01 june 2016, 10:45
Speech by Ilham Aliyev at the opening of Caspian Oil & Gas exhibition 2016
Dear ladies and gentlemen, distinguished guests!
My greetings to all of you! It is a very significant day in the life of our country today. The 23rd Exhibition "Caspian Oil and Gas" is beginning its work. I would like to express my gratitude to all the people and organizations who have contributed to the organization of this exhibition.
The exhibition has played a very important role in the overall development of our country. As you may know, the first exhibition was held in 1994. At that time, Azerbaijan was practically not known to the world. Azerbaijan was a newly independent state, especially if we consider that the early years of independence were very difficult and Azerbaijan was dominated by an economic, political and military crisis. Armenia occupied our lands and civil war broke out in 1993. So if we take into account all these factors, we can see once again how important this exhibition was. It was with the help of this exhibition that Azerbaijan demonstrated its oil potential to the world at the time. Azerbaijan asserted itself as a country open to investment. Azerbaijan wanted to follow the path of development and become a modern state. To achieve this, of course, foreign investment had to be made in the country. And, of course, the oil sector was the most attractive area for foreign investment.
Azerbaijan is an ancient oil state. The world’s first was industrially extracted in Azerbaijan in the 19th century. In the 20th century, the world's first offshore oil was also produced in the Caspian Sea, in Azerbaijan. However, the situation of the early 1990s was not very encouraging, of course. The country was faced with enormous challenges and the prospects for long-term development of Azerbaijan in general were very bleak.
I want to say again: the fact that the first exhibition was held in this environment was a very important event. Taking this opportunity, I want to once again thank the organization which has been holding this exhibition for many years. At the same time, I want to express my gratitude to the companies that showed confidence and began to cooperate in us. First of all, I want to highlight the operations of BP. For 22 years, BP and SOCAR have been interacting as reliable partners. They work together in many projects – Azeri-Chirag-Guneshli, Shah Deniz, the Southern Gas Corridor, the construction of oil and gas pipelines are the most important projects for our country. And this cooperation has a great future, because, along with these projects, work is under way on other promising initiatives.
Over the years, the State Oil Company of Azerbaijan, SOCAR, also evolved into an international energy company, primarily because Azerbaijan has implemented such large-scale projects. SOCAR is already investing heavily both at home and abroad. The billions invested in Azerbaijan earlier are now being invested by Azerbaijan abroad. Thus, our economic interests are secured. At the same time, of course, the investment made in a foreign country serves the development of relations with this country in all spheres.
From 1994 to the present, Azerbaijan has covered a successful and glorious road in all spheres, including the oil and gas industry. All our objectives have been met. Not a single project remained unfinished. We have implemented all the projects. Great effort, including political, has been made to implement these projects. Major financial resources were allocated as well. These large-scale projects have been implemented on the basis of agreements with many countries, because the primary objectives were to produce oil from the Caspian Sea, ship it to shore and transport to world markets. Of course, it would be impossible to resolve these issues without international cooperation. At the same time, the region had to be stable. The implementation of these projects required enhanced investor confidence. Otherwise, no international financial institutions or companies would want to invest their money. It was in this direction that very serious work was done, and stability in Azerbaijan was fully ensured in the mid-1990s. Investors believed in us and began investing billions of dollars in Azerbaijan.
And we made rational use of these opportunities. We channeled our oil revenues into the non-oil sector. Great effort was made to diversify the economy. Today, the oil factor accounts for slightly more than 30 per cent of the gross domestic product of Azerbaijan. A large portion of our total revenues is generated in the non-oil sector. Therefore, the State Oil Fund was established to ensure transparent storage and management of revenues. Today, this Fund is one of the most transparent sovereign oil funds across the globe. The entire work related to infrastructure and reconstruction was designed to achieve diversification of Azerbaijan's economy, expand business opportunities and further reduce dependence on oil and gas. We are working in this direction event today. The most important task for us today is to implement a concept of long-term sustainable economic development and not to depend on the oil price in the future.
But in the mid-1990s, we had completely different objectives. We had to maximize our oil and gas potential in the world. It is no coincidence that less than two years after the signing of the "Contract of the Century" in 1994, a production sharing agreement was signed for the gas field of Shah Deniz in June 1996. Today, Shah Deniz is one of the largest gas fields in the world. Gas from Shah Deniz is already being delivered to regional markets. The implementation of the Southern Gas Corridor project will allow us the opportunity to deliver Azerbaijani gas produced both from Shah Deniz and other gas fields to world markets. We will therefore fully implement our oil and gas programs.
Of course, speaking about the Southern Gas Corridor today, we have to emphasize the work done in the 1990s. After all, if the Baku-Tbilisi-Ceyhan oil pipeline had not been built at the time, there would be no such corridor, of course. The Baku-Tbilisi-Ceyhan oil pipeline linked the Caspian and Mediterranean seas and created an energy corridor. Azerbaijani gas will now be delivered to world markets through this corridor. We can say that the geography of these corridors is largely the same. This corridor is now being transformed into a transport corridor. Having channeled our oil revenues into the transport infrastructure, we created very serious transport opportunities. Today, we are implementing the East-West transport corridor, and I am sure that it will be put into operation before the end of the year. Thus, oil, gas and transport corridors will run through the territory of Azerbaijan. Over the years, we have also taken the necessary steps related to the export of electricity, and today Azerbaijan exports electricity as well.
So our geographic location, investment, sound policies and cooperation with partners have created these realities. These realities serve the Azerbaijan state and people, ensure the interests of neighboring countries and strengthen international cooperation with a wide geographic area. Without the international cooperation, we will not be able to implement any project, because Azerbaijan has no access to the open seas and world markets. That is why major funds are allocated for the construction of oil and gas pipelines. In fact, international cooperation was initiated by us. This is natural, because we had to build oil and gas pipelines to deliver these resources to the world market. Transit and consumer countries are also showing great interest in these projects. Of course, they also benefit from these projects. Transit countries will be receiving major profits for decades to come, while consumer countries will gain access to additional alternative sources of gas. In other words, all parties will only benefit and, of course, first of all, Azerbaijan should make and makes efforts to forge this international cooperation. Whereas a trilateral format of Azerbaijan-Georgia-Turkey appeared in the mid-1990s, today this format is expanding, and the countries participating in the Southern Gas Corridor represent different structures. Again, Azerbaijan-Georgia-Turkey and the European Union member states such as Bulgaria, Greece, Italy and Albania, already seven countries, are involved with the Southern Gas Corridor. Balkan countries are showing interest in the project as well. Memoranda have already been signed with some Balkan countries with a view to creating branches of the Southern Gas Corridor in the future. The main line is the route from Baku to the coast of Italy. But the corridor should be branched out. We are working on these issues.
We have sufficient gas resources. Proven gas reserves in Azerbaijan constitute 2.6 trillion cubic meters. Currently, preparations are under way for the development of Absheron and Umid fields. I am confident that these projects will also be crowned with success, and gas production in Azerbaijan will increase even more. The deep horizons of the Azeri-Chirag-Guneshli field contain major deposits of gas. We are taking serious steps to extract them. In other words, we do not restrict our activities to the existing format of the Southern Gas Corridor. We want to reach out to a wider geographical area. To achieve this, there are gas resources and an international cooperation format has already been established.
You are well aware that Baku has hosted a meeting of the Advisory Council of the Southern Gas Corridor for the second time. During the second meeting in February, all member countries were represented at a high level. The meeting attended by two vice presidents of the European Commission, senior officials from the United States and the United Kingdom resulted in the signing of a Declaration. The Declaration notes the leading role of Azerbaijan in the implementation of the Southern Gas Corridor project. Of course, this is a great honor and, at the same time, tremendous responsibility for us. The initiative to establish the Advisory Council was also made by us. I am glad that the European Commission has also supported this initiative. Thus, we are already working within a very serious coordination format, and I am glad that we are achieving all our goals.
I remember attending the opening of this exhibition last year and saying that the foundation of the TANAP project had been laid in 2015. Today, I can say with a sense of satisfaction that the foundation of the TAP project was laid last month, two weeks ago. This shows that we are consistently moving forward to achieve our goals and are achieving them. If we look at the chronology of the work done, we can say that we are moving with great consistency, in a focused and systematic manner to achieve our goals.
The signing of the "Contract of the Century" in 1994 and of the contract for the Shah Deniz project in 1996, the production of first oil from Chirag in 1997, the construction of the Baku-Supsa oil pipeline linking us to Black Sea ports in 1999, the groundbreaking ceremony of the Baku-Tbilisi-Ceyhan oil pipeline in 2003, the commissioning of the Baku-Tbilisi-Ceyhan oil pipeline and the Baku-Tbilisi-Erzurum gas pipeline in 2006-2007, the signing of the TANAP project between Azerbaijan and Turkey in 2012, the groundbreaking ceremony of the Southern Gas Corridor in 2014, the groundbreaking ceremony for TANAP in 2015 and, finally, the groundbreaking ceremony for the TAP project in 2016. Such is the chronology. In other words, the current situation did not arise by itself. These successes have not fallen from the sky. These were made possible as a result of intense and focused work. I want to reiterate that we achieved this success only through international cooperation.
The situation today is as follows: the implementation of the Southern Gas Corridor is progressing on schedule. Currently, our main objective in the energy sector is to implement the Southern Gas Corridor. I am sure that this process will go as scheduled. Work is progressing on all four segments of the Southern Gas Corridor – the Shah Deniz project, the South Caucasus gas pipeline, TANAP and TAP, and I am confident that it will be executed in a timely manner.
The Southern Gas Corridor is an economic project. At the same time, it is a security project, because energy security issues in the world are coming to the fore today. Everyone already understands that it is impossible to talk about national security of countries in the absence of energy security. Countries not rich in energy resources, of course, depend on other resources. Our goal has always been to use the energy factor for the deepening of cooperation. Azerbaijan has never used its potential for other purposes. Our wish has been to deepen cooperation and to ensure that the situation around us is stable, so that this stability could make it possible for us to realize transnational projects, improve the welfare of the Azerbaijani people and increase the power of our country. Therefore, there is no disagreement regarding the matters discussed at the Advisory Board of the Southern Gas Corridor. Why? Because all the interests are provided! The Interests of the producing country Azerbaijan, the interests of the transit countries and the interests of consumer countries! We can achieve these goals only when these interests overlap. If any of these three parties pursued its own interests, we could not have achieved such success. This is a perfect example. Only on this basis should we build a sound energy policy and long-term cooperation in this field. The energy factor should never be used for other purposes - as a tool for blackmail or privileges in a certain sphere. I believe that Azerbaijan's position on this issue has won approval on a global scale.
On the other hand, this position is already justifying itself. It shows that only this approach can bring success. We want Azerbaijan to develop even faster. We want to strengthen stability in the region. Of course, we are concerned about the events ongoing in the world today. In various parts of the world there are new centers of conflict, wars, confrontations and standoffs. Of course, this is an unpleasant picture.
We are committed to stability in our region. Countries can only develop in the conditions of stability. Only stable countries can receive investment. Only in the conditions of stability can people live in peace, security and prosperity. I think that the example of Azerbaijan may be interesting for many countries.
This year we will celebrate the 25th anniversary of the restoration of our independence. In the 25 years Azerbaijan has proved that we can live as an independent country, live well, be the master of our own destiny and establish normal relations with all countries. The important thing is that we have a very precise and clear vision of the future.
We are seriously dealing with the implementation of the Southern Gas Corridor now. Along with this, we are even more seriously engaged in the diversification of the economy in order to completely eliminate the dependence on the oil factor and for Azerbaijan to become a long-term and sustainable economy. Much still remains to be done in this area. 2016 for us and indeed all countries rich in oil is a year tests. Oil prices have fallen several times, which, of course, is a challenge for all countries. However, I believe that Azerbaijan is coping with this test with its head high. 2016 should be a year of stabilization, and we are already seeing it. I am confident that economic growth will be restored next year.
In the last 10 years we have experienced very high economic growth. Azerbaijan's economy has grown more than three times. Of course, our economy and people have got used to that. Now a new period has begun. But we can and we will get out of any situation with dignity. Our main goal is to mitigate the impact of the global recession on the Azerbaijani people. Therefore, all social programs are being implemented. This year, we have raised salaries and pensions by 10 per cent. Work is under way to create the entire social infrastructure. Of course, excellent groundwork is being laid for the future. The decline in the oil price has created a stressful situation, and this, I think, has done us good. Many agencies, including those in the government, were accustomed to receiving large sums for various projects. Today we approach these issues more economically. Public funds are allocated only for priority issues. Most of the funds should come from the private sector. Local and foreign investors make investment and believe in us, and I think that over the years we have gained an excellent reputation as a reliable partner. As you know, all the contracts in the oil sector have been signed on the basis of production sharing, and we can’t and have no intention to change a single full stop or a comma there. This increases confidence in us. The trends of transparency and predictability existing in the oil sector should be strengthened in all other sectors as well.
I would like to greet all the companies participating in the exhibition again. The exhibition is indeed a very important and prestigious event both for Azerbaijan and for the whole world because it is being held for the 23rd time and the interest in it keeps growing mainly because the heads of leading countries in the world are paying great attention to this exhibition. The US President and the UK Prime Minister sent warm congratulations for the exhibition. I would like to thank the US President and the UK Prime Minister for the congratulations. Their congratulations show the value of the exhibition again. I wish the exhibition every success. Thank you
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