Azerbaijan and Iran to unite efforts in Caspian

The creation of the Iran-Azerbaijan joint oil company will be beneficial for both parties and will allow to resolve the issue with the disputed  Araz-Alov-Sharg oil field, however, the project implementation is a distant possibility so far, the oil experts told Vestnik Kavkaza, commenting on the statement of general director for Europe, America and Caspian Sea countries at Iran's Oil Ministry, Hossein Esmaeili Shahmirzadi about the ongoing talks with Azerbaijan on this project.

Political scientist Rovshan Ibragimov, noted that Azerbaijan has a number of interests in creating such a joint venture with Iran. "First of all, having the necessary infrastructure, Azerbaijan will be able to use it not only for itself, but also for oil production in the Caspian sectors of other states. It will also give Azerbaijan additional experience for its diversified oil production activities abroad. and will improve relations between the two states," he explained.

Iran, in turn, needs Azerbaijan to develop Caspian deposits. "Iran does not have the ability to independently produce oil in the Caspian Sea. Iran has neither infrastructure nor the experience of intelligence and other works in the Caspian, so it cannot deal with the Caspian fields without Azerbaijan. I think that the improvement of relations between the two countries in different economic spheres in the last few years have given an additional impulse to Iran's desire to turn to Azerbaijan for experience and technology for mutually beneficial financial cooperation," Rovshan Ibrahimov said.

The expert expects that the joint venture will solve the problem of the Araz-Alov-Sharg oil fields, which development is frozen until the status of the Caspian Sea is determined. "One of the solutions can be joint development and production at these fields. In which case a modular approach of separating the Caspian into sectors between the two countries can be applied: if the majority of the field is in the national sector of one of the states, it is fully included in this sector. If it is possible to solve the problem of the Araz-Alov-Sharg fields, then in the future this experience can be applied to solve the problem with the Kapaz field," he predicted.

Head of the 'Caspian Barrel' Center for Oil Research Ilham Shaban, in turn, stressed that the creation of such an enterprise is a distant possibility. "When the Iranian president arrived in Baku on an official visit in March, a memorandum of cooperation was signed between the Azerbaijani Energy Ministry and the Iranian Ministry of Oil and Gas to cooperate in the development of the Caspian fields, without specifying any names and locations. This memorandum is of unlimited duration and not legally binding, that is, before entering into any agreement on the establishment of a joint venture can take a lot of time," the expert explained.

"For the time being, we can say that the joint venture is unlikely to deal with the Caspian fields. The fact is that Iran does not have the deep drilling technology in the Caspian. Tehran said it has drilled only one well, but the second well has not been drilled since then. It is clear that the statements are made because of the threat of new sanctions in order to show that Iran has very good political-economic relations with its neighbors - and it is absolutely the right thing," the head of the 'Caspian Barrel' Center for Oil Research said.

At the same time, the joint venture could influence the solution of the problem of the Araz-Alov-Sharg oil fields by analogy with the Russian-Kazakhstani experience. "Russia and Kazakhstan have found a way out over disputed deposits equally developing them. This experience could be applied to Iran and Turkmenistan, which does not yet want to split Kapaz, according to the Russian-Kazakh example. Due to this the parties are not able to benefit from the field. But it is still difficult to predict whether our countries will be able to come to an agreement. If this happens, it will be the first experience in settling disputes with Iran after the collapse of the USSR," Ilham Shaban noted.