On December 17, 2020, the Republic of Turkey and Azerbaijan signed a memorandum of understanding to construct a new natural gas pipeline that will connect Turkey’s province of Ighdir and Azerbaijan's province of Nakhchivan. According to Turkey's Minister of Energy, the agreement on the nearly 85 kilometer pipeline signifies growing economic ties between the two states in the aftermath of the recent Nagorno-Karabakh conflict.
Azerbaijan's Nakhchivan province is isolated from the rest of the country. In fact, Nakhchivan is not connected by any overland routes with 'mainland' Azerbaijan. Instead, it is surrounded on all sides by foreign states, namely Armenia, Iran, and Turkey.
Following its devastating war with Armenia in the 1990s, Azerbaijan was unable to support the province's 500,000 residents with a steady natural gas supply. As such, officials in Baku were forced to strike a deal with Iran to deliver gas to its isolated province. Under the terms of that agreement, the State Oil Company of Azerbaijan (SOCAR) delivers gas to Iran, which in turn resells it to the province of Nakhchivan for a profit. Although Azerbaijan enjoys a relatively steady relationship with Iran, its recent conflict with Armenia strained Tehran's patience with Baku, as the Ayatollah proved to be more concerned with regional stability than the former Soviet-state's territorial ambitions.
Although little is known about the exact details of the agreement, The Intelligence Ledger assess that the completion of the pipeline may significantly alter the relationship between Azerbaijan and Iran, while simultaneously boosting Turkey's wealth and influence.
In the initial project announcement, Fatih Dönmez, Turkey's Minister of Energy, claimed that the pipeline would be able to fulfill nearly all of Nakhchivan's energy needs. If this is to be taken literally, the pipeline will be able to deliver nearly half a billion cubic meters of natural gas to the isolated region from Turkey. In all likelihood, this would result in the discontinuation of gas imports from Iran and add one more area of strain to the relationship be Tehran and Baku.
While Iran and Azerbaijan argue, Turkey will have space to grow in influence and its state-owned crude oil and gas pipeline company will grow in wealth. Thus, Ankara will be well positioned to dictate policy to Baku on affairs of importance to the NATO member state.