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Nagorno-Karabakh peace deal 'good news' for energy security: Azerbaijan


All Azerbaijan's main export pipelines said to have been targeted

Azerbaijan due to start Southern Corridor gas supplies imminently

  • Author
  • Nick Coleman    Stuart Elliott
  • Editor
  • Alisdair Bowles
  • Commodity
  • Natural Gas Oil

London — The ending of weeks of fierce clashes over Nagorno-Karabakh is "good news" for the security of energy supplies to Europe and elsewhere, Azerbaijan's energy minister, Parviz Shahbazov, said Nov. 12, referring to the settlement as a "victory" for his country, ahead of the start of 'Southern Corridor' gas supplies to Italy.

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At the opening of an online ministerial meeting of the Gas Exporting Countries Forum, Shahbazov said several of Azerbaijan's energy export pipelines had come under attack in the upsurge in fighting over the Armenia-backed territory, which is thought to have cost thousands of lives.

BP, Azerbaijan's largest foreign investor, had said it was "deeply concerned" after a reported rocket attack on the country's main crude export artery, the Baku-Tbilisi-Ceyhan pipeline, on Oct. 6. Shahbazov said Nov. 12 other pipelines had also been targeted, although none of the alleged incidents are thought to have disrupted supplies.

The latest fighting, arising out of a decades-long conflict dating from the early 1990s and the fall of the Soviet Union, came to an end this week when Armenia, Azerbaijan and Russia signed a deal enshrining military gains by Azerbaijan and a role for Russian forces upholding the settlement.

Shahbazov said the result was "good news in terms of ensuring the stability of supply to European and other consumers as the security of oil and gas supply had become a target by military aggression by Armenia."

Armenia has denied Azerbaijan's claims of attacks on energy infrastructure.

However, Shahbazov said "several attempts" had been made on pipelines including BTC, the South Caucasus Pipeline, which constitutes the eastern section of the European Union-backed Southern Gas Corridor, as well as the Western Route Export Pipeline to Georgia's Black Sea coast, and the Baku-Novorossiisk pipeline to Russia's southern coast on the Black Sea. He also said Armenian officials had threatened attacks on the Sangachal terminal, which processes oil and gas from the ACG crude oil complex and the Shah Deniz gas field.

BTC transported 620,000 b/d of crude for loading on Turkey's Mediterranean coast in the first half of this year, while the Southern Corridor, which relies on the second phase of the Shah Deniz gas field development, will enable a 16 Bcm/year expansion in Azerbaijan's gas exports.

"Stability in the global energy and gas market requires a completely free geopolitical environment," Shahbazov said. "The fact that Azerbaijan is ending the 30 years long conflict by restoring justice and its territorial integrity... also serves the above mentioned mutually beneficial purpose."

What he called Armenia's "military capitulation" will "ensure the security and reliability of our regional and global energy projects," Shahbazov said.

Caspian assets

BP said Oct. 27 the last section of the Southern Gas Corridor, taking gas from Azerbaijan all the way to Italy, was "mechanically complete," as final commercial and administrative arrangements are put in place.

The former Soviet republics of the South Caucasus are no stranger to military conflict, and pipelines are generally thought to be well protected, with the BTC pipeline buried along its entire length.

BP declined to comment, while Norway's Equinor, a partner in the ACG complex and BTC pipeline, said, "We are pleased to see a peaceful resolution to the conflict. The conflict did not impact Equinor's operations in Azerbaijan and there is no change to our plans in the country."

ExxonMobil is reported to have been trying to sell its 6.8% stake in ACG. Asked about a possible sale, ExxonMobil said the company "continually reviews its assets for their contribution toward meeting the company's operating needs, financial objectives and their potential value to others."