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Azerbaijan: Fuel From Turkmenistan Eases Energy Shortage

Azerbaijan is reportedly getting fuel from Turkmenistan to ease its energy shortage. The break could be a sign of closer cooperation between the two Caspian competitors and progress on stalled pipelines. RFE/RL correspondent Michael Lelyveld filed this report.

Boston, 17 February 2000 (RFE/RL) -- Turkmenistan may be coming to the rescue of rival Azerbaijan in its energy crisis. The question that analysts have yet to answer is why.

On Monday, Azerbaijani Prime Minister Artur Rasizade said Turkmenistan would provide the country with 60,000 metric tons of crude oil in February or March, the Reuters news agency reported. Azerbaijan will ship an equal amount of oil from a Black Sea port between April and June to compensate Turkmenistan, Rasizade said.

The seasonal swap will help ease Azerbaijan's energy shortage, which forced it to impose electricity rationing throughout the country last month. In an embarrassing turn of events, the petroleum-rich Caspian nation suddenly turned from an oil exporter into an importer after its powerplants ran low on fuel oil and gas.

Last week, the government detained two officials of the state oil company SOCAR on suspicion of illegal oil sales. Last month, President Heidar Aliyev fired two other energy officials for alleged corruption and oil thefts. But a larger problem is that Azerbaijan has been exporting oil at high market prices for cash. It now faces the same high prices when it tries to buy oil back.

In desperation, Azerbaijan has turned to other countries including Turkmenistan for supplies of fuel oil, only to be told they also had short supplies because of the incentives for exporting crude. But this week, Ashgabat has apparently agreed to ease the crisis by essentially lending oil to Baku.

The move has drawn interest because of the issues that separate the two countries on opposite Caspian shores. So far, analysts have been unable to say why Turkmenistan would come to the aid of Azerbaijan now.

Since 1997, the two neighbors have been feuding over ownership of an oilfield in the center of the Caspian, known alternately as Kyapaz or Serdar. Although both have formally agreed that the dispute should not affect other issues, Azerbaijan retaliated last year by claiming half the capacity of a planned trans-Caspian gas line from Turkmenistan. The line to Turkey must cross Azerbaijani territory, giving Baku a strong hand.

The claim has stalled progress, in part because the cost of building a line across the Caspian is hard to justify for only half the gas sales that Turkmenistan planned. The surprising decision to help Azerbaijan in its hour of need could signal a break in the impasse, but it is too soon to tell.

U.S. President Bill Clinton has written to President Saparmurat Niyazov of Turkmenistan, asking him to extend the mandate of the American-led pipeline consortium past its expiration date this week. Meanwhile, Turkmenistan's government made no mention of the oil deal with Baku in its weekly press update Monday, adding to the mystery.

One possible explanation is that Turkmenistan may charge a premium fee for allowing the swap, which Azerbaijan has yet to disclose. Another possibility is that Azerbaijan has been asked to provide a discount for Turkmen oil shipments that transit the country by rail to Georgia and the Black Sea.

But there is at least one other sign of a potential break in the standoff over the trans-Caspian line. BP Amoco said Tuesday that it plans to start exporting gas from Azerbaijan to Turkey in 2002 from the Caspian field known as Shah Deniz.

"Transportation to the Turkish border will be through a combination of new and existing infrastructure," BP Amoco said in a press release. The language suggests that the company has agreed with Azerbaijan to refurbish its existing Soviet-era lines through Georgia for exports to Turkey.

If that is the case, it could be a signal that Azerbaijan will soon ease its claims to the capacity of the trans-Caspian line. Previously, Azerbaijan insisted it should have access to the new pipeline because of the discovery of huge amounts of gas at Shah Deniz. But it may now see cooperation with Turkmenistan as a wiser course.

Azerbaijan could still compete for future gas sales to Turkey without blocking the trans-Caspian project. If that is its decision, it may be weeks or months before its intentions become clear.

But the experience of running out of fuel could be enough of a shock to break the deadlock in the Caspian, if it convinces Azerbaijan that it may need help from neighboring countries like Turkmenistan in an emergency.