AZERBAIJAN JOINS THE MIDDLE EAST
By John C. K. Daly
Eurasia Daily Monitor
le_id=2373054
May 13 2008
DC
Azerbaijan’s massive hydrocarbon resources have begun to attract
the attention of an increasing number of energy-poor nations in
the Middle East, including Israel and Jordan. While the logistical
problems involved in such deliveries would be daunting, as no direct
pipelines currently exist, the diplomatic intricacies involved in
such shipments would be even more formidable. Nevertheless, the
diplomatic implications of such interest are both interesting and
potentially significant.
Israel has recently attempted to increase its number of natural gas
suppliers, according to National Infrastructure Minister Benjamin
Ben Eliezer. On May 4 Ben Eliezer told a conference in Tel Aviv that
his Ministry had discussed possible future supplies of natural gas
to Israel with the energy companies BP and Gazprom as well as with
Caspian producers Azerbaijan, Kazakhstan and Turkmenistan. Last week
in Azerbaijan, National Infrastructure Ministry Director-General
Hezi Kugler held talks with Azeri officials about possible future
gas supplies, but no details of the negotiations have been released
(Trend news agency, May 6).
Azerbaijan produces gas from its Caspian offshore Shah Deniz field,
the country’s largest natural gas field, which is operated by BP. The
330 square-mile Shah Deniz gas and condensate field was discovered
in 1999 and began production in December 2006. The field lies under
2,000 feet of water, 44 miles southeast of Bakubat.
BP owns 25.5 percent of the joint venture. The other Shah Deniz
consortium partners are Statoil Azerbaijan (25.5 percent), State Oil
Company of the Azerbaijan Republic (SOCAR) (10 percent), France’s Elf
Petroleum Azerbaijan (10 percent), Russia’s LukAgip N.V. (10 percent),
Iran’s Oil Industries Engineering & Construction (OIEC) (10 percent),
and Turkiye Petrolleri Anonim Ortakligi (TPAO) (9 percent).
Shah Deniz holds an estimated 1.5 to 3 billion barrels of oil, and 50
to 100 billion cubic meters of gas. The United States is optimistic
about Azerbaijan’s natural gas future. The US Energy Information Agency
wrote, "With the addition of the Shah Deniz natural gas and condensate
field and the South Caucasus Pipeline, Azerbaijan will become a large
natural gas provider to Turkey and to Europe in the upcoming decade"
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The 430-mile-long South Caucasus Pipeline, also known as the
Baku-Tbilisi-Erzurum (BTE) Pipeline, became operational at the same
time as the Shah Deniz field and transmits Azeri gas through Georgia
to Erzurum in eastern Turkey. Shah Deniz oil is sent through the
1,092-mile-long, $3.6 billion Baku-Tbilisi-Ceyhan (BTC) pipeline,
which terminates at Turkey’s eastern Mediterranean port of Ceyhan. The
BTC shares the same corridor as the BTE. In 2007 the BTC pipeline
exported roughly 650,000 barrels per day of crude and condensate.
The devil is in the details, in this case geography. While Israel
might be interested in possible imports of Azeri natural gas, the fact
remains that there are only two ways of transporting it, pipelines
and liquefied natural gas (LNG) tankers. LNG ports and tankers are
extremely expensive, while any pipeline extending from Erzurum to
Israel would either have to extend from southeastern Turkey under
the Mediterranean parallel to the Lebanese coast or traverse Syria,
with which Israel has yet to sign a peace treaty.
There are, however, interesting signs that a deal may yet be in the
works. According to recent newspaper reports, Israeli Prime Minister
Ehud Olmert already has informed Syrian President Bashar al Assad
that Israel is prepared to cede the Golan Heights to Syria in return
for a comprehensive peace agreement (Ha’aretz, May 6).
Such considerations may be the diplomatic subtext of the state
visit to Azerbaijan by Jordan’s King Abdullah, ostensibly in Baku to
attend the opening of Azerbaijan’s Second Jordanian exhibition and
the Azerbaijan-Jordan Business Forum. While in Baku, Abdullah held
extensive discussions with Azeri President Ilham Aliyev and signed
a number of bilateral documents (AzerTag, May 5).
In an interview with Azerbaijan’s State Telegraph Agency, Abdullah put
the Arab-Israeli conflict in a broader regional context, observing,
"It is common knowledge that the Palestinian problem is the core issue
in the Middle East conflict, and it is our conviction that solving
the interrelated issues in our region depends on our ability to find
a just and permanent solution to the conflict in Palestine" (AzerTag,
May 2). In comments that will undoubtedly resonate in Baku, Abdullah
offered his services in resolving Azerbaijan’s Nagorno-Karabakh
dispute with Armenia.
As Washington is prodding both Israel and the Palestinian Authority
toward resolving their disputes over the Middle East’s "core issue,"
Abdullah’s comments about "interrelated issues" would seem to indicate
a possible "twin track" approach to solving the region’s other
unresolved disputes. Syria, bracketed between Israel’s ally Turkey
to the north and Israel itself, the Middle East’s leading military
power, to the south, may now be ready to trade peace for territory,
especially if the deal were sweetened with increased access to both
natural gas and transit fees.
In such a situation, Turkey would win by further positioning itself
as a regional transit hub, and Azerbaijan would gain valuable
additional diplomatic support from Jordan for resolving its dispute
with Armenia. If Azerbaijan developed energy ties with Israel, this too
could have a diplomatic payoff over Nagorno-Karabakh, particularly if
Israel used its good offices with Armenia, its fifth-largest trading
partner. Finally, Syria and Israel would gain access to Caspian energy
from a reliable Western ally. For Israel, there could be no greater
60th birthday present than a peace treaty fired by natural gas from
Azerbaijan’s Caspian "King of the Sea" gas field.