Baku, Azerbaijan, April 6
By Seymur Aliyev – Trend:
One of the main international issues today is to lift Western sanctions against Iran, and if so, the question is what kind of preferences this process will bring to Azerbaijan.
Political relations between Baku and Tehran have always been at a high level. However, the economic cooperation, although not obviously, was limited due to the sanctions against Iran.
Today, Iran, is limited regarding the export of its main product - oil, and the country desperately needs investments. The funds may be invested in virtually all areas beginning from agriculture to power engineering, to oil and gas production.
At the same time, funds can be invested on more favorable terms before Tehran can reach the pre-crisis sales volumes, as well as in terms of low oil prices in the world.
Meanwhile, Azerbaijan today is actively investing in almost all countries of the region. However, Iran has so far stayed aside. The current conditions open significant opportunities for Baku to invest in the Islamic Republic.
The resumption of cooperation of West and Iran paves the way for Iranian gas to Europe.
Today, the most promising direction of export may become namely the Southern Gas Corridor, initiated by Azerbaijan and its partners on development of the Shah Deniz field.
By the way, the National Iranian Oil Company (NICO) is also among these partners. Previously, participation of the Iranian company in pipeline projects to deliver gas to Europe was not even considered due to the sanctions. Now, however, the possibility of acquiring a share in TANAP by the Iranians is not excluded. In the future, the gas produced in Iran can be transported via this route as well.
Among the major transport projects, realized jointly by Azerbaijan, Iran and Russia, there is the North-South railway corridor, which is being delayed, including due to lack of investments.
A significant increase in the flow of goods from Europe to Iran and back is expected if the sanctions are lifted.
In this regard, the speedy implementation of the North-South project will bring significant preferences for Azerbaijan as a transit country.
However, the lifting of sanctions from Iran can also have a negative impact on oil prices, which in turn may negatively affect Azerbaijan’s revenues, some 60 percent in the budget of which accounts for the incomes from the oil sales.
The growth of oil export by Iran to western countries as well, will lead to increase in the volume of supply with demand remaining at the same level and this will definitely affect the oil prices. The reduction of political tension around Iran improves the security of the entire region and for the investors as well.
Naturally, this process will not fully start soon, since investors will be cautious. Nevertheless, good political relations between Azerbaijan and Iran, lifting sanctions on Iran open great opportunities for Baku to invest in this country.
Edited by SI
Seymur Aliyev is the head of Trend Agency's Russian News Service
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