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Azerbaijan And Energy Security

The United States and Azerbaijan have agreed to work together to expand oil and gas production in Azerbaijan and the Caspian region. U.S. State Department spokesman Sean McCormack commented on the Memorandum of Understanding on energy cooperation signed by Secretary of State Condoleezza Rica and Azerbaijan’s Foreign Minister:

“It establishes a high-level energy dialogue, talking about ways to get Caspian energy resources to Europe via a number of different pipelines. There are several of them that are under consideration at the moment.”

The goal is to promote a network of pipelines to transport natural gas from the Caspian basin to markets in southern and central Europe. This would improve Azerbaijan's access to European and global markets, building on the success of the Baku-Tbilisi-Ceyhan oil pipeline, which now delivers about seven-hundred-thousand barrels a day to the Turkish Mediterranean coast. Natural gas projects under consideration include efforts to link an existing pipeline that runs from Baku through Tbilisi, Georgia, to the Turkish city of Erzurum, to a new pipeline that would continue through Turkey and Greece, and later to Italy. Another project, named Nabucco, would allow natural gas to move through the Turkish network to Austria via Bulgaria, Romania and Hungary.

At present, much of the natural gas infrastructure in the Caspian region and Central Asia is owned or controlled by Russia and operated by Russia's state-controlled natural gas monopoly GazProm. U.S. Deputy Assistant Secretary of State for Southern Europe and the Caucasus Matthew Bryza says the U.S. policy encourages diversification of sources of supply and routes to market, and "competition, not confrontation, with Russia:

“Russia already provides sixty-five percent of the gas to Turkey, already provides forty percent of the imported gas into the rest of Europe. So Gazprom has a huge market share already. And what we’re trying to do is increase competition, so that the European gas market isn’t as dysfunctional as it is right now.”

Mr. Bryza says the U.S. role in the new pipeline project is limited. “We’re not going to subsidize it,” he said, “we’re not going to pressure anybody, but we’re going to do whatever we can to help eliminate disinformation and smooth the investment process.” The agreement, says Mr. Bryza, is an opportunity “to help Europe diversify its gas supplies” and “to help Azerbaijan and the private companies producing there gain access to the European market on more market-based terms.”