Azerbaijan-Trkiye ties: new goals in the fields of economy, energy and transport

On June 10, Azerbaijani President Ilham Aliyev paid a one-day visit to Trkiye and met with President Recep Tayyip Erdoan. Geopolitical developments in the region were on the agenda of the presidents of the two allied countries. In addition to regional and global geopolitical developments, energy, economic and transportation issues should also be addressed.

Over the past two months, developments between the two countries in the fields of economy, energy and transportation have been more remarkable. It should be noted that the important decisions taken at the 11th meeting of the Joint Economic Commission of the two countries on May 11, the agreements signed in the field of energy on May 14 and June 4 and the resumption of the Baku exchange -Tbilisi- The Kars Railway (BTK), after the completion of a large-scale reconstruction of the Georgian section of the railway, will ensure that cooperation in these areas is in line with the new goals.

Meeting results

On May 8, the 11th meeting of the Joint Economic Commission between the two countries was held in Ankara. At the end of the commission meeting, a protocol of 120 articles was signed between the two countries. This protocol includes the exchange of experiences in the field of public-private partnership, the signing of a new agreement in the field of transport, the strengthening of cooperation for the Middle Corridor, the organization of the 4th Forum of 'Energy, the development of interuniversity cooperation, the organization of a youth forum and the strengthening of cooperation for the restoration and reconstruction of the liberated territories.

In addition to the protocol, a memorandum of understanding between the Council for Foreign Economic Relations (DEIK) of the Republic of Turkey and the Small and Medium Enterprises (SME) Development Agency of the Republic of Azerbaijan, an agreement on the establishment of a joint working group on trade facilitation, a cooperation agreement in the water sector and a declaration in the field of combating animal diseases were signed between the parties.

At the press conference held after the meeting, Azerbaijani Prime Minister Ali Asadov highlighted that more than 20 Turkish companies have implemented projects worth $4 billion for the restoration and reconstruction of the liberated territories. According to official figures, 3,000 Azerbaijani companies operate in Turkey and Turkish entrepreneurs have implemented 526 projects worth $19.3 billion in Azerbaijan. According to him, Turkey's investment in Azerbaijan amounts to $13 billion and Azerbaijan's investment in Turkey amounts to $21 billion. Ylmaz also announced that a free trade agreement would be signed between the parties from a medium-term perspective.

The parties signed a preferential trade agreement in 2020 and an additional protocol in 2023. According to official declarations following this agreement, the volume of trade between the two countries increased to 7.5 billion dollars and the objective is to bring this figure to $15 billion.

Resumption of Baku-Tbilisi-Kars railway capacity

The capacity of the Baku-Tbilisi-Kars railway, which connects Azerbaijan and Trkiye via Georgia, has been increased from 1 million tonnes to 5 million tonnes in 2024. The first agreement for this railway line, which is a important element of the Middle Corridor, was signed in Tbilisi in 2007 and its opening took place in Baku in 2017. At the opening ceremony of the BTK in 2017, Aliyev said that the capacity of the BTK could be increased to 5 million tonnes in the second stage, then to 17 million. tons. Thus, work to increase the capacity of BTK to 5 million tons in 2023 was initiated and completed in May 2024, and began operating at a capacity of 5 million tons on May 20.

Some of the geopolitical developments that occurred with the start of the railway, including the closure of the borders of Russia, through which the Northern Corridor passes, and Iran, through which the Southern Corridor passes, due to COVID-19, the closure of the Suez Canal, which is an important waterway where 90% of goods are transported between the east and west, by a Japanese-flagged cargo ship and ultimately the Russo-Ukrainian war in 2022 increased the importance of the central corridor as a means of transportation. road between East and West.

In fact, after these geopolitical developments, freight transport began to develop via the Middle Corridor. According to figures provided by Azerbaijan Railways, the cargo flow of BTK in 2019 was 3.8 million tons, and in 2023, after the outbreak of the Russian-Ukrainian war, this figure was 6.8 million tons. Along with the increase in cargo volume from the Middle Corridor, BTK's capacity is being highlighted.

New agreements and targets in the energy sector

On the sidelines of the 29th Caspian International Oil and Natural Gas Fair, held on June 4 in Azerbaijan, within the framework of the Baku Energy Week, four agreements on the delivery and exchange of natural gas were been signed between Turkey and Azerbaijan. First, an agreement was signed to extend the natural gas supply agreement, which will expire at the end of 2024, until the end of 2030. According to SOCAR's statement, with this agreement, 3.7 billion cubic meters of natural gas will be Azerbaijani gas is exported annually to Turkey from the “Ahdeniz-1” field until 2030. In addition, agreements were signed between the parties to transport Azerbaijani gas to Europe and Nakhchivan via Turkey , and gas from Turkmenistan to Turkey via Azerbaijan.

As in the case of oil and natural gas, crucial steps are being taken to strengthen cooperation in the electricity sector. An agreement on this issue was signed at the 3rd Trkiye-Azerbaijan Energy Forum held in September 2023. According to information provided by Minister of Energy Alparslan Bayraktar, technical studies continue to export the electricity produced in Azerbaijan to Turkey and from Trkiye to Europe. Thus, Trkiye will become an export route for Azerbaijan's oil and natural gas as well as its electricity.

The Idr-Nakhchivan gas pipeline, with an annual capacity of 500 million cubic meters (bcm), is expected to become functional by the end of this year. A memorandum of understanding for the construction of the Idr-Nakhchivan gas pipeline was signed between the Turkish company Botas and the State Oil Company of Azerbaijan (SOCAR) in 2010. The gas pipeline is intended to supply gas from the Trans-Anatolian gas pipeline (TANAP) in Turkey to the Autonomous Republic of Nakhchivan, replacing the current supply of Iranian gas. On September 25, 2023, Aliyev and Erdoan attended the groundbreaking ceremony for the Idr-Nakhchivan gas pipeline. Azerbaijan will be able to transport its gas to Nakhichevan via Trkiye and will end Nakhchivan's dependence on foreign natural gas producers. This will also further increase mutual dependence between Trkiye and Azerbaijan.

In summary, although Azerbaijan-Troika relations seem to revolve around political and military issues, in recent years successful projects and collaborations have been carried out in the fields of economy, energy and transportation . The agreements and negotiations of the last two months show in particular that the two countries have set new objectives in the areas of energy, transport and the economy. Deepening cooperation in these areas is a requirement of the Shusha Declaration on the alliance, signed between the two countries in June 2021. The agreement establishing a working group for negotiations of a new agreement on trade relations, transportation of Azerbaijani natural gas to Europe and Nakhchivan via Trkiye in the field of energy, transportation of Turkmen gas to Trkiye via Azerbaijan and increasing the transportation capacity of BTK appeared as medium-term objectives.

The Sabah Daily News Bulletin

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