Turkmen-Azerbaijani Oilfield Deal on the Cards
Turkmen-Azerbaijani Oilfield Deal on the Cards
Despite their disagreements about how the Caspian Sea should be divided up, Turkmenistan and Azerbaijan could reach an economically workable compromise on an offshore oil and gas field which they both claim, say NBCentralAsia observers.
In mid-June, Azerbaijan’s minister of industry and energy, Natik Aliev, said he was “not ruling out” developing the disputed Serdar/Kapaz field in cooperation with Turkmenistan, even though talks have so far failed to produce agreement on who it belongs to,
The field, known as Serdar in Turkmenistan and Kapaz in Azerbaijan, is a huge oil and gas deposit located under the sea between Turkmenistan and Azerbaijan. It contains an estimated 80 million tons of oil and 32 billion cubic metres of gas.
Some development work took place before 1991, when Turkmenistan and Azerbaijan were both still part of the Soviet Union, which had one sector while Iran had the other.
After the Soviet Union collapsed, the newly independent states around the Caspian could not agree among themselves or with Iran over where the sea borders should lie. Baku insists on dividing the sea along a median line from the shore, giving it the lion’s share of oil reserves, while Turkmenistan wants the division to take into account where the oilfields lie relative to the shore.
In the late Nineties, and then in 2001, Turkmenistan tried grant rights to investors to manage Serdar/Kapaz on its behalf, and Azerbaijan opposed the move vigorously. Relations between Turkmenistan and Azerbaijan were broken off, and the field was left in limbo.
The two countries resumed diplomatic relations after Turkmen president Sapurmurat Niazov died in December. His successor, Gurbanguly Berdymuhammedov, has been much more open to negotiations and relations have warmed considerably.
Kazakstan-based economic expert Petr Svoik points out that Turkmenistan is clearly aspiring to become a producer of oil as well as gas, but is being held back by the lack of offshore drilling equipment, scientific work and qualified marine geologists.
By contrast, Azerbaijan does have this kind of technology and is interested in developing all resources in the Caspian Sea, including the disputed Serdar/Kapaz field. Azerbaijan is the major supplier for the Baku-Tbilisi-Ceyhan pipeline and is keen to fill it to capacity. The pipeline has a design capacity of 80 million tons a year but currently carries about half that amount.
“All these circumstances are pushing Azerbaijan and Turkmenistan towards cooperation rather than confrontation,” said Svoik. “Plus we have a new Turkmen leader who’s probably going to be a bit better [than his predecessor], and more ready to compromise.”
An NBCentralAsia observer based in Ashgabat said a compromise on the field can only be reached once the legal status of the Caspian Sea has been defined. Much hinges on Iran’s position, which is not dissimilar to Turkmenistan’s.
“Iran is trying to either halt the [negotiations] process altogether or to procrastinate for manipulative reasons,” he said.
However, Rovshan Ibrahimov, head of the international relations department at Qafqaz University in Baku, argues that a rapprochement over the disputed deposit will help both countries come to a broader understanding on the status of the sea.
If Turkmenistan and Azerbaijan agree on Serdar/Kapaz, Turkmenistan might accede to the treaties signed by Russia, Kazakstan and Azerbaijan which divide the bottom of the Caspian into national sections, allowing all four post-Soviet countries to begin constructive negotiations with Iran, said Ibrahimov.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
In mid-June, Azerbaijan’s minister of industry and energy, Natik Aliev, said he was “not ruling out” developing the disputed Serdar/Kapaz field in cooperation with Turkmenistan, even though talks have so far failed to produce agreement on who it belongs to,
The field, known as Serdar in Turkmenistan and Kapaz in Azerbaijan, is a huge oil and gas deposit located under the sea between Turkmenistan and Azerbaijan. It contains an estimated 80 million tons of oil and 32 billion cubic metres of gas.
Some development work took place before 1991, when Turkmenistan and Azerbaijan were both still part of the Soviet Union, which had one sector while Iran had the other.
After the Soviet Union collapsed, the newly independent states around the Caspian could not agree among themselves or with Iran over where the sea borders should lie. Baku insists on dividing the sea along a median line from the shore, giving it the lion’s share of oil reserves, while Turkmenistan wants the division to take into account where the oilfields lie relative to the shore.
In the late Nineties, and then in 2001, Turkmenistan tried grant rights to investors to manage Serdar/Kapaz on its behalf, and Azerbaijan opposed the move vigorously. Relations between Turkmenistan and Azerbaijan were broken off, and the field was left in limbo.
The two countries resumed diplomatic relations after Turkmen president Sapurmurat Niazov died in December. His successor, Gurbanguly Berdymuhammedov, has been much more open to negotiations and relations have warmed considerably.
Kazakstan-based economic expert Petr Svoik points out that Turkmenistan is clearly aspiring to become a producer of oil as well as gas, but is being held back by the lack of offshore drilling equipment, scientific work and qualified marine geologists.
By contrast, Azerbaijan does have this kind of technology and is interested in developing all resources in the Caspian Sea, including the disputed Serdar/Kapaz field. Azerbaijan is the major supplier for the Baku-Tbilisi-Ceyhan pipeline and is keen to fill it to capacity. The pipeline has a design capacity of 80 million tons a year but currently carries about half that amount.
“All these circumstances are pushing Azerbaijan and Turkmenistan towards cooperation rather than confrontation,” said Svoik. “Plus we have a new Turkmen leader who’s probably going to be a bit better [than his predecessor], and more ready to compromise.”
An NBCentralAsia observer based in Ashgabat said a compromise on the field can only be reached once the legal status of the Caspian Sea has been defined. Much hinges on Iran’s position, which is not dissimilar to Turkmenistan’s.
“Iran is trying to either halt the [negotiations] process altogether or to procrastinate for manipulative reasons,” he said.
However, Rovshan Ibrahimov, head of the international relations department at Qafqaz University in Baku, argues that a rapprochement over the disputed deposit will help both countries come to a broader understanding on the status of the sea.
If Turkmenistan and Azerbaijan agree on Serdar/Kapaz, Turkmenistan might accede to the treaties signed by Russia, Kazakstan and Azerbaijan which divide the bottom of the Caspian into national sections, allowing all four post-Soviet countries to begin constructive negotiations with Iran, said Ibrahimov.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
