s exclusive economic zone, necessary preliminary steps for laying the South Stream pipe, Prime Minister Erdogan said at a news conference.

After the meeting, Mr. Putin said, “We agreed on every issue.”

The trans-Anatolian oil pipeline also marginally improves Russia’s position in the region. The pipeline is one of two so-called Bosporus bypass systems circumventing the straits between the Black Sea and the Mediterranean, which are operating at capacity in tanker traffic.

The preferred Western route is the Baku-Tbilisi-Ceyhan pipeline, which allows companies to ship Caspian Basin crude oil to the West without crossing Russian territory; the pipeline instead crosses the former Soviet republic of Georgia and avoids the crowded straits by cutting across Turkey to the Mediterranean.

Russia prefers northbound pipelines out of the Caspian region that terminate at tanker terminals on the Black Sea. The success of this plan depends, in turn, on creating additional capacity in the Bosporus bypass routes. Russia is backing two such pipelines.

Mr. Putin’s offer to move ahead with a Russian-built nuclear power plant in Turkey suggests a sweetening of the overall Russian offer on energy deals with Turkey, while both Western and Russian proposals are on the table.

The nuclear aspect of the deal drew protests. About a dozen Greenpeace protesters were surrounded by at least 200 armored police officers in central Ankara on Thursday.

Andrew E. Kramer contributed reporting from Moscow.

The New York Times

August 7, 2009
Aliyev and Sarksyan Meet in Moscow

Aliyev and Sarksyan Meet in Moscow

Publication: Eurasia Daily Monitor Volume: 6 Issue: 139

July 21, 2009

By: Saban Kardas

Azerbaijan’s President Ilham Aliyev met his Armenian counterpart Serzh Sarksyan in Moscow on July 17 in their latest round of reconciliation talks. Turkey has closely followed the talks between the two presidents, facilitated by the Russian President Dmitry Medvedev, hoping that the resolution of the Karabakh issue might also facilitate Turkish-Armenian rapprochement.

The meeting was the sixth between Aliyev and Sarksyan since their first meeting in June 2008. As one of the co-chairs of the OSCE Minsk group, Russia accelerated its peacemaking efforts toward finding a solution to the dispute between Armenia and Azerbaijan. Medvedev hosted the two presidents in Moscow for a second time in November 2008, and since then the two leaders have met in Zurich, Prague and St. Petersburg (Trend News, July 17).

The meeting came in the context of growing international interest. Other major actors had also expressed their support for this mechanism, hoping that it might facilitate a solution. The presidents of Russia, France and the United States issued a statement during the G8 summit in Italy the previous week, and urged all sides to step up their work toward the resolution of the remaining differences on Karabakh, on the basis of the principles outlined in the 2007 Madrid agreement (www.osce.org, July 10).

Representatives from the other two co-chairs of the Minsk group and the OSCE representatives were also in Moscow. On July 17, the Azeri Foreign Minister Elmar Mammadyarov and his Armenian counterpart Edward Nalbandyan met with the Minsk group co-chairmen Yuri Merzlyakov (Russia), Bernard Fassier (France) and Matthew Bryza (United States), as well as the OSCE Chairman’s Special Envoy Andzey Kasprzyk. The Azeri and Armenian presidents also held bilateral talks, and later the ministers as well as the co-chairs joined them. The following day, the leaders held trilateral talks with the participation of Medvedev.

No documents were signed at the meeting and no official statement was issued. Medvedev’s spokesperson told reporters that the parties had a chance to discuss in detail the remaining issues. He added that he is optimistic that “it will be possible to settle the Karabakh conflict in the foreseeable future.” According to Armenian diplomatic sources, the presidents instructed their foreign ministers to work in close cooperation with the Minsk group co-chairs to organize a high-level meeting on Karabakh in the fall. The co-chairs of the Minsk group reiterated their support for the ongoing talks. They added that they would continue their contacts in the region. The two presidents might meet again in September, they added (Trend News, ITAR-TASS, www.ntvmsnbc.com, July 18).

On July 20, Mammadyarov said that some progress was achieved in Moscow. He added that the parties agreed on some principles of a possible solution, but that further work was required on the precise details. He maintained that both sides were working toward a schedule for withdrawal of the Armenian forces from the occupied Azeri territories. Once this is achieved, it will be possible to discuss other issues such as the repatriation of refugees, the rebuilding of the region and determining the status of Karabakh. However, he ruled out independence for Karabakh by saying “whatever its status, Karabakh will remain part of Azerbaijan” (www.ntvmsnbc.com, July 20).

Swedish Foreign Minister Carl Bildt, the head of the E.U. troika delegation visiting the region, said in Yerevan that the E.U. supported the Minsk group’s activities and was ready to assist in the implementation of an agreement. However, in implicit defiance of Mammadyarov’s statements, Nalbandyan said that the “return of any territories to Azerbaijan was not discussed in Moscow.” He also added that Armenia did not officially endorse the Madrid principles (ANKA, July 20; Trend News, July 21).

Despite the contradictory accounts from Yerevan and Baku, it appears that the removal of Armenian forces from the occupied Azeri territories has been on the agenda for some time. Prior to the meeting in Moscow, Aliyev had explained the details of the plan to a Russian TV station (www.cnnturk.com, July 8). According to the Turkish press, the two presidents in fact discussed the specifics of Armenian withdrawal from the occupied Azeri territories, even including the deployment of international forces. Whereas, the Armenian side insisted on Russian forces, the Azeris requested Turkish troops. Turkey reportedly expressed its readiness to send troops, if the parties agreed on such a solution (Zaman, July 19). However, no official Turkish diplomatic source has corroborated this proposal.

Turkey has been supportive of the process led by the Minsk group and Russian initiatives. Ankara reportedly plans to contribute to the initiatives of the Minsk group through a new round of contacts with Baku and Yerevan. Nonetheless, currently the earliest direct talks between Yerevan and Ankara to discuss Turkish-Armenian normalization are scheduled in September at the U.N. General Assembly (Sabah, July 20).

After intensive diplomatic traffic between Turkey and Armenia, which resulted in the announcement of a roadmap for normalization in April, Ankara had to slow down the process to satisfy concerns in Baku. During his visit to Baku in May, Turkish Prime Minister Recep Tayyip Erdogan underlined clearly that Ankara would not proceed with its Turkish-Armenian rapprochement before a solution over the Karabakh issue could be achieved. Although Ankara came under criticism for stalling its dialogue with Yerevan, diplomatic sources maintain that secret talks between the two countries are continuing (EDM, June 30).

Commenting on these recent developments, Foreign Minister Ahmet Davutoglu denied that Turkish-Armenian normalization was stalled. He said that “[Turkish-Armenian and Azeri-Armenian] processes would affect each other positively.” Though declining to set a date on the opening of the Turkish-Armenian border, he expressed his hope that positive developments might take place before the end of the year (Hurriyet Daily News, July 20).

Erdogan took a very clear position, saying that he will maintain his support for Azerbaijan over the Karabakh dispute. It would be difficult for him to step back from this, given the enormous costs of such a move to his popularity at home and in Baku. Therefore, before taking any steps to revitalize its relations with Yerevan, Ankara hopes that the recent initiatives could produce at least partial progress between Baku and Yerevan.

https://jamestown.org/program/aliyev-and-sarksyan-meet-in-moscow/

July 21, 2009