Azernews.Az

By Gulgiz Dadashova

Azerbaijani President said the Shah Deniz-2 is one of the biggest energy projects in the world.

Azerbaijani President Ilham Aliyev made the remarks at the signing ceremony of the final investment decision on the project of the second phase of the Shah Deniz gas condensate field development in Baku today.

"Today is a historic day in the history of modern Azerbaijan," he said. "The final investment decision on the Shah Deniz 2 energy project will provide our country with successful, long-term economic development."

"It is a project of energy security and diversification, with broad international cooperation between countries and companies involved in this historic project," President Aliyev said.

"But today, I would like to go 19 years back, to 1994, when Azerbaijan's energy strategy was launched," President Aliyev added.

"It was the wisdom, vision, and courage of our late president Heydar Aliyev that made it possible," the president said. "Only three years after regaining independence, and only after one year, at the end of the civil war in Azerbaijan and only after four months, after the ceasefire in the war with Armenia, Azerbaijan and its foreign partners signed the Contract of the Century. It opened the Caspian Sea for the first time to foreign investments, which provided successful economic development for our country."

"That was the contract of the 20th century," the president said. "Shah Deniz will probably be called the contract of the 21st century. But before we came to today's ceremony, there were several milestones in the history of the development of the independent Azerbaijan."

The contract on Shah Deniz was signed n 1996 and the first pipeline connecting the Black Sea and the Caspian Sea from Baku to the Black Sea coast in Georgia was built in 1999."

"Then Baku-Tbilisi-Ceyhan pipeline was built in May 2006, connecting the Caspian Sea to international markets, including the Mediterranean market, for the first time," the president said.

"The South Caspian gas pipeline was built in 2007, connecting Azerbaijan, Georgia, and Turkey to the new gas pipeline which is part of today's ceremony," he said.

"Azerbaijan and European Union signed a memorandum of understanding on strategic energy cooperation 2011, which also facilitated the development of Azerbaijan's energy strategy and diversification, and gas supplies to Europe," he said.

"We signed a historic agreement with Turkey on Trans-Anatolian Pipeline (TANAP) in 2012," he added. "This year, in 2013, the Trans-Adriatic Pipeline (TAP) was selected as the main export route. Now we are signing a final investment decision on Shah Deniz as well."

"So, this is the reflection of history," he said. "This is just a small example of these milestones, of this path, towards the full-scale development of one of the biggest gas fields in Azerbaijan. This project will change the energy map of the region and Europe. Azerbaijan's gas reserves will be transported to the market which expects them."

"According to the estimates, Azerbaijan's total gas reserves are close to three trillion cubic meters of gas," he said.

"Shah Deniz 2, TANAP and TAP are the biggest energy projects of the world," he said. "We expect at least $45 billion of investments and at least 30,000 new jobs along the line of the corridor. And of course this project needs a lot of additional efforts."

"Azerbaijan is just in the beginning of the huge project, which we will implement by joint efforts," the president said.

"Today, I would like to congratulate the people of Azerbaijan on this historic day," the president said. "This will provide long-term sustainable economic development of our country. At the same time, I would like to express my gratitude to Shah Deniz consortium for their commitment to Azerbaijan. Especially I would like to express my gratitude to SOCAR and BP - strategic partners and two leaders of energy projects of Azerbaijan. The partnership between SOCAR and BP has a history of 20 years. And the investment decision signed today will allow us to continue this strategic partnership for at least 40 years more, and maybe even more than that."

"Today Azerbaijan's energy policy allowed us to transform the country's economy and to diversify it," the president added. "When Azerbaijan became independent, the country had zero GDP in private sector. Today, 85 percent of our economy is generated in private sector."

"We managed to reduce unemployment to the level of 4.8 percent, reduce the level of poverty to 5.5 percent," he said. "The country's foreign debt is only 8 percent of GDP. The financial situation is stable. We are actively investing in non-energy sector of the country's economy, which today makes 55 percent of our economy."

"Therefore, energy policy, close cooperation with international institutions, diversification and transparency are the main elements of successful development," he said.

"And I think that in case of Azerbaijan, we have avoided the 'oil curse', and avoided the so-called Dutch disease," he said. "We have shown an example when oil and now gas, serve the benefit of the people."

"Of course, one of the reasons for that was an international cooperation," the president said.

"Azerbaijan highly appreciates the high level of international cooperation in Azerbaijan, because the knowledge and the expertise of foreign oil companies are very important for us," he said. So, we will continue this cooperation now in a bigger format."

"Today, we start a new format of cooperation, which will embrace many more countries and companies," he said. "And I am sure that Shah Deniz 2 project in the future will cover many more destinations than it is anticipated today."

"But today, we will concentrate, of course, on the construction of TANAP, TAP, in order to be able to deliver our gas to the European market in time," he said.

"We will need a very active cooperation between Azerbaijan, Georgia, Turkey, Greece, Albania, Italy, Bulgaria, the countries which are now covered by initial stage of Shah Deniz," the president said. "At a later stage, we will start active cooperation with Montenegro and Croatia."

"There are the plans for extension of this pipeline to the Balkans," he added.

"At the same time, I hope that in the coming years Azerbaijan will actively work with our partners in Romania, Hungary and Austria to extend the pipeline to that destination," he said.

"Therefore we have big plans and the design of the pipeline is appropriate for these plans," he said. "In the future we will be able to deliver, for the pipelines to be constructed as much gas as we can produce. And of course Shah Deniz 2 is a project of energy security."

"Energy security of any country can not be separated from national security," he said. "This was not the case in the 1990s when Shah Deniz contract was signed, but today it is the case. And one of the main elements of energy security is natural gas. This is the today's situation, and I think that in the coming years it will not change. Therefore, energy security, energy diversification is as important for producers like Azerbaijan, but also for transitors and consumers."

"I am sure that we jointly will find the proper balance of interests between producers, transitors and consumers," he said. "We will establish such a format of cooperation which will be beneficial for all of us. Our energy strategy is based on friendship, cooperation and mutual support.

"Never in our history Azerbaijan tried to use its energy potential for other purposes - only to strengthen cooperation, to establish more fruitful bilateral and multilateral ties, and to show the signs of mutual support to our partners," the president said.

The prime ministers of Albania, Bulgaria, Georgia and Croatia also delivered speeches at the meeting and spoke about the importance of the project.

The Shah Deniz Consortium -- Azerbaijan's state energy company SOCAR, British BP and France's Total -- has made the final investment decision (FID) on the second phase of offshore gas condensate field development. Authorization of the "Shah Deniz-2" brings the project to the stage of immediate execution.

In June the Shah Deniz Consortium selected the Trans Adriatic Pipeline (TAP) as a route for transportation of gas to the European markets. The initial capacity of the TAP pipeline will stand at 10 billion cubic meters per year, with a chance of increasing these figures to 20 billion cubic meters per year.

TAP will utilise Azerbaijan's vast Shah Deniz 2 project in the Caspian Sea, one of the world's largest gas fields with an expected investment of more than $40 billion including pipelines.

Trans-Anatolian gas pipeline (TANAP) will be built to transport gas through Turkey; this pipeline will ensure gas deliveries to the European border.

Buyers of the Azerbaijani gas from its Shah Deniz II project are Shell , Bulgargas, Gas Natural Fenosa, Greek DEPA, Germany's E.ON, French GDF Suez, Italian regional utility Hera Trading, Swiss AXPO and Italian Enel.