Azerbaijan-Turkey economic relations
Economic relations between Azerbaijan and Turkey have developed since the early periods of the independence of our country. The first agreement between Azerbaijan and Turkey on this basis was signed in Ankara on November 1, 1992. “The agreement on Trade and Cooperation” came into power on January 23, 1993.
The special phase of the bilateral economic relations in terms of comprehensive development has commenced since 1994 by upgrading legal-contractual basis and realizing other necessary activities.
Nowadays, a number of mechanisms on various spheres established jointly by Azerbaijan and Turkey exist. Azerbaijan-Turkey High-Level Strategic Cooperation Council, Azerbaijan-Turkey Intergovernmental Economic Commission, Agricultural Executive Committee, Joint Commission on International Road Transport, Joint Customs Committee should especially be emphasized.
On the other hand, as a consequence of the importance given to the regional economic cooperation and active participation in trans-regional infrastructure projects these two states involved into a number of regional projects of international importance that are currently being implemented. Baku-Tbilisi-Ceyhan oil pipeline (BTC), Baku-Tbilisi-Erzurum gas pipeline (BTE), Baku-Tbilisi-Kars railway (BTK), Tans-Anatolian pipeline (TANAP) are some examples.
One of the most significant steps for the implementation of BTC project was signing Ankara Declaration on the construction of the Baku-Tbilisi-Ceyhan Main Export Pipeline by Azerbaijan, Turkey and Georgia on October 29, 1998. The agreement "On transporting crude oil via the Baku-Tbilisi-Ceyhan Main Export Pipeline to the Republic of Azerbaijan, the Republic of Georgia and the Republic of Turkey" was signed in OSCE Istanbul Summit, on November 18, 1999. The official inauguration of BTC Main Export Pipeline was held at Ceyhan Terminal on July 13, 2006.
Likewise, Baku-Tbilisi- Erzurum gas pipeline is one of the salient projects between two states conveying regional importance. Azerbaijan started first gas deliveries to Turkey through this pipeline since 2007. After reconnecting gas pipeline systems between Turkey and Greece Azerbaijan could export its natural gas to EU countries. Commissioning of BTC Main Export Pipeline and BTE gas pipeline allowed Azerbaijan to export its oil and natural gas reserves to the world market and expanded the opportunities for our countries.
One of the especially significant projects for Azerbaijan and Turkey to increase regional cooperation was “Baku-Tbilisi-Kars new railway project” aiming to diversify transportation infrastructure, enhance transit role of our countries in the international freight and passenger transportation, came into being as a result of initiative and will of the leaders of our countries.
The other important project in the international scale implemented by the initiative of two countries is TANAP project that plays a crucial role in providing energy security for Turkey and EU countries and equipment diversification. First gas deliveries to Turkey within TANAP project started in 2018. The transportation capacity of the pipeline is 16 billion cubic meters (bcm) at initial stage, it is been expected to be increased to 24 bcm and 31 bcm gradually. TANAP pipeline of 1850 km is going to be connected to Trans-Adriatic Pipeline (TAP) in the early 2020, thus by this connection it will deliver natural gas obtained from South Caucasus Pipeline to Europe through Greece, Albania and Italy.
Another momentous project of international importance implemented by the initiative of the two states is the inauguration ceremony of STAR refinery built in the Petkim petrochemical complex in Aliaga, Izmir in September, 2018. The project was realized with an investment value of 6,3 billion dollars by SOCAR.
Trade volume between Turkey and Azerbaijan has been increasing since 1993. Turkey is among the top states investing to Azerbaijan economy. Investment of 10 billion dollars has been brought to Azerbaijan economy by more than 13000 Turkish companies working in Azerbaijan. Turkish companies operate mainly in the spheres of energy, industry, telecommunication, banking and insurance, construction, transportation, food, textile, medicine and etc.
In recent years Azerbaijan considerably increased its investment to Turkey. Almost 2000 companies with Azerbaijan capital are operating in Turkey. The investment of solely State Oil Company of Azerbaijan Republic (SOCAR) in Turkey has reached 12,6 billion dollars. By these numbers, business people from Azerbaijan investing to Turkey are among the first seven countries of Central Asia and Caucasus.