Representatives meeting for the third time in just two months achieved a breakthrough on a 16-year debt dispute on March 5, providing a glimmer of hope to proponents of a trans-Caspian pipeline that would bring Turkmen natural gas to Europe without crossing Russian or Iranian territory.
Under the deal, Turkmenistan will reportedly receive by the end of the year nearly $45 million of the $56 million it claims it has been owed for gas supplies since 1991-92. Baku had claimed the debt was just $18 million.
Putting aside the issue should allow the two parties to move on to a topic that weighs heavy on the minds of Europe and its energy consumers -- a trans-Caspian pipeline from Turkmenistan to Azerbaijan that continues to Europe.
A major hurdle remains in the form of an ownership dispute over oil and natural-gas fields located in the Caspian Sea, approximately halfway between Turkmenistan and Azerbaijan.
It is that issue more than any other that led to the severe chill in relations between the two countries in the 1990s, and that has kept them cool until late last year.
Relations between Baku and Ashgabat have warmed since Turkmen President Gurbanguly Berdymukhammedov took over from the outwardly resolute Saparmurat Niyazov, who died in December 2006.
Berdymukhammedov relaunched ties with Azerbaijan and relations have progressed well enough that Berdymukhammedov is due to make a state visit to Baku before the end of June.
The European Union has for months been lobbying Ashgabat and Baku to agree to work together on a trans-Caspian pipeline that would bring natural gas to Europe via pipelines that bypass Russia.
The United States is also supporting such trans-Caspian ambitions, and U.S. State Department special representative Steven Mann was in Turkmenistan earlier this week to address the issue. It was Mann's second visit so far this year to Turkmenistan. The EU and United States are hoping that Turkmen natural gas might help fill the proposed Nabucco gas pipeline to bring Caspian gas as far as Austria via Turkey, Bulgaria, Romania, and Hungary.
Turkmen officials have worked hard to leverage their country's massive hydrocarbon resources into increased international standing despite sharp criticism over rights and media issues and strictures on political participation.
RFE/RL's Turkmen and Azerbaijani services contributed to this report