Azerbaijan, Turkmenistan enjoy tangible upsurge in cooperation Energy and transport at the core

Over the past two years, Central Asian states have been bolstering multilateral and bilateral cooperation with Azerbaijan and Türkiye hand in hand to further strengthen business cooperation. New preferential mechanisms are introduced to increase trade, financial funds are formed, and joint investment projects are implemented. The core of the integration vector is transport and logistics projects aimed at developing several routes of the Middle Corridor. All the above trends are also very relevant for the Azerbaijani-Turkmen cooperation, which has been experiencing a tangible boost recently. Prospects for the development of bilateral business ties were discussed the day before during the visit of the delegation of the Ministry of Economy of Azerbaijan to Ashgabat.

The high level and prospects of Azerbaijani-Turkmen ties were evidenced by Turkmen President Serdar Berdimuhamedov's reception of Mikail Jabbarov, head of the Azerbaijani delegation. It was noted at the meeting that multi-vector ties between the two countries are developing due to the importance the heads of the two states attach to the relations between Azerbaijan and Turkmenistan based on friendship and solidarity.

The talks between the Azerbaijani delegation and Turkmenistan's Deputy Chairman of the Cabinet of Ministers, Foreign Minister Rashid Meredov were also very productive. "During the conversation, we expressed satisfaction with the positive results of our joint efforts and economic partnership in promoting regional development, as well as touched upon the possibilities of further expansion of bilateral cooperation," Jabbarov said.

A meeting was also held in Ashgabat with the head of the state concern Turkmengaz Maksat Babayev, during which they discussed issues of Azerbaijan's partnership with the Turkmen enterprise, opportunities to expand cooperation in the energy sector and implementation of promising projects.

It is appropriate to note here that the basis of Azerbaijani-Turkmen business cooperation is built on large-scale projects in the field of transit of hydrocarbon raw materials and oil products, as well as various transport initiatives for transhipment of non-oil products between the ports of Turkmenbashi and Alat. In particular, a total of 32 million tonnes of Turkmen oil has been exported to world markets through the Baku-Tbilisi-Ceyhan (BTC) pipeline in recent years. At the same time, through tanker and ferry-railway transhipment through Azerbaijan, Turkmen oil products and fuel were sent to the Black Sea oil terminal in the Georgian port of Kulevi and exported to the world market. This cooperation was actively developing last year, and in parallel with the traditional fuel transit, the purchase of petrol and other types of Turkmen oil products for the domestic needs of Azerbaijan was carried out. During the period of repair and modernisation works and the forced shutdown of the Heydar Aliyev Baku Oil Refinery, Azerbaijan increased fuel imports, including at the expense of purchases from Turkmenistan. The domestic fuel market has not experienced any shortages this year. Accordingly, in January-August 2023 tanker deliveries of Turkmen oil products and fuel through our country slightly decreased (relative to the corresponding figures of 2022), and this transit amounted to just over 640 thousand tonnes. Nevertheless, the transit deliveries of Turkmen fuel oil and paraffin recorded a tangible growth in the reporting period.

It is noteworthy that Azerbaijani-Turkmen cooperation in the segment of hydrocarbon raw materials transit is developing very successfully: in recent years, a significant part of Turkmen oil exports to the west is carried out by tanker transhipment and further through the BTC pipeline system. Thus, for eight months of this year, the volume of transit of Turkmen oil through the territory of our country reached almost two million tonnes, which is more than a quarter more than in the same period last year.

Another very promising project in the energy sector is the trilateral agreement on the organisation of swap supplies of "blue fuel", signed by Azerbaijan, Turkmenistan and Iran in November 2021. Since January 2022, Baku and Ashgabat have already established successful swap operations, transshipping on average 4.5-5 million cubic metres of Turkmen gas to the north-eastern regions of Iran, and then the corresponding volume of Iranian gas was delivered to Azerbaijan via a cross-border pipeline. According to Iranian sources, today swap deliveries have been increased to 7-7.5 million cubic metres per day, and the project participants do not rule out doubling the volume in the future. The potential for increasing the swap through the Serah gas line allows for this since the capacity of this pipeline system reaches 20 million cubic metres per day.

Prospects for expanding the energy vector in bilateral cooperation were also given much attention during the current visit: Minister Mikail Jabbarov and Deputy Prime Minister of Turkmenistan Batyr Amanov reviewed promising areas in the energy sector. Representatives of the State Oil Company of Azerbaijan (SOCAR) participated in the talks, and the sides exchanged views on expanding cooperation in transit, joint exploration and development of hydrocarbon resources, and implementation of other promising projects.

In particular, in the medium term Baku and Ashgabat plan to jointly develop gas deposits at the Dostlug offshore field, and in the longer term they may become partners in the transit of Turkmenistan's "blue fuel" within the framework of the Trans-Caspian gas pipeline project.

The next most important and highly successful vector of Azerbaijani-Turkmen cooperation can be identified as the expansion of non-oil cargo transhipment, as well as an increase in bilateral trade. After the LapisLazuli route initiated by Baku and Ashgabat and uniting the transport flows of Afghanistan, Turkmenistan, Azerbaijan, Georgia and Türkiye was launched in December 2018, the volumes of transit of minerals, construction materials, fertilisers, textiles, dried fruits and other agricultural products, various containerised cargoes with multimodal transportation scheme have increased significantly. These cargoes are transported by ferries and other dry-cargo vessels in both directions along the Baku-Turkmenbashi-Baku sea line, and in the recent period due to simplification of cross-border procedures and reduction of tariffs (especially from March 1, 2023), the turnover of non-primary cargoes has multiplied.

The growth of container traffic between the countries should also be particularly noted: only in the first half of this year, 2,362 TEU containers were handled between Baku International Sea Trade Port (BISTP) and Turkmenbashi Harbour, which is 2.9 times more than in the same period of 2022. It should be noted that a significant contribution to the expansion of transhipment between the eastern and western coasts of the Caspian Sea was made by a memorandum signed not so long ago between a subsidiary of Azerbaijan Railways - ADY Container and the Transport and Logistics Centre of Turkmenistan, which is aimed at optimising international container traffic.

Thus, cooperation in the transit of hydrocarbon raw materials and transhipment of non-oil goods have become the main drivers of the growth of mutual Azerbaijani-Turkmen trade. The successful economic cooperation between the two countries is clearly evidenced by the dynamic growth of mutual trade turnover: last year, having increased significantly, it totalled $535.3 million. This positive trend continued this year: trade turnover between Azerbaijan and Turkmenistan in January-August 2023 totalled $644.767 million, and taking into account trade operations in the next four months, it will significantly exceed last year's figures. The meeting of Economy Minister Mikail Jabbarov with Deputy Prime Minister of Turkmenistan, co-chairman of the Azerbaijani-Turkmen joint intergovernmental commission Batyr Atdayev inspires optimism in this regard: the parties considered the possibilities of further increasing bilateral trade turnover, holding the next meeting of the commission, as well as expanding ties between business circles of the two countries.