Will Iranian energy resources be carried by Azerbaijani pipelines?

Will Iranian energy resources be carried by Azerbaijani pipelines?

This weekend Tehran hosted a major international conference on the conclusion of new oil and gas contracts between Iran and foreign companies. The process of lifting the sanctions against Iran will begin in the next year, and the largest oil and gas corporations are showing a strong interest in entering the Iranian market of exploration and production of energy. At the same time, Tehran is beginning to seek routes to restore and increase exports of oil and gas.

According to Azerbaijan’s Minister of Energy, Natig Aliyev, one of the routes is Azerbaijan, and Iranian structures are showing interest in it. "We will negotiate, consider their suggestions and the possibility of expanding our pipelines to transport Iranian energy," the minister said, reminding that Azerbaijan offered to use its infrastructure for transporting energy resources to world markets.

The expert Rovshan Ibragimov told Vestnik Kavkaza that the appearance of Iranian energy resources in the Azerbaijani pipelines is a long-term prospect. "The sanctions against Iran have not been removed fully and the active development of the Iranian oil and gas sector is not expected; currently there is a long-term planning of the projects," he explained.

"First of all, there is the transit within the framework of Russian-Iranian cooperation, which most likely will consist of swapped supplies of Russian oil to the northern regions of Iran and the export of Iranian oil from the Persian Gulf. These two countries will need an opportunity to use Azerbaijani pipelines for active cooperation," Rovshan Ibragimov noted.

The second direction is the West. "It's about such promising pipelines as TANAP and TAP, which will connect Azerbaijan to the Turkish market and the countries of south-eastern Europe – Greece, Albania and Italy – with potential access to other markets. In this case, at the moment Iran has no free volumes of natural gas to be exported in this direction," the expert warned.

Rovshan Ibragimov reminded that Azerbaijan has very significant opportunities for pumping Iranian energy resources through its territory. "For example, the Baku-Tbilisi-Ceyhanoil pipeline can transport up to 60 million tons of oil a year using maximum power. There have not completely filled the Baku-Supsa and the Baku-Novorossiysk pipelines, the amounts of which are up to 6 million tons," he noted.

As for the distant future of the Iranian energy resources exported via Azerbaijan, there is the Gazi-Magomed-Astara-Bind-Biand gas pipeline. "Currently there is an agreement on swapping supplies of Azerbaijani gas with Iran in exchange for Iranian gas supplies to Nakhichevan amounting to 1 billion cubic meters," Ibragimov said, adding that there is no pipeline infrastructure between Azerbaijan and Iran.

An expert of the Center for Central Asian and Caucasus Studies of the Institute of Oriental Studies of the RAS, Stanislav Pritchin, also sees the main interest of Iran in the Azerbaijani infrastructure in the connection to the Southern Gas Corridor. "Firstly, there is the potential supply of gas through TANAP and TAP into the European Union. But this project is now being implemented on the basis of export volumes of Azerbaijani gas to Europe, and Iran will have to expand the existing gas pipelines, that is, both the Baku-Tbilisi Erzurum and TANAP pipelines," he said.

Pritchin also said that now there is a theoretical possibility of using a gas pipeline supplying gas to Nakhchivan through Iranian territory. "Now it is acting in the Azerbaijan-Iran direction, but it is possible to expand it in the opposite direction, which, however, will require investment on the part of Iran," the expert concluded.