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Moody's expects Iran nuke deal to offer new trade opportunities for Azerbaijan

30 September 2015 [18:00] - TODAY.AZ

By Aynur Karimova - AzerNews 

Moody's expects the nuclear deal reached between the P5+1 and Iran in July 2015, as well as the lifting of economic and financial sanctions on Tehran, to offer Azerbaijan the opportunity to boost foreign trade and investment with its southern neighbor.

Moody's Investors Service, an influential provider of credit ratings, research, and risk analysis, said in its recent report that these new trade and investment opportunities could partially offset the credit negative effects from the nuclear deal, which if implemented would enable Iran to return to oil export markets, potentially leading to lower oil prices. Meanwhile, it would also increase pressures on Azerbaijan's government and export revenues.

"Thanks to its close geographic location and strong trade ties in the pre-sanctions period, Azerbaijan could benefit from a lifting of sanctions on Iran by increasing foreign trade and investment with its neighbor," Moody's said on September 28.

With a population of around 78 million people and generating the 18th largest nominal GDP in the world in 2014, Iran is offering significant trade and investment opportunities to the Azerbaijani economy.

Azerbaijan was among the first countries to seek new foreign trade and investment opportunities with Iran. In August 2015, a delegation from Azerbaijan's government visited Iran to conduct preliminary negotiations on a number of strategic projects, including oil swaps, bilateral cooperation in oil and gas engineering, and the joint production of oil and gas equipment.

The removal of the international sanctions that had impeded full-scale economic ties between the two neighboring nations in the past would actually enable Azerbaijan to benefit from increased foreign trade and investment with its neighbor, develop commercial relations between the two countries in the border regions, and encourage joint ventures and investments.

Also, Azerbaijani companies could expand operations in Iran if the Iranian economy is more liberalized.

Iran has also expressed an interest in cooperating with Azerbaijan on its Southern Gas Corridor project, which aims to bring natural gas from the Caspian Sea to the European Union.

Iran, which holds 33.8 trillion cubic meters of proven natural gas reserves -- or 18.2 percent of the world’s total proven reserves -- has pursued multiple projects for years to pipe natural gas to Europe.

The anticipated lifting of sanctions and the resumption of relations with the West will increase the chances Iranian gas reaching those markets.

Iran’s geographical location makes it possible for the country to transit gas to markets in Europe only via routes going through Turkey or Azerbaijan.

Azerbaijan is already on the path to exporting not only its own natural gas to Europe, but Iran’s as well. Although international sanctions are still in place, Tehran seems willing to consider the idea.

In August, Iran's Communications and Information Technology Minister, Mahmoud Vaezi, toldTrend that Tehran would cooperate with Azerbaijan on gas transportation to Europe through the Southern Gas Corridor.

“Transportation through Azerbaijan is one of the routes of bringing Iranian gas to Europe,” Vaezi noted. “I believe we will be able to cooperate with Azerbaijan in the use of the Southern Gas Corridor. We have held talks in this regard with Azerbaijan's energy minister and the relevant structures.”

The Southern Gas Corridor is a priority energy project for the EU. It envisages the transit of gas from the Caspian Sea region to European countries through Georgia and Turkey.

This ambitious project aims to diversify the routes and sources of energy supply that will enhance Europe's energy security. The Southern Gas Corridor project will ensure Caspian gas supplies to European markets for the first time in history.

At its initial stage, the primary source of gas for the pipeline will be from Stage 2 of the Shah Deniz field. Other sources could also connect to the pipeline at a later stage.

As part of the second stage of development of the field, gas will be exported to Turkey and European markets via an expanded South Caucasus Pipeline and the construction of both the Trans-Anatolian and Trans-Adriatic pipelines.

It is believed that TANAP, which will later be linked to TAP, could become a reliable route for supplying Iranian gas to Europe. By joining TANAP, Iran is sure to strengthen Azerbaijan’s regional position as a transit country.

This will not only bring economic benefits, but also political dividends that will be much more significant. In this regard, Azerbaijan should mobilize its diplomatic efforts to persuade Iranian officials to connect the existing infrastructure to TANAP and TAP.

URL: http://www.today.az/news/business/144063.html

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