Azerbaijan: The Energy Magnet at the Heart of Eurasia


INSIGHT



  • Azerbaijan’s trade networks allow for economies of scale. They also enable efficient use of Azerbaijan’s energy resources. The geographical location allows the country to direct its trade relations in any desired direction. Azerbaijan is located near the center of the Eurasian landmass.
  • Azerbaijan is known for its energy resources. The oil fields are, as they are currently in many other countries beginning to dwindle. They do make up for a significant percentage of the overall energy demands from within. Azerbaijan has started the arduous task of oil exploration more than a hundered years ago, and many of the previously bountiful oil fields are depleted. Nevertheless, the remaining oil fields will serve the continous industrial growth within Azerbaijan. They allow for connections to the wider world, and to Eurasia in particular.
  • As more and more energy resources are attributed to domestic needs, less and less hydrocarbon resources may become available for global energy trade. Nevertheless, there will be cost advantages, as part of that energy will be used to grow and maintain networks and to further expand infrastructural networks in all directions. This will lead to significant cost advantages in logistic terms, and improve supply chain management.
  • The energy used to deliver goods and services will eventually decrease. Similarly, the cost per unit delivered will  decrease.
  • The rise of China is a pivotal moment in Eurasian affairs. The track that Eurasia follows is one that China has initiatiated. Other countries follow this path to varying degrees, depending on their own circumstances. Nevertheless, a great many energy trade movements are passing through Central Asia and the Caucausus and the Greater Middle East. This implies east and west be brought together in a trade network. Azerbaidjan may well benefit. 


1. AZERBAIJAN IS RICH IN ENERGY RESOURCES. ON TOP OF THAT, AZERBAIJAN CAN FULLY LEVERAGE ITS LOGISTIC ADVANTAGES IN THE HEART OF EURASIA.


Azerbaichan has the advantage that it can go in any direction to advance trade relations. This can be accomplished on the basis of the relatively abundant energy reserves Azerbaidchan possesess domestically and the ease at which it can trade with relations far and wide. 


2. PARTAKING IN CHINA’S NEW SILK ROAD INITIATIVE


The advantage of Azerbaijan’s geostrategic location is that it is able to connect the different places and regions near it. Through the Caspian Sea, Azerbaijan is able to attract the attention of other strategic players, including China and Russia. Such players are very willing to expand westward, also to benefit from infrastructural development and economic progress. 

Adding to all of this, new initiatives have sprouted out from the heart of Eurasia. Nodes of transport not only connect Azerbaijan in the east-western direction, through the Caspian Sea, but also in a north-southerly direction. With the integration of the Eurasian economic sphere, more connections are build that help connect Russia with Azerbaijan, Iran. This may support the exchange of goods with countries bordering the Persian Gulf and the Indian Ocean.  

We have to keep in mind that the region is energy-rich. Countries such as Kazachstan, Azerbaijan, Turkmenistan, the Russian Federation, Iran and the Gulf countries have access to their own energy sources. This is a contributing factor, fueling the trade of energy commodities within Eurasia. 

We must remember that trading in energy commodities depends on the volume exchanged. The larger the volume, the lower the price per unit. Due to Azerbaijan’s geographical location, energy companies are at the center of the action and can exchange large quantities of these energy commodities.


3. CONCLUSION


  • Azerbaijchans strategic location within Eurasia contributes to its long-term success, though the road travelled is difficult to ascertain. It depends on the vagaries of energy trade, and what trade links will prove most effective for trade between East Asia and Europe.

  • Azerbaidjan can connect to major players on the Eurasian landmass, which is an advantage in logistic terms. The real strength of this endavor may be that Azerbaidjan can trade not just with countries on the other side of the world, but also with countries nearby. The eventual advantages may accrue at a more local level as logistics have been a major consideration that has restricted trade yonder.

  • This has allowed only limited trade volumes to pass through the heartland of Eurasia. Though the new paradigm allows Azerbaijan the benefit of numerous energy linkages from across the Eurasian continent

  • Oil and gas reserves still play a major role in Azerbaijan’s economy. The further expansion of Eurasian energy networks along the New Silk Road may ease congestion. The growth of nodes along the New Silk Road will allow for easier traffic and help avoid congestion at transhipment points along the way. 


Many thanks for the shared interest in the energy world!



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