'Azerbaijan renowned throughout the world as one of the leading oil exporters'

Wed 27 Nov 2013 06:42 GMT | 10:42 Local Time

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News.Az reprints an interview from The Report Company.

Q&A Natig Aliyev - Minister of Industry and Energy

Blessed with huge oil and gas reserves, Azerbaijan is set to change the energy map of Europe with the construction of the Southern Gas Corridor pipeline project. Azerbaijan’s minister of industry and energy took the time to talk with The Report Company about the impact of UK investment in its hydrocarbons sector, the modernisation of Azerbaijan’s industrial infrastructure and recent steps to diversify into renewable energy sources.

What have been the main achievements of Azerbaijan in the industrial and energy sectors, and what are your strategic goals?

The economic development of Azerbaijan, which has led to radical changes in all spheres of our lives, stems directly from oil and gas. Today, Azerbaijan is renowned throughout the world as one of the leading oil exporters. The oil and gas sector has created great opportunities for us to establish strategic relationships at a global level and to create and broaden new collaborations. At the same time this sector has brought the world’s advanced technology and practices to Azerbaijan. State-of-the-art infrastructure projects have been implemented in the country; modern terminals and pipelines have been built, which created hundreds of thousands of jobs. We have been able to build a healthy and stable economy due to the positive influence of the oil sector.

Most importantly, oil and gas has meant that our country has become an authority in the world arena. It is impossible to imagine the energy map of our region and Europe without Azerbaijan. The implementation of the TANAP project following the Baku-Tbilisi-Ceyhan main oil export pipeline and the Baku-Tbilisi-Erzurum main gas export pipeline, which are of particular importance among the seven oil and gas pipelines of our republic, made a significant contribution to energy security. The fact that today Azerbaijan has become a gas exporter strengthens the image of our republic and has turned our country into a major player.

In terms of industry, the recent creation of the Sumgayit Hi-Tech Park, the commissioning of the modern construction materials and dextrose plants, the reconstruction of the Garadagh cement plant and the construction of shipbuilding, solar panel, pile yarn and fertiliser plants as well as other enterprises are the evident result of the successful industrialisation policy carried out in Azerbaijan.

In total, over 40 industrial enterprises were built and commissioned last year, and 100 industrial facilities are currently under construction. The Sumgayit chemical industrial plant and Balakhani industrial park, which were created recently, will contribute to the economy’s modernisation and increase non-oil branches of export.

In the future, we also plan to create a new petrochemical complex that complies with the highest global standards. We also plan to increase SME activity in the industrial sector, and invite investment into this field.

How does Azerbaijan work with the EU to generate energy security for the region?

The projects implemented in the mid-1990s at the initiative of our country have modified to a significant extent the energy map of the Caucasian and Caspian regions, and now the energy map of Europe. The Partnership and Cooperation Agreement signed between Azerbaijan and the EU on 22th April 1996 laid the foundation for these relations. We joined the European Neighbourhood Policy in 2004 and the Action Plan for the European Neighbourhood Policy in 2006.

One of the main areas of the cooperation between Azerbaijan and the EU is the dialogue on energy. The Memorandum of Understanding on Co-operation in the Field of Energy between the European Union and Azerbaijan, which was signed on 7th November 2006 provided new opportunities for the broadening of this dialogue. The major objectives of this MoU included the diversification and security of the EU’s energy supply as well as the development and modernisation of Azerbaijan’s energy infrastructure. New opportunities were created for a more intensive cooperation in a number of areas in the energy sector after the adoption of the EU Eastern Partnership Programme by Azerbaijan in May 2009.

One of the signs of the positive development of such relations was the high-level visit of President of the European Commission José Manuel Barroso to our country in January of 2011. The Joint Declaration on the Southern Gas Corridor was signed during the visit, and the fact that the energy issue is a priority area for both parties was confirmed again.

One of the means of the co-operation with EU in the field of energy is the INOGATE Programme financed by the European Commission. A number of projects were implemented within the scope of the programme from 2006 to 2012 and cooperation was strengthened between the member states in the energy markets, legislative bases and use of alternative and renewable sources of energy. We continue to maintain close cooperation with the INOGATE Programme.

What influence will the Shah Deniz project have on the world gas market and what role will it play in ensuring European energy security?

The Shah Deniz gas field has very strong influence on energy security in the region. This is a global project. The export of Azerbaijani gas produced from the Shah Deniz gas field via the Baku-Tbilisi-Ceyhan pipeline started in the first quarter of 2007. The Shah Deniz gas field has 1.2 trillion cubic metres of confirmed gas reserves. The Trans Adriatic Pipeline (TAP) project was selected by the Shah Deniz consortium. This project provides for the transportation of Azerbaijani gas from the Caspian region via Greece and Albania to the south of Italy via the Adriatic Sea and finally to Western Europe. The project is a good choice in terms of its profitability, safety, efficiency and commercial aspects. We intend to carry on building intensive partnerships with key exporting countries against the backdrop of increased global competition. Azerbaijan is assuming an ever-greater importance in terms of European countries’ energy security, and has gained an image as a reliable partner who uses its energy resources for the creation of long-term relationships.

How would you assess the relationship between Azerbaijan and the UK?

We have an initiative to attract British commercial interests and investors to Azerbaijan and we look to create new opportunities for British businesses. One priority area is in ensuring energy security, which includes the future export of new hydrocarbon resources. Another area covers the development of partnerships and the conduct of business in compliance with European quality standards. Today, dozens of British companies participate in construction, energy, commerce, service and other sectors of Azerbaijan’s economy as investors and contractors. A striking example of that is the BP-SOCAR cooperation in energy. The UK is a reliable partner for Azerbaijan, and Azerbaijan is also interested in investing into the British economy.

What steps are you taking to promote the use of alternative and renewable sources of energy?

Azerbaijan is rich in oil and gas resources, but traditional energy sources are not inexhaustible. Taking this into account and factoring in the severe damage to the environment caused by these traditional energy sources, there is a growing movement by many countries to use renewable energy. A number of state-run programmes have been already implemented in the field of alternative and renewable energy.

We also cooperate with the IFC to encourage small and medium businesses to use alternative energy sources. Azerbaijan also successfully cooperates with the World Bank, Asian Development Bank and German Development Bank in this area. We are also a member of the International Organisation for Alternative and Renewable Energy Sources.

How do you ensure you minimise the impact of the energy sector on the environment?

One of the main areas of the complex measures we have taken to improve the environment is the implementation of soil remediation projects to clean up areas contaminated with oil. About 5000 hectares of the Absheron Peninsula is contaminated with oil and oil products, and between 2006 and 2012 we have restored about 1000 hectares. We are also working to drain and remove hazardous waste in a number of lakes located near the oil fields.

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