Azerbaijan has begun sending shipments of crude for transit via
Iran, since the Baku-Tbilisi-Ceyhan (BTC) pipeline is shut down.
Azerbaijan said the shipments to Iran will only continue while the BTC
is down, but since Russia is calling the shots on the pipeline, Iran
could become a regular transit option for Azeri oil. If this occurs,
the entire region could experience a shift, and the U.S. position in
negotiations with Iran could weaken.
Analysis
Iran received its first cargo of Azeri crude for
transit Aug. 24, the Iranian Oil Ministry’s news agency, Shana, said on
its Web site. The shipment falls under a longstanding oil swap deal
Iran has with quite a few Caspian oil-producing nations, though
Azerbaijan has never fulfilled the order. Azerbaijan says the shipments
will only last as long as its Western route for oil through the
Baku-Tbilisi-Ceyhan (BTC) pipeline is shut down, but with the Russians
calling the shots on the BTC, Iran could become a regular option for
Azerbaijani crude — something that could shift the entire region.
Azerbaijan’s ability to ship its large energy wealth to the West has
been doubly hit in the past few weeks. First, transport through the BTC
line, which carries 1 million barrels per day (bpd) from Azerbaijan’s
capital to the Turkish Mediterranean and on to Europe, was halted when
a
fire erupted Aug. 5
— possibly the result of a Kurdish attack — in the Turkish section of
the line. That setback was compounded by the Russia-Georgia war which
not only halted oil shipments through the BTC regardless of the
condition of the Turkish section, but also
stopped exports via the Baku-Supsa pipeline and by rail from Azerbaijan to Georgia.
Azerbaijan ended up sending approximately 100,000 bpd of oil — a
small fraction of what the country is capable of — north through Russia
through the Baku-Novorossiysk pipeline. The cessation of most of its
oil production has put Azerbaijan in a really difficult place
financially, since so much of the country’s economy is based on energy
revenues. But even if the BTC and Georgian options are back up and
running, Azerbaijan now knows it has to get the Russians approval for
its energy to flow to the West.
