By Gulgiz Muradova
Oil and gas extraction have an extensive history in Azerbaijan, and Baku was the birthplace of mechanised oil extraction and transportation. Today, energy remains one of the main pillars of the Azerbaijani economy, due to its huge oil and gas resources, its status of a reliable and committed exporter, and its willingness to engage with its neighbors and partners in Europe in ensuring the security of transit and supply.
The country has already proven to be the most reliable partner for and anchor of Western energy security, which was once again stressed at the 24th International Caspian Oil & Gas Exhibition and Conference that opened in Baku on May 31.
President Ilham Aliyev, in his speech at the Caspian Oil and Gas 2017, stressed that Azerbaijan is known in the world as a reliable partner producing and exporting oil and gas to markets.
Highlighting the fact this already is the 24th exhibition being held in the country, the president said that the interest in the exhibition is not declining, on the contrary, it is growing.
“I am fully confident that this year’s exhibition will be successful as well. But, of course, the holding of the first exhibition played a special role in popularizing our country in the world, because at that time, Azerbaijan was not known. Azerbaijan was a young, independent country, there were a lot of problems. The exhibition played an indispensible role in presenting our country’s oil and gas potential to the world,” said President Aliyev.
He pointed out that the first exhibition had a special meaning in presenting Azerbaijan to the world as a country with huge potential. “Since then Azerbaijan has been able to build a very successful cooperation with foreign investors in the oil and gas sphere,” he added.
The president noted that this cooperation was built on mutual interests. “Both the state and investors are reaping the benefits. An excellent format of cooperation with foreign investors has been created in Azerbaijan. Today, this format also manifests itself in other spheres,” he added.
Pointing to the Contract of the Century signed in 1994, Ilham Aliyev said the document is a historic project, noting that the Contract has an exceptional place in the development of the Azerbaijani state.
“Successful implementation of the Contract, allowed us to direct the oil money to human capital, non-oil sector, and infrastructure projects and to develop our country,” added President Aliyev.
He also touched upon the extension of the term of the Azeri-Chirag-Gunashli contract.
“I hope that in the near future we will reach an agreement with foreign investors on extension of this project’s term, because the Azeri-Chirag-Gunashli field has a great potential,” he said, adding the field has a quite large volume of oil that hasn’t been extracted so far.
Over the past two decades since the ‘Contract of the Century’, the nation was able to establish itself as a reliable partner to cooperate with international companies, attracting new technologies and innovation into the country and foreign investments into the non-oil sector as well.
In late 2016, BP and Azerbaijan agreed to extend the ACG deal up to 2050, which will add significant resource development potential. By extending the 1994 agreement, Azerbaijan will be able to preserve its oil income for many years.
President Aliyev further stressed that the Shah Deniz Project needs to be highlighted when speaking about the International Caspian Oil & Gas Exhibition’s importance.
He reminded that the contract on the Shah Deniz Project was signed in 1996 exactly during the International Caspian Oil & Gas Exhibition.
“That time, Azerbaijan was known as solely an oil country. Implementation of the Shah Deniz Project has turned Azerbaijan into a country producing and exporting both oil and gas,” he added. “Today, we cannot imagine the regional cooperation without the Shah Deniz Project, because the Shah Deniz project is a project that solves exactly the energy security issues.”
Gas volumes in the Shah Deniz reservoirs are so vast that they will not only meet the needs of Azerbaijan and its regional neighbors, but provide significant supplies to Europe. With a five-year extension to the original PSA signed last year, Shah Deniz will produce natural gas until at least 2036.
The SGC aims to provide increased energy security for Europe, bringing affordable gas supplies initially from Shah Deniz, and paving the way for future gas delivery from the wider Caspian region and, potentially, the Middle East.
President Aliyev further said that over the past years, Azerbaijan has been able to create a many-branched oil and gas transportation network. He pointed to the Baku-Tbilisi-Ceyhan and Baku-Supsa oil pipelines, and reminded that the Baku-Tbilisi-Erzurum gas pipeline has been operating for 10 years already.
“All of these are historic projects,” he said, further adding that Azerbaijan’s oil and gas projects are the guarantors of the region’s security, stability, and development.
Reminding that Azerbaijan is today implementing the Southern Gas Corridor project, the president said the project is unique on the global scale.
The project holds the first place among the infrastructure projects in Europe, Ilham Aliyev said, adding $40 billion are envisaged to be invested in the project, and a great part of this figure has already been invested.
“The work is continuing successfully on four segments of the Southern Gas Corridor,” he said, revealing the figures on implementation of the four SGC projects. “The Shah Deniz 2 project has been implemented by 93 percent. The South Caucasus Pipeline has been realized by 85 percent. The TANAP project has been implemented by 72 percent and we are expecting to mark the commissioning of the TANAP project the next year. And the fourth project is the TAP, which is complete by 42 percent.”
These figures are demonstrative, he said, adding, “They show that all the work is going on in line with the plan and we are near to completing the Southern Gas Corridor project.”
President Aliyev also said the Southern Gas Corridor’s realization starts new projects, adding the major Absheron project’s commencement is to come next.
“At the same time, the Umid, Babek and shallow water projects are being implemented,” he said, adding that new production is expected to start in the years to come.
“This means we are boosting our oil and gas potential,” he said, stressing that Azerbaijan is investing the oil money to other sectors and is seeing the excellent result of this.
The U.S. remains strongly committed to the Southern Gas Corridor project and welcomes the efforts of Azerbaijan and its international partners to complete it, said President Donald Trump in his welcome letter to the participants of the Caspian Oil and Gas 2017.
“I appreciate Azerbaijan’s important role in the global energy security including the development and exportation of energy resources from the Caspian region,” the message read. “I support and encourage Azerbaijan’s efforts to diversify its economy and look forward to exploring other areas of cooperation to the benefits of both our people.”
Donald Trump stressed that the U.S. is ready to work with Azerbaijan as the country continues to undertake economic and governmental reforms.
Azerbaijan’s gas will be an important source of stability, said Maros Sefcovic, the European Commission Vice-President for Energy Union in his video message to participants of the event.
“Azerbaijan is a very important partner for Europe. It is the key enabler of the Southern Gas Corridor, which is strategic in helping the EU to further diversify its energy sources, to achieve its climate goals and to improve geopolitical balance and stability in Europe,” said Sefcovic.
He expressed confidence about bringing Azerbaijani gas to Europe in 2020. “It will help us with our goals as I just mentioned and it will of course serve all the participating countries, both in and outside the EU,” said the EU commissioner. “This gas will be an important source of revenues and an important source of stability and security, which arises from a firm reliable partnership. This is a project of vast proportions, and has therefore been prominent on our agenda for a considerable time now.”
Sefcovic further noted that the cooperation of the EU with Azerbaijan already serves all three objectives of Energy Union: security, competitiveness, and sustainability.
“There is much more we can do together – especially regarding environmental and climate issues,” he said.
Sponsored by Azerbaijan's Ministry of Energy and the State Oil Company of Azerbaijan (SOCAR) the 24th International Caspian Oil & Gas Exhibition and Conference is co-organized by ITE Group and its partner Iteca Caspian.
About 300 companies from more than 30 countries, including Azerbaijan, US, Belarus, Belgium, Spain, Italy, Kazakhstan, China, the Netherlands, Poland, Japan are participating in the conference. Italy is participating in the exhibition with its national pavilion. The companies from the US, UK, Romania and a number of other countries are among the debutants which make up 15 per cent of the total number of participants. The conference provides suppliers with the opportunity to talk to customers and colleagues, to present technologies and services in action, to acquire useful business contacts, and to get new information and technologies, expanding the opportunities for international collaboration in the oil and gas sector.
The conference will address such issues as: "Role of Azerbaijan in global energy, status of major projects and a look to future strategic growth", "Identifying key operators plans in developing onshore and offshore oilfields, expansion of international cooperation in oil and gas projects", "An overview the refining and petrochemical industries in Azerbaijan new projects development", "Diversifying supply routes from the Caspian region, Azerbaijan as transportation, logistic hub of Caspian region", "Cost optimization and improving the efficiency of upstream development with advanced technologies for exploration and production", "Improving the efficiency of exploration and production with digital technologies", "The development perspectives for alternative energy in Azerbaijan". Around 400 delegates from more than 30 countries are taking part in the conference.
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