2024-08-05 07:52:43
Source: Trend International Information Agency
Azerbaijan is a key hub on the Trans-Caspian International Transport Route (TITR, or Middle Corridor).
As reported by Day.Az, former British Ambassador to Azerbaijan, Kazakhstan and Kyrgyzstan James Sharp said this in an exclusive interview with Trend.
“The regional economic development that will modernise the Middle Corridor is not simply about facilitating the export of raw materials, but more importantly, how to use its position in the Middle Corridor to create a diversified, value-added economy. This is where hubs have a particular advantage. One of the lessons of the ancient Silk Road is that hubs along the route developed into important trading centres. In my view, the most obvious hub on the Middle Corridor is Alyat, the port of Baku. Alyat is a key hub on the Middle Corridor. All the routes pass through it, and it is the only place in such a unique position. Moreover, it is located on the North-South Corridor route between Russia and Iran. Of course, at the moment this raises questions about sanctions, but in the long term, progress could mean that businesses based in Alyat – and by extension Azerbaijan as a whole – will have fantastic access to a wide range of markets. Azerbaijan needs to re-establish its role as a crossroads once again,” he said.
As the former ambassador noted, Kazakhstan is another country through which most routes pass, and one could imagine developing hubs near Almaty, as well as in Shymkent, where the route from Uzbekistan – and perhaps further south – joins the Middle Corridor.
The Growing Importance of the Middle Corridor
Sharp noted that since the start of the war in Ukraine, there has been a significant change in attitudes in Europe towards the transportation of goods through Russia.
“This has sparked renewed interest in the Middle Corridor, or, more precisely, to the Trans-Caspian International Transport Route. Interestingly, it is not only the war in Ukraine that has increased interest in the Middle Corridor. Events in the Red Sea, where the Houthis have been launching missiles and drones against commercial shipping, have also made governments and companies aware of the need to diversify transport routes. I think there are several reasons why investing in the Middle Corridor makes sense as an additional way to connect Asia and Europe. Of course, the Middle Corridor will not replace other routes, but it will provide an alternative route. There is still a significant amount of work to be done. In addition to the obvious bottleneck of switching between rail and sea transport when crossing the Caspian Sea, there is a significant amount of work to be done due to the fact that the route crosses so many countries,” he said.
Necessary measures for the development of the route
The diplomat believes that both investment and cooperation are necessary to develop the route.
“There are problems with both what might be called ‘hard connection“, and with “soft connection”. “Hard connection” includes issues such as the construction or modernization of railway lines, the procurement of rolling stock and port infrastructure. The “soft link” is more related to customs procedures. In general terms, one can say that the “hard link” requires investment, and the “soft link” requires cooperation. In terms of investment, this is definitely happening. For example, earlier this year the EU held a Global Gateway meeting where it announced about 10 billion euros in funding. And in terms of cooperation, we are already seeing regional governments and organizations starting to address the issues raised in the World Bank and EBRD reports. So, although there is still a long way to go, I am optimistic that we will see great progress,” he said.
As James Sharp noted, it is important to remember that the benefits of the Middle Corridor are not just about transporting goods between China and Europe.
“The countries of the region will benefit even more from improved connections between the region and Europe/China, as well as between the countries of the region themselves. Improved rail and sea links will increase trade and exports from these countries. So the focus should be on how the countries of the region can use the Middle Corridor to support their economic development?” he said.
Transportation of Kazakh oil via Azerbaijan
Speaking about oil supplies via Azerbaijan, James Sharp noted that the truth is that oil supplies from Kazakhstan to Azerbaijan via the Caspian are, like the Middle Corridor, a response to concerns about complete dependence on Russia.
“The CPC pipeline from Kazakhstan to Novorossiysk is certainly the most cost-effective and efficient way to export oil to the West, but events over the last few years have raised clear concerns about the vulnerability it creates. So I understand that for strategic reasons Kazakhstan and the oil companies operating there want to develop alternative export routes. Therefore, as with the Middle Corridor, I doubt that the Trans-Caspian route will replace the CPC pipeline, but instead provide a diversity of export routes.. It also helps Azerbaijan make greater use of the BTC pipeline at a time when Azerbaijani oil exports are expected to decline.“, – he said.
Noting that improvements are needed “hard” message on both sides of the Caspian, the diplomat expressed confidence that oil deliveries along this route will continue.
Green Energy Trends in Azerbaijan and Kazakhstan
“I am very pleased to see that both countries are increasing their renewable energy capacity. I think they have a special responsibility as oil and gas producers to support green energy. It is clear from the research funded by the British Embassy that Azerbaijan has huge potential for offshore wind power. And Kazakhstan has a huge territory with huge opportunities for onshore wind and solar power. But there are clearly challenges related to the distance from major markets and how this will impact the economics of renewable energy“, – he said.
According to the diplomat, It is encouraging to see countries discussing with Georgia and EU countries the issue of “green” power lines to Europe.
“Another economic problem in the case of Kazakhstan is the availability of cheap coal, and here, despite the signing of contracts on renewable energy sources, Disappointing signing of contracts for new coal power plantsparticularly after COP26, hosted by the UK in Glasgow, where an agreement was reached to phase out coal power. As for UK companies, a key example is bp’s construction of a solar power plant in the Jabrayil region of Azerbaijan. This is part of bp’s own commitment to achieve net zero emissions by 2050, which I hope both Azerbaijan and Kazakhstan will also take on at COP29 this year.“, – concluded James Sharp.
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