University of North Carolina at Chapel Hill, Center for Slavic, Eurasian, and East Europeans Studies
Cold Reality in the "Land of Fire" - Twenty Years of Geopolitical Wrestling around Azerbaijani Hydrocarbon Resources
I focus on how the energy resources of Azerbaijan changed the geopolitical picture of the broader Caspian region in the two decades that followed the collapse of the Soviet Union and how they turned Azerbaijan from an outback, war-shattered country into one of the most important pivotal states in Eurasia.
Azerbaijan, torn by the war for Nagorno-Karabakh and burdened by economic collapse in the early 1990s, was the first Newly Independent State to open up its resources for foreign investors and became one of the most spectacular areas of geopolitical contest in the Post-Soviet region. Neighbored by three regional powers (Russia to the north, Iran to the south and Turkey to the west), it is the only country that provides a possible transport route of Central Asian natural gas to the West without passing through Russia or Iran. Baku in the last two decades has been trying to lure the United States and the European Union in order to concrete its independence against its powerful neighbors, put pressure on Armenia to return the occupied Azerbaijani territories and diversify its natural gas export to the reliable, well-paying European markets.
After the Millennium, Azerbaijan emerged as an oil and (more recently) natural gas producer of growing importance. The implementation of transport infrastructure for Azerbaijani oil and natural gas to the West has been an important pillar in US efforts to stabilize the independence of the South Caucasus. Azerbaijani natural gas resources (however relatively modest they are) have been considered the keystone of European energy import diversification efforts (the so called Southern Energy Corridor) as well, marked by, inter alia, the EU-backed Nabucco natural gas pipeline project. In spite of the politically more desired western markets, the crawling realization of Nabucco and the lack of sufficient pipelines to the West have recently compelled Baku to sell its growing natural gas production to its neighbors on the existing infrastructure – at least on the short term.
However, the region is still in motion: in the last few months Baku not only committed itself to Turkey, Russia, Iran and even Syria; on January 13-14 President of the European Commission José Manuel Barroso and Azerbaijani President Ilham Aliyev signed a Joint Declaration on the European Southern Energy Corridor.
I seek to answer the following questions: How did the production of Azerbaijani hydrocarbon resources transform the geopolitical picture of the Caspian region? How did Azerbaijan’s position change after signing the ‘Contract of the Century’ in 1994? Why is Baku still patient with the crawling European pipeline projects? How long might the diversification of natural gas exports in the European direction remain a priority?