On November 27th, representatives of Iran, Azerbaijan and Turkmenistan signed a gas swap deal for up to 2 bcm per year.
Under the trilateral agreement that was signed in Ashgabat in the presence of Iranian and Azerbaijani Presidents, Ebrahim Raisi and Ilham Aliyev, up to 2 bcm of gas will be pumped annually from Turkmenistan to Azerbaijan via Iran. Thus, Ashgabat should sell 5-6 million cubic metres of gas per day to Azerbaijan.
“The signed agreement is important document. This is a historical document, it shows how deep the Azerbaijani-Iranian ties are. Azerbaijan will receive Turkmen gas through Iran. This is a good ground for trilateral cooperation. The signed document is also important from the point of view of economic and energy security,” Aliyev said, quoted by the official website of the President of Azerbaijan.
The gas will be transfered through the Caspian Central Pipeline.
Another Trans-Caspian subsea gas pipeline of the total length of 300 km is planned to link Baku with Turkmenistan’s port of Turkmenbashi. However, the project was frozen in 2021.
The project was heavily criticized by Russia and Iran, significant transit countries of Turkmen gas.
Another issue discussed by the representatives of Iran and Turkmenistan was the gas debt that Tehran owes to its neighbour. In late 2017, Ashgabat claimed that it was owed $1.8 billion in payments for gas delivered to Tehran. Since 1997, Iran imports gas from Turkmenistan for distribution in its northern provinces.
“We will soon pay the first instalment to clear the gas debt that we owe to the Turkmen side, after talks that were held earlier,” Iranian Oil Minister Javad Owji commented on the issue.
According to data provided by National Iranian Oil Co (NIOC) CEO Mohsen Khojaste Mehr, Iran will be able to meet the gas needs in its five provinces by supplying Turkmen gas to Azerbaijan under the newly signed contract.
Last month, NIOC CEO Mohsen Khojaste Mehr claimed that Iran planed to increase daily natural gas production to 940 cubic meters per day in the winter of 2021, as the consumption of household, commercial, industrial and energy enterprises increased. This winter NIOC will have maximum gas production. 700 million cubic meters of gas will go through 37 offshore platforms in the Persian Gulf and are connected to the South Pars joint oil and gas field, which provides 70% of gas production in the country.
Javad Owji also added that Tehran and Baku would soon sign an agreement on the joint development of oil and gas fields in the Caspian Sea. This would be an important source for Iran.
The State Oil Company of Azerbaijan (SOCAR) has recently claimed that oil production at the Karabakh oil and gas field located in the Caspian Sea will begin in 2025. It was discovered by SOCAR together with the Norwegian company Equinor in March 2020 and its oil reserves are initially estimated at more than 60 million tons.
In its turn, Baku is not suffering from lack of resources. On October 15, Azerbaijan reportedly agreed to increase gas supplies to Turkey by 3.5 bcm beginning from 2023.
“Yes, in the following years, by the time we deliver 6 billion, another 3.5 billion cubic meters on average will be a plus under the new contract, starting from 2023, from the first phase of Shah Deniz,” the Azerbaijani Energy minister Parviz Shahbazov claimed, adding that Baku had agreed with Ankara to extend gas supply contracts. However, the contracts are yet to be signed.
Constructive dialogue was launched between the regional powers as soon as the tensions in Azerbaijani-Iranian border regions decreased.
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I hear the Israeli cabinet crying hard on this one. I can only understand, as it means early demise for its dream of establishing a forward presence right at Iran’s border and ramp up its terrorist attacks against its scientists, academics and soldiers alike. In simple terms, Tehran told Baku to take a long, hard look at what is good for it, and it worked. The political-economic deal perfectly complement the military show of force previously displayed a few weeks back and the message seems to have been effective to get everyone back to working policies in good neighborly relationships rather than uselessly and foolishly destabilizing everything by opening Pandora’s box and invite notorious trouble-makers around that would certainly be targets of choice for basically the entirety of Iran’s military arsenal soon after setting up camp. Aliyev finally showed some elementary wisdom and this development is quite welcome.