Baku News

November 19, 2007 - BLOOMBERG by Lucian Kim - ASHGABAT, Turkmenistan -- Azerbaijan sent its first delegation of oil officials to Turkmenistan, opening the possibility the two Caspian Sea countries will agree to participate in a U.S.-backed natural-gas pipeline bypassing Russia. Elshad Nassirov, vice president of Socar, the Azeri state oil company, and Mukhtar Babayev, the company's head of marketing and sales, attended an energy conference in the Turkmen capital Ashgabat last week. The first visit is a "thaw" in relations between the two countries, Socar spokesman Nizametdin Guliyev said by telephone from Baku, Azerbaijan, on Friday. The two countries are in dispute over how to divide their common border in the Caspian Sea, thwarting progress on a U.S.-backed project to connect Turkmenistan to Azerbaijan via a sub-sea pipeline. The United States revived a plan to build a trans-Caspian pipeline after the death in December of Turkmen President Saparmurat Niyazov, who led the country into isolation. The new link would transport Turkmen gas to Europe through a new "southern corridor" of pipelines crossing Turkey, breaking Russian control over Central Asian gas exports. "We're optimistic the political and technical challenges will be overcome for the trans-Caspian," Reinhard Mitschek, the managing director of the Nabucco pipeline from Austria to Turkey, said in an interview in Ashgabat on Thursday. The Socar delegation will be followed early next week by a visit to Ashgabat by Azeri Deputy Foreign Minister Khalaf Khalafov, who is responsible for negotiations with Turkmenistan. Gurbanguly Berdymukhammedov, Niyazov's successor, will host Ashgabat's first summit of post-Soviet republics in a decade on Nov. 22, when prime ministers from the Commonwealth of Independent States meet. Berdymukhammedov is opening up the country to foreign investment and exploring new export routes. Since taking office in February, he has visited all of Turkmenistan's Caspian Sea neighbors except Azerbaijan. Socar made its debut in Ashgabat at a conference attended by 500 foreign government officials and executives. The official U.S. delegation included Energy Secretary Samuel Bodman, the State Department's top diplomat for Caspian energy, Steven Mann, and U.S. Ambassador to Azerbaijan Anne Derse. "We've concluded that all you need is two countries to agree," Bodman told reporters Thursday, rejecting Russian and Iranian objections that all five Caspian nations must first agree on the division of the sea's energy riches. Though it's the second-largest gas producer in the former Soviet Union, Turkmenistan has already contracted out more gas than it produces, creating the need for investment into new fields. "Pipelines naturally follow investment, they cannot come first," Bodman said. "It's clear that Turkmenistan will need new export options." The European Union wants to help Turkmenistan develop wind and solar power capacity to free up additional gas for export, Energy Commissioner Andris Piebalgs said in an interview Thursday after meeting with Berdymukhammedov.