The crisis in Ukraine has again demonstrated how risky it is for Europe to depend on Russian energy supplies, creating opportunities for Azerbaijan to step in. Azerbaijan is in an optimal position to take advantage of the Europeans' desire to diversify. It already uses the Southern Corridor route — designed to avoid Russia — to send oil and natural gas via the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines, respectively. Through these projects, Baku has proved a reliable partner to Europe for the past decade. Azerbaijan has also been developing the Shah Deniz II natural gas field, which is set to come online in 2018 and which will add another 16 billion cubic meters of natural gas to Azerbaijani production. Various consortia competed for access to the Shah Deniz II field, and the Trans-Adriatic pipeline — which will take Azerbaijani natural gas from Turkey to Italy via Greece and Albania — won the more ambitious and costly Nabucco West project.
Europe has also been pushing to expand Azerbaijan's participation via the Trans-Caspian pipeline, which would link Turkmenistan to Azerbaijan via the Caspian Sea. Because all of Azerbaijan's upcoming natural gas supplies are already accounted for in the Trans-Adriatic pipeline, the European Union has looked to Turkmenistan, which produces nearly 80 bcm of natural gas per year and has up to 30 bcm of natural gas available for export. However, the Trans-Caspian pipeline has long been hindered by legal issues over maritime demarcation in the Caspian Sea and by opposition from both Russia and Iran.
Despite the opportunities, Azerbaijan will come under financial and political strain during the diplomatic maneuvering required to decide which energy projects to pursue. During the process, it will have to be careful not to inflame Russia by, for example, challenging Moscow over Nagorno-Karabakh. In the long run, Azerbaijan's comparative stability and its relatively balanced foreign policy position between Russia and the West will benefit the country and its energy prospects.
