Iran could in the future join the Trans Anatolian Natural Gas Pipeline (Tanap) project. Experts believe that Azerbaijan can play a significant role in the export of Iranian energy resources to European markets during the post-sanctions period
Tehran and Baku have recently intensified bilateral relations with an expectation to further deepen the all-out cooperation between the two close neighbours.
Iranian President Hassan Rouhani’s government has named the development of ties with the neighbouring countries as one of his priority issues. Moving in line with this policy, Tehran has significantly expanded relations with its historic neighbour Baku.
The nuclear deal and the lifting of international sanctions promise new opportunities for deepening economic cooperation between the two countries.
As part of the measures to broaden the longstanding ties in various fields, an Azerbaijani delegation that included several representatives from oil, telecommunication, banking, and energy companies, led by Azerbaijan’s Economic Development Minister Shahin Mustafayev, visited Tehran.
During the meetings, top officials from Iran and Azerbaijan explored avenues for reinvigorating mutual cooperation and conferred on the implementation of previously accorded joint projects in the energy sector.
President Rouhani underlined the need for a further expansion of bilateral ties in different areas in a meeting with Mustafayev in Tehran.
'Following the agreement with the six world powers in Geneva on July 14, we continually receive offers from various countries who desire to make investments in Iran; however, neighbors including Azerbaijan are our top priorities to cooperate with,' Rouhani says.
The two nations who have lived side by side over centuries have a long history of close relations.
A large number of Iranians live in Azerbaijan and about 30 million ethnic Azerbaijanis live in Iran. These are the grounds for which to pursue and strengthen bilateral relations between the two countries.
Observers of cross-border politics believe that the high-level visits over the past few months have taken cooperation to a new level.
Referring to the role that the North-South corridor can play in consolidating the bilateral ties between the two countries, Rouhani stressed that Azerbaijan can act as Iran’s gateway to the Caucasus region while Tehran can ease Baku’s access to the Gulf and Oman Sea.
Mustafayev, for his part, expressed his country’s readiness to develop ties with Iran in various sectors like energy, trade, transportation, industry, agriculture, oil, and banking.
Both Azerbaijan and Iran are located in very favourable strategic positions that create great opportunities for benefitting from the bilateral ties.
Iran, which is situated in the Middle East region, has land borders with the South Asian, Central Asian, and Middle East countries, with access to the Gulf and Indian Ocean.
Azerbaijan, in the cradle of the Caspian Sea is settled in between the West and East. The country plays a gateway role between not only the east and west, but also the north and south.
Iran is ready to produce oil equipment in Azerbaijan
The Land of Fire is positioned on one of the most important trade and transit routes to Europe.
The transportation sector is one of the main areas of cooperation between Azerbaijan and Iran.
'The establishment of the North-South transport corridor is strategically important for us. We also intend to discuss cargo transportation via the Anzali-Baku route,' Mustafayev says.
Azerbaijan is seeking to transport oil to different directions, alongside having mutually beneficial cooperation with its southern neighbour.
'For us, it is strategically important not to depend on one direction and to establish mutually beneficial cooperation,' Mustafayev says, noting his country is willing to cooperate in this area with Iran as well.
Azerbaijan further offered Iran to use its infrastructure to export oil and gas to world markets.
'Iran can use Azerbaijan’s infrastructure, especially the Baku-Tbilisi-Ceyhan pipeline to export its oil,' Mustafayev says at a meeting with Iran’s Oil Minister Bijan Namdar Zanganeh.
He adds that Iran could in the future join the Trans Anatolian Natural Gas Pipeline (Tanap) project.
Experts believe that Azerbaijan can play a significant role in the export of Iranian energy resources to European markets during the post-sanctions period.
Iran is eager to sell its gas in European markets once sanctions are removed. Since the country does not possess a direct supply route to Europe, the Azerbaijan-initiated Tanap project - part of Sothern Gas Corridor aimed at providing Europe with natural gas - could be a simple and profitable option for its European exports.
Earlier, Iranian Deputy Foreign Minister Abbas Araqchi says due to its unique transit potential located between Iran and Europe, Baku would have an important place in Iran’s future cooperation with the EU.
Azerbaijan also invited Iran to use its gas storage to keep gas and use it during a period when consumption grows.
Iran was also offered to cooperate in oil and gas engineering and the joint production of oil and gas equipment.
Zanganeh, in turn, says Iran is ready to carry out swap deliveries of Azerbaijan’s oil to the Gulf region.
He says oil could be transported from Iran’s Neka port on the Caspian Sea via pipeline (with a capacity of pumping 500,000 barrels per day) to the Tehran Oil Refinery, noting in return, Azerbaijan could deliver oil to the southern borders of Iran.
Zanganeh says all of the negotiations can be carried out now, and after lifting sanctions on Iran, it will be possible to sign an agreement and start working.
He also adds that Iran could also cooperate with Azerbaijan in the oil and gas sector in the Caspian Sea.
'We have put forward concrete proposals for cooperation in the Caspian Sea and we look forward to a response from the Azerbaijani side. If an agreement is reached, it will be possible to sign a corresponding document at a meeting of the heads of state,' he says, adding that it would be easy to do from a technical point of view.
He also adds that his country would welcome the Azerbaijani government’s support for creating the necessary conditions for Iranian oil and gas companies to work in the country.
Zanganeh further says Iran has extensive experience in the production of petroleum equipment.
'Iran is producing Siemens turbines. We are ready to cooperate with Azerbaijan in the joint manufacture of oil equipment,' he says, adding that Iran is ready to produce oil equipment in Azerbaijan.
In the backdrop of the recent positive developments, Baku and Tehran are taking measures to further broaden economic relations.
The lifting of sanctions will also affect the development of commercial relations between Azerbaijan and Iran, particularly in the border regions.
Also, the operations of Azerbaijani companies could expand in Iran should the Iranian economy continue to liberalise.
The Azerbaijani delegation’s visit to Iran took place within the framework of the preparation for the 10th meeting of the joint intergovernmental commission to be held in Iran.
Mustafayev says cooperation in the financial and banking sector, which may affect other spheres in the future, is extremely important. He also stressed that Azerbaijan is ready to cooperate with Iran in other areas, such as in the areas of insurance, pharmaceuticals and tourism.
Mahmoud Vaezi, Iran’s information and communications technology minister, at a meeting with the members of the Azerbaijan-Iran Intergovernmental Commission on Economic, Trade and Humanitarian Cooperation, stated that relations between Azerbaijan and Iran will continue to develop at a rapid pace.
He highlighted the importance of developing relations between the two countries in the banking sector and expressed hope for a speedy development of relations in the customs, energy, petrochemical, and oil and gas sectors.
Vaezi expressed his country’s interest in developing cooperation with Azerbaijan in the electricity sector, in insurance, transportation of freight and passengers, the transport sector, and especially linking the railways.
He says agreements have been reached for the construction of the second bridge in Astara region.
'We have held talks on agriculture and decided to sign a document on animal husbandry. If the document is signed, the problems of export and import in this area will be solved,' he adds.
Vaezi also says Iran has an interest in closely cooperating with Azerbaijan in advanced technologies. 'There are no barriers for our cooperation.'
Azerbaijan and Iran agreed to establish a working group on investment at the level of deputy ministers.
Currently, trade turnover between Azerbaijan and Iran is $500 million.
Iranian officials have repeatedly invited Azerbaijani businessmen to invest in various fields of the Islamic country’s economy. Iranian investors are also willing to invest in Azerbaijan’s projects.