Azerbaijan diverts EU oil, gas to Russia and Iran after Georgian crisis

In early August when clashes erupted between Georgia and Russia, Azerbaijan has responded by reducing its reliance on trans-Caucasus oil pipelines, increasing shipments to Russia and starting to sell crude to Iran.

Baku, which has cautiously nurtured ties with the West to counter strong Russian influence, initially portrayed the changes as temporary measures when the brief war between Georgia and Russia broke out in early August and the oil and gas routes across the Caucasus to the Black Sea and Turkey were shut down.

But Azerbaijan has since decided to keep shipping some oil through Russia and Iran even though the fighting stopped more than a month ago.

“We don’t want to insult anyone ... but it’s not good to have all your eggs in one basket, especially when the basket is very fragile,” said Elhar Nasirov, the vice-president of Socar, Azerbaijan’s state oil company.

Nasirov said Azerbaijan would continue exporting oil to Russia and Iran, even though gas and oil shipments through Georgia had resumed, because of the increased risks in the Caucasus.

“We knew there was a risk of political turmoil in Georgia. But we did not expect war,” he was quoted as saying.

Elmar Mammedyarov, the foreign minister, told the Financial Times: “We are trying to be friends with everybody, at the same time as acting in accordance with our national interests.”

The small amount of oil that Azerbaijan is diverting to Russia is symbolically important to the Kremlin, which is determined to reassert control over Caspian energy.

Azerbaijan forged close relations with the US in the 1990s when Russia was weak and allowed in western oil companies.

Nearly 1 million barrels a day of oil – about 1 per cent of world output – now crosses the Caucasus, much of it through the US-backed Baku-Tbilisi-Ceyhan pipeline. Gas is shipped to Turkey via the south Caucasus pipeline.

But US efforts to persuade central Asian countries to use these pipelines have met with mixed success and may now be derailed.

Kazakhstan, which temporarily evacuated its oil port at Batumi on the Georgian Black Sea during the conflict, held talks this week with Moscow on new export pipelines to Russia.

Azerbaijan has not joined the west in condemning Russian action against Georgia despite the disruption caused to the oil business.

Ilham Aliev, Azerbaijan’s president, ended talks with Dmitri Medvedev in Moscow last week, saying Azerbaijan sought “predictability” in the Caucasus. Mr Mammedyarov said Azerbaijan’s main task was to preserve its independence and sovereignty.

Nasirov said Azerbaijan was being courted for gas by Russia, the EU and Iran. “Russia knows it will have to pay a very high price if it wants all our gas,” he said.

Meanwhile Azerbaijan remained committed to supplying Georgia with gas through a new pipeline completed last year.