MARITIME HUB

Azerbaijan has had long-standing, smooth and friendly relations with its Caspian neighbour, Turkmenistan, void of any political problems or misunderstandings. Although both countries had previously sought to expand economic partnership, these efforts failed to secure any particular practical success.

During the recent visit of President Ilham Aliyev to Ashgabat and his talks with his Turkmen counterpart Gurbanguly Berdimuhamedov, the parties signed a total of 21 documents, covering multilateral aspects of cooperation. Half of all agreements concern the sharing of the transport potential of the Caspian region, particularly the transportation of products manufactured in Azerbaijan and Turkmenistan, and using the transit capabilities of both countries for transporting goods from Europe to Asia and back as part of international projects.

Upon the Caspian...

Currently, Azerbaijan is implementing a number of international transport projects in partnership with the neighbouring countries. The only state behind all these transport corridors is Armenia, which had occupied 20% of the territory of Azerbaijan. Friendly countries are aware of the importance of building and expanding mutual ties, as this secures the welfare of their peoples.

Naturally, Azerbaijan keeps the closest economic relations with the neighbouring countries. For example, Azerbaijan holds a strategic partnership with Russia, Georgia, Turkey, Iran and Kazakhstan. Baku is connected with these countries thanks to a group of projects designed for the transportation of hydrocarbons, as well as the transit of goods by regional railway routes.

In May 2018, Turkmenistan opened the largest international trading port in Turkmenbashi with an annual throughput capacity of 17-18 million tons of cargo (excluding oil products). The country is also thinking about joining the ongoing regional projects. Together with the port previously operating in Turkmenbashi, cargo handling in Turkmenistan may total up to 25-26 million tons annually.

"Turkmenistan and Azerbaijan have done a great job to create modern transport infrastructure and logistics... Therefore, the opening of international trade ports in Turkmenistan (Turkmenbashi) and Azerbaijan (Alat) took place synchronously, in the same year and month, May 2018. Indeed, we made a prudent step forward when we began to invest in these projects. Today we can see full integration of our trade ports (the corresponding document was signed on November 22 in Ashgabat). This creates opportunities for our countries to increase trade and transit. We are also creating a huge potential for our neighbours," Azerbaijani President Ilham Aliyev said after his talks in Ashgabat.

According to Mr. Aliyev, a special place is available at the Baku International Trade Port (BITP) in Alat to receive additional cargo from Turkmenistan. This will increase the volume of transit cargo along the East-West and West-East routes.

The capacity of the Alat port is 15 million tons of cargo annually and 100 thousand containers. According to the results of the second stage of development of the port, its annual throughput capacity will be increased to 25 million tons of cargo and 500 thousand containers with a gradual increase to 1 million containers.

The trade fleet of Azerbaijan, the largest in the Caspian, is involved in the transportation project. Azerbaijani Minister of Economy, Shahin Mustafayev, said that Azerbaijan has 270 vessels for cargo transportation. In the next five-six years, this number will exceed 300 vessels. This year, for the first time, a feeder ship with containers of the Azerbaijan Caspian Shipping Company was operated on the Aktau-Baku route. Azerbaijani tankers transport oil and other hydrocarbon products from Kazakhstan, as well as oil from Turkmenistan. Other cargoes include grain, coal, chemicals, and consumer goods.

By the way, another agreement reached in Ashgabat was on the immediate simplification of the visa regime between Azerbaijan and Turkmenistan for participants of international transport. This means a reduction in the time for issuing visas, an increase in their duration, which should improve trade and economic relations between the countries.

... and reaching the seabed

Certainly, the convention on the legal status of this unique reservoir, adopted in Aktau on August 12, 2018 by the five littoral states, will promote the growth of transit through the Caspian Sea. In addition to issues of shipping, port operations and economic activities in the Caspian, this document signed by the presidents of the Caspian states also concerns the development of Caspian seabed and the laying of pipelines.

"Turkmenistan and Azerbaijan are countries with large reserves of natural resources. Of course, cooperation in the energy sector between our countries is natural. Azerbaijan provides transit opportunities for Turkmen energy resources. We are pleased that the Turkmen oil is transported through the Baku-Tbilisi-Ceyhan pipeline system (BTC), which contributes positively to our cooperation," Turkmen President Gurbanguly Berdimuhammedov said.

He praised the energy integration between Turkmenistan and Azerbaijan, in particular, the possibility of joint access to international markets thanks to energy resources. In fact, currently the Turkmen oil is transported in tankers through the Caspian Sea and further along the Baku-Tbilisi-Kars railway route, according to the agreement signed with SOCAR Trading of Azerbaijan a few years ago. In 2018, the transit volume was 4 million tons, but by the end of the year, this indicator will grow.

In January-September 2018, the non-oil cargo transit from Turkmenistan through the Caspian Sea and Azerbaijan to Europe reached 190 thousand tons.

However, the relations between the countries could significantly expand if it were possible to implement a rather ambitious project for the transit of Turkmen gas through the bottom of the Caspian Sea to Azerbaijan and further to Europe. The European Commission has been involved in discussions around this idea since 2015. In general, the EU expressed its willingness to help attract investment in the construction of the Trans-Caspian gas pipeline under the Caspian from Turkmenistan to Azerbaijan to ensure transportation of c. 30 billion cubic meters of Turkmen gas annually for 30 years to Europe.

Turkmenistan is the fourth in the world and second in the CIS (after Russia) largest country in terms of natural gas reserves. According to the latest data, the estimated combine reserves of the Galkynysh, Yashlar and Garakel fields are estimated at 27.4 trillion cubic meters of gas.

Azerbaijan and Turkmenistan have always supported the construction of export routes for the supply of energy resources through diversification and the creation of multi-vector pipeline systems. Azerbaijan, in principle, is ready to provide its expanding gas infrastructure for the transit of Turkmen gas.

For the time being, Turkmenistan is exporting gas to China via a pipeline running through Uzbekistan and Kazakhstan. By 2020, it is also expected to complete the construction of the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI) for pumping Turkmen gas in these directions.

As for the potential of gas delivery from Turkmenistan through the Caspian Sea to Europe, this issue is still negotiated by the parties involved and can be resolved taking into account the agreements reached in the Convention on the Legal Status of the Caspian Sea.

Since all the problems between the Caspian states are successfully, albeit gradually, Azerbaijan has established close economic contacts with almost all of them, taking into account the favourable geographical position of our country and its well-thought development policy, aiming to turn the country into an international trade and transport hub.