Clashes on Azerbaijan-Armenia Border Threaten Regional Transport and Energy Routes

The Jamestown Foundation

Clashes on Azerbaijan-Armenia Border Threaten Regional Transport and
Energy Routes
By Bahruz Babayev


[The article has maps which are not shown below]

On July 12, Armenian and Azerbaijani forces exchanged fire along the
state border in the Tovuz region of Azerbaijan and Armenia’s Tavush
province, resulting in several days of intense cross-border clashes
involving heavy artillery exchanges (Mod.gov.az, July 12). The two
countries have been under a volatile ceasefire since fighting a bloody
war over the Azerbaijani region of Karabakh in the 1990s
(Dailysabah.com, July 13). To this day, Armenia occupies 20 percent of
Azerbaijan’s territory. The last instance of serious fighting between
the two sides occurred in April 2016, when the Azerbaijani military
liberated several formerly occupied strategic positions on the Line of
Contact in Karabakh (Report.az, April 4, 2017). In contrast, the
recent fighting in Tovuz represented the largest cross-border military
engagement since 1994.

Tovuz is a narrow land corridor through which a number of vital
transport and energy export routes link Azerbaijan to European and
other global markets. The territory is notably crossed by the
trans-Eurasian Transportation Corridor East-West. Other critical
infrastructure passing through Tovuz includes the Baku–Tbilisi–Ceyhan
(BTC) oil pipeline, the South Caucasus natural gas pipeline (SCP) and
the Baku–Tbilisi–Kars (BTK) railway (Tvreal.az, July 17).

The BTC pipeline delivers Azerbaijani crude oil to Europe (Ona.az,
March 13, 2019). In early 2020, 81 percent of Azerbaijan’s oil exports
were transported via the BTC (Vergiler.az, February 18); and
throughout 2019, the pipeline transported a total of 233.2 million
barrels of oil (Neftegas.ru, January 16). The SCP runs largely in
parallel with the BTC and presently supplies Azerbaijani gas to
Georgia and Turkey. It provides 23 percent—2.7 billion cubic meters
(bcm) of gas in the first quarter of 2020—of Turkish demand. As
Turkey’s largest supplier, Azerbaijan helps the former reduce its
reliance on Russia and Iran (Arabnews.com, May 2; see EDM, July 6).
The SCP additionally provides about 87 percent of Georgia’s natural
gas demand and is the easternmost segment of the Southern Gas Corridor
(SGC), which will annually deliver 10 bcm of gas to Europe starting in
late 2020 (EurActiv, February 13).

The BTK railway connects Azerbaijan, Georgia and Turkey and is a
strategic segment of the so-called “Middle Corridor,” linking China to
Europe. The BTK has an annual capacity of 17 million tons of cargo
(trend.az, April 4, 2019). Furthermore, this railroad has been used by
North Atlantic Treaty Organization (NATO) and allied forces to transit
supplies to and from Afghanistan (Nato-pfp.mfa.gov.az, accessed July
30). The BTC, the SCP and the BTK all run 15 kilometers of Tovuz city
(the district capital), which was exposed to Armenian shelling.

The vice president for investment and marketing at the State Oil
Company of the Azerbaijan Republic (SOCAR), Elshad Nasirov, alleged
that Armenia’s military provocations were intended to disrupt
Azerbaijani plans to begin supplying gas to Europe in three months. He
stressed that “the entire infrastructure for the supply of
Azerbaijan’s energy resources to Western countries and the global
market is located in this region” (Azerbaycan24.com, July 17). This
charge was echoed by Azerbaijani parliamentarian Ganira Pashaeva, who
asserted that Armenia aimed to target Azerbaijani-Turkish energy and
transport lines (Anadolu Agency, July 17).

The recent cross-border clashes did not directly damage Azerbaijan’s
energy infrastructure, instead destroying 61 households and farms
across several Tovuz district villages (APA, July 23). However, these
pipelines’ close proximity to the areas exposed to shelling illustrate
how vulnerable they are to attacks and shutdowns. Indeed, BP
temporarily took the SCP, BTC and the Baku–Supsa oil pipeline offline
during the August 2008 Russian-Georgian war (Ogj.com, August 12,
2008).

It is also notable that two weeks before the cross-border violence
erupted, Armenia’s former defense minister Lieutenant General
Vagharshak Harutyunyan suggested Yerevan could destroy the entire oil
complex in three major cities of Azerbaijan (Kavkazplus.com, July 3;
Miq.az, July 6). Currently, the conflict appears to have settled down
again. But energy infrastructures would become a likely target if
full-scale military operations begin.

The recent clashes on the Azerbaijan-Armenian border, in Tovuz, could
jeopardize the “energy and transport corridor from the Caspian into
Europe,” according to Brenda Shaffer, a senior advisor for energy at
the Foundation for Defense of Democracies (New.az, July 17). Further
armed conflict in this sensitive corner of Azerbaijan would force Baku
to shut down most of its major oil and gas export pipelines for safety
reasons (RFE/RL, April 5, 2016). And the possibility of energy
pipelines going offline even temporarily would have a number of
economic and political consequences for Azerbaijan, Georgia, Turkey
and Europe.

Cross-border hostilities would certainly be costly for Azerbaijan. Oil
sale revenues, including transfers from the State Oil Fund, are
planned to account for 57 percent of the Azerbaijani national budget
in 2020 (Marja.az, September 13, 2019). Moreover, energy resources
make up between 85 and 91 percent of its overall income from exports.
So though it is difficult to accurately project the long-term economic
consequences of temporary oil and gas pipeline shutdowns for
Azerbaijan, such an outcome would surely bite into Azerbaijan’s
financial reserves.

As the SCP provides around 90 percent of Georgia’s natural gas demand,
it is also a big concern for Tbilisi, which has a little room for
maneuver in negotiations with Moscow if it suddenly needed to switch
back to relying on Russian energy supplies. Azerbaijan has also been
an important key to Turkey’s efforts to diversify its natural gas
market away from a reliance on Russia, which Ankara does fully trust
as a supplier. Finally, the BTC and SCP carry political importance for
the European Union and the Balkans, as these regional countries seek
to free themselves from Russia’s energy grip.

The sudden armed confrontation between Armenia and Azerbaijan quieted
back down since July 17, but the ceasefire looks quite fragile. And
though international experts believe further escalations are unlikely
(Ednews.net, July 17), the Azerbaijani public has clearly lost faith
that a peaceful resolution to the broader conflict with Armenia is
possible following decades of failed diplomacy (Etikxeber.az, July
23). If the precarious ceasefire is once again broken and begins to
spiral out of control, the consequences will include long-term harm to
the strategic interests of not only the immediate region but also
major outside powers.


 

You may also like

Clashes on Azerbaijan-Armenia Border Threaten Regional Transport and Energy Routes

The Jamestown Foundation

Clashes on Azerbaijan-Armenia Border Threaten Regional Transport and
Energy Routes
By Bahruz Babayev


[The article has maps which are not shown below]

On July 12, Armenian and Azerbaijani forces exchanged fire along the
state border in the Tovuz region of Azerbaijan and Armenia’s Tavush
province, resulting in several days of intense cross-border clashes
involving heavy artillery exchanges (Mod.gov.az, July 12). The two
countries have been under a volatile ceasefire since fighting a bloody
war over the Azerbaijani region of Karabakh in the 1990s
(Dailysabah.com, July 13). To this day, Armenia occupies 20 percent of
Azerbaijan’s territory. The last instance of serious fighting between
the two sides occurred in April 2016, when the Azerbaijani military
liberated several formerly occupied strategic positions on the Line of
Contact in Karabakh (Report.az, April 4, 2017). In contrast, the
recent fighting in Tovuz represented the largest cross-border military
engagement since 1994.

Tovuz is a narrow land corridor through which a number of vital
transport and energy export routes link Azerbaijan to European and
other global markets. The territory is notably crossed by the
trans-Eurasian Transportation Corridor East-West. Other critical
infrastructure passing through Tovuz includes the Baku–Tbilisi–Ceyhan
(BTC) oil pipeline, the South Caucasus natural gas pipeline (SCP) and
the Baku–Tbilisi–Kars (BTK) railway (Tvreal.az, July 17).

The BTC pipeline delivers Azerbaijani crude oil to Europe (Ona.az,
March 13, 2019). In early 2020, 81 percent of Azerbaijan’s oil exports
were transported via the BTC (Vergiler.az, February 18); and
throughout 2019, the pipeline transported a total of 233.2 million
barrels of oil (Neftegas.ru, January 16). The SCP runs largely in
parallel with the BTC and presently supplies Azerbaijani gas to
Georgia and Turkey. It provides 23 percent—2.7 billion cubic meters
(bcm) of gas in the first quarter of 2020—of Turkish demand. As
Turkey’s largest supplier, Azerbaijan helps the former reduce its
reliance on Russia and Iran (Arabnews.com, May 2; see EDM, July 6).
The SCP additionally provides about 87 percent of Georgia’s natural
gas demand and is the easternmost segment of the Southern Gas Corridor
(SGC), which will annually deliver 10 bcm of gas to Europe starting in
late 2020 (EurActiv, February 13).

The BTK railway connects Azerbaijan, Georgia and Turkey and is a
strategic segment of the so-called “Middle Corridor,” linking China to
Europe. The BTK has an annual capacity of 17 million tons of cargo
(trend.az, April 4, 2019). Furthermore, this railroad has been used by
North Atlantic Treaty Organization (NATO) and allied forces to transit
supplies to and from Afghanistan (Nato-pfp.mfa.gov.az, accessed July
30). The BTC, the SCP and the BTK all run 15 kilometers of Tovuz city
(the district capital), which was exposed to Armenian shelling.

The vice president for investment and marketing at the State Oil
Company of the Azerbaijan Republic (SOCAR), Elshad Nasirov, alleged
that Armenia’s military provocations were intended to disrupt
Azerbaijani plans to begin supplying gas to Europe in three months. He
stressed that “the entire infrastructure for the supply of
Azerbaijan’s energy resources to Western countries and the global
market is located in this region” (Azerbaycan24.com, July 17). This
charge was echoed by Azerbaijani parliamentarian Ganira Pashaeva, who
asserted that Armenia aimed to target Azerbaijani-Turkish energy and
transport lines (Anadolu Agency, July 17).

The recent cross-border clashes did not directly damage Azerbaijan’s
energy infrastructure, instead destroying 61 households and farms
across several Tovuz district villages (APA, July 23). However, these
pipelines’ close proximity to the areas exposed to shelling illustrate
how vulnerable they are to attacks and shutdowns. Indeed, BP
temporarily took the SCP, BTC and the Baku–Supsa oil pipeline offline
during the August 2008 Russian-Georgian war (Ogj.com, August 12,
2008).

It is also notable that two weeks before the cross-border violence
erupted, Armenia’s former defense minister Lieutenant General
Vagharshak Harutyunyan suggested Yerevan could destroy the entire oil
complex in three major cities of Azerbaijan (Kavkazplus.com, July 3;
Miq.az, July 6). Currently, the conflict appears to have settled down
again. But energy infrastructures would become a likely target if
full-scale military operations begin.

The recent clashes on the Azerbaijan-Armenian border, in Tovuz, could
jeopardize the “energy and transport corridor from the Caspian into
Europe,” according to Brenda Shaffer, a senior advisor for energy at
the Foundation for Defense of Democracies (New.az, July 17). Further
armed conflict in this sensitive corner of Azerbaijan would force Baku
to shut down most of its major oil and gas export pipelines for safety
reasons (RFE/RL, April 5, 2016). And the possibility of energy
pipelines going offline even temporarily would have a number of
economic and political consequences for Azerbaijan, Georgia, Turkey
and Europe.

Cross-border hostilities would certainly be costly for Azerbaijan. Oil
sale revenues, including transfers from the State Oil Fund, are
planned to account for 57 percent of the Azerbaijani national budget
in 2020 (Marja.az, September 13, 2019). Moreover, energy resources
make up between 85 and 91 percent of its overall income from exports.
So though it is difficult to accurately project the long-term economic
consequences of temporary oil and gas pipeline shutdowns for
Azerbaijan, such an outcome would surely bite into Azerbaijan’s
financial reserves.

As the SCP provides around 90 percent of Georgia’s natural gas demand,
it is also a big concern for Tbilisi, which has a little room for
maneuver in negotiations with Moscow if it suddenly needed to switch
back to relying on Russian energy supplies. Azerbaijan has also been
an important key to Turkey’s efforts to diversify its natural gas
market away from a reliance on Russia, which Ankara does fully trust
as a supplier. Finally, the BTC and SCP carry political importance for
the European Union and the Balkans, as these regional countries seek
to free themselves from Russia’s energy grip.

The sudden armed confrontation between Armenia and Azerbaijan quieted
back down since July 17, but the ceasefire looks quite fragile. And
though international experts believe further escalations are unlikely
(Ednews.net, July 17), the Azerbaijani public has clearly lost faith
that a peaceful resolution to the broader conflict with Armenia is
possible following decades of failed diplomacy (Etikxeber.az, July
23). If the precarious ceasefire is once again broken and begins to
spiral out of control, the consequences will include long-term harm to
the strategic interests of not only the immediate region but also
major outside powers.


 

You may also like