Speech by Ilham Aliyev at opening of 24th International Caspian Oil & Gas Exhibition and Conference
31 may 2017, 10:45
Dear ladies and gentlemen!
My warm greetings to all of you! I congratulate you on the opening of the "Caspian Oil and Gas" exhibition. The fact that this exhibition is held in Azerbaijan is a very significant event. Our country is hosting the 24th exhibition, which is an indicator in itself. This shows that Azerbaijan is recognized in the world as a reliable partner producing and exporting oil and gas to world markets. Interest in this exhibition does not decrease. In fact, it is still growing. It was noted that about 300 companies are taking part in the exhibition. I am absolutely sure that this exhibition will also be successful.
Of course, the holding of the first exhibition played a special role in popularizing our country in the world. Azerbaijan was not known at that time – it was a newly-independent state. There were quite a few problems in our country, and the exhibition played an invaluable role in unlocking the oil and gas potential of Azerbaijan to the world. I want to express my gratitude to organizers of the exhibition. They have been cooperating with Azerbaijan for 24 years, making a great contribution to the development of our country.
The first exhibition was of particular importance in introducing Azerbaijan to the world as a country with great potential. Since that time, Azerbaijan has been able to establish successful cooperation with foreign investors in the oil and gas sector. This cooperation is based on mutual interests. Both countries and investors are making profit, thus, there is an excellent format of cooperation with foreign investors in Azerbaijan. This format is now present in other sectors. As you know, our main priority at present is to develop the non-oil sector. We are trying to apply the experience we have gained in the oil sector, in particular, the experience of cooperation with foreign investors, to the non-oil sector, and have been able to achieve success in this.
Azerbaijan is the home of oil. It was in Azerbaijan that oil was industrially produced for the first time in 1846. New historical documents have been discovered this year. Some time ago, I issued the instruction to review the documents stored in various libraries and museums around the world in order to obtain more accurate information. New historical documents have been found on this issue. They testify to the fact that oil was extracted from the world's first well drilled in an industrial way in Azerbaijan, on the territory of Bibiheybat in Baku, in 1846. To celebrate this significant event, we have erected a monument to that oldest oil well this year, and I am sure that this site will be of great interest to visitors to Baku.
In addition, oil was extracted offshore, in the Caspian Sea, for the first time in the world in the middle of the last century also in Azerbaijan. Here too, it is possible to say that Azerbaijan, the Caspian Sea, is the homes of offshore oil production.
The oil industry in Azerbaijan developed during the Soviet era as well. The contribution of Azerbaijani oil workers to victory over fascism in World War II is irreplaceable. A total of 70-80 per cent of fuel was provided by Azerbaijani oil workers. Otherwise, the result of the war could have been different.
In the 1970s, the development of the oil industry in Azerbaijan gained even more momentum under the leadership of Heydar Aliyev. Many important projects were implemented. They still serve the development of the independent Azerbaijan. Unfortunately, on the eve and in the first years of independence the oil industry in Azerbaijan was in decline. Oil and gas production fell sharply. Azerbaijan had practically lost its dynamic development momentum. At the same time, as a result of production that did not meet any environmental standards, the vast territories of Baku and the Absheron Peninsula were contaminated with oil. Currently, we are cleaning these contaminated sites. Very large environmental projects are being implemented. The territory of the famous Bibiheybat has become a green area now.
Approaching its independence in such a state, Azerbaijan had lost its appeal to the world, of course. If we add to this the crisis experienced in the early years of independence – chaos, anarchy, illegal armed formations, civil war, and Armenian occupation – all these factors, of course, turned Azerbaijan into a very risky country dangerous for foreign investors. Under such circumstances, the only development option was to attract foreign investments. Fortunately, the Azerbaijani people once again showed wisdom in 1993 by inviting great leader Heydar Aliyev to take power and electing him President. After that Azerbaijan embarked on a path of development.
Starting from 1993, very important steps have been taken in Azerbaijan to achieve stability. Within a few years stability was completely restored and Azerbaijan secured a worthy place in the world. However, the economy was practically in ruins. Inflation exceeded 1,000 per cent. Industrial production had almost collapsed and there were no great prospects for economic development. It is clear that a country without the economy will never be able to achieve real independence. Today our independence is measured not only by state attributes. We have an independent foreign policy and an independent domestic policy. We have a powerful economy and financial resources. We live at our own expense, so we can speak from any platforms and defend our position as an independent country. At that time, Azerbaijan was to a certain extent in a dependent position. We did not have money, the treasury was empty and the economy was in a paralyzed state. Therefore, the great importance of Heydar Aliyev's oil strategy comes to life once again because the situation changed completely with the signing of the Contract of the Century, and Azerbaijan was able to attract major foreign investments.
The Contract of the Century signed in 1994 is a historic project. If the Contract of the Century had not been signed at the time, no-one would invest in the oil and gas industry of Azerbaijan and the Shah Deniz field. If oil and gas pipelines had not been built, the Southern Gas Corridor could not be realized. If transport projects had not been implemented – the Baku-Tbilisi-Kars transport corridor is being realized today – no-one would ever invest in this project, especially if we consider that Azerbaijan has invested almost 1 billion in this project. If we had no money, no-one would invest in this project, of course. Therefore, the Contract of the Century has an exclusive place in the development of the Azerbaijani state. The successful implementation of this contract allowed us the opportunity to channel funds from oil into human capital, the non-oil sector and infrastructure projects, and to develop our country. The present-day Azerbaijan, our regions, thriving cities and Baku, one of the most beautiful cities in the world, are graphic examples of our work. This work is evident. We have done it thanks to a thoughtful policy. Of course, by strengthening the economic potential, we have significantly advanced our country.
The implementation of the Contract of the Century also goes on successfully. Today we are thinking about the future of the giant Azeri-Chirag-Guneshli oil field, and I hope that we will come to an agreement with foreign investors on the extension of this project in the near future because the Azeri-Chirag-Gunashli field has huge potential and a lot of oil to be produced. So we are in the final stages of negotiations with foreign partners to maintain a long-term sustainable level of production.
The investment made in Azerbaijan is protected in a transparent manner. The most important projects for our country are to be implemented by the State Oil Fund. The first of these is the solution of the problems of internally displaced persons. In recent years, about 100 IDP settlements have been built using the resources of the Oil Fund. These funds, of course, are generated from oil revenues, and we have managed to present ourselves to the world as a modern and dynamically developing country today.
Speaking about the significance of the exhibition, we must certainly mention the Shah Deniz project. Many people have probably forgotten that the Shah Deniz contract was signed at the oil and gas exhibition in 1996. At that time, Azerbaijan was known only as an oil country. The realization of the Shah Deniz project has turned Azerbaijan into a country that extracts and exports both oil and gas. Today we can’t imagine regional cooperation without the Shah Deniz project because Shah Deniz is a project addressing the issues of energy security in particular. Energy security issues today are issues of national security of the country. Everything depends on energy. Natural gas - of course, except for renewable energy – is the cheapest and most environmentally friendly source of energy. The economic progress of developed countries is also directly related to energy sources. Fortunately, Azerbaijan possesses quite large oil and gas resources. Our confirmed gas reserves are estimated at 2.6 trillion cubic meters. Thus, by fully ensuring its energy security, Azerbaijan plays a role in resolving energy security issues of its friends and partners.
The development of the Shah Deniz field has been under way for many years. Over these years, we have also managed to create a diversified oil and gas transportation network. A special place in it, of course, is occupied by the Baku-Tbilisi-Ceyhan and Baku-Supsa oil pipelines. The Baku-Tbilisi-Erzurum gas pipeline has been in operation for 10 years. All these are historic projects. If we did not have them, if investment had not been made in these projects, we would not be able to export our energy resources anywhere. We live in a landlocked area and do not have access to the open seas and oceans. Therefore, oil and gas pipelines supply our energy resources to foreign markets. The economic side alone is not enough – regional cooperation is also necessary. Together with our partners we have created and are strengthening this cooperation. Azerbaijan’s oil and gas projects are at the same time a guarantor of security, stability and development in the region, as tens of thousands of people have been employed in these projects. The countries implementing these projects together with us are experiencing rapid development in this area. Of course, this has a very positive impact on relations between countries. The oil and gas pipelines Baku-Tbilisi-Ceyhan, Baku-Tbilisi-Erzurum and Baku-Supsa are our great assets.
The second phase in the development of the Shah Deniz project is also proceeding successfully. As you know, we are implementing the Southern Gas Corridor today. This is a unique project on a global scale and the first infrastructure project in Europe. There are plans to invest $40 billion in this project. A considerable part of that has already been invested. Work is ongoing successfully in four segments of the Southern Gas Corridor. I have recently announced these figures. I want to cite them again so that people attending the exhibition could also know. The Shah Deniz-2 project is 93 per cent through. We will soon celebrate the Shah Deniz platform topside sail away. The South Caucasus Pipeline is 85 per cent through. This pipeline links Azerbaijan to Georgia. The TANAP project, the contract for which was signed in 2012, is being successfully implemented. The TANAP project is 72 per cent through. We expect to mark the commissioning of the TANAP project next year. The fourth project is TAP. The level of execution there is 42 per cent. So these figures are an indicator in themselves. They show that all work is going according to plan and we are approaching the completion of the Southern Gas Corridor project.
The third meeting of the Southern Gas Corridor Advisory Council was held in Baku this year. The adopted resolution shows again that Azerbaijan is the leader in this project. The Advisory Council meeting was attended by high-level representatives of the seven partner countries of this project. Also, representatives of our potential partners from the Balkan countries, high-ranking representatives from the United States of America, Great Britain, and the Vice-President of the European Commission were also present. So it was a major forum. I want to reiterate that the resolution adopted at the end of this meeting noted the leading role of Azerbaijan in this sphere.
I also want to emphasize that meetings of the Southern Gas Corridor Advisory Council are held on the initiative of Azerbaijan for the third time and are of great importance because these meetings analyze all the work done and, most importantly, we prepare a joint program of further activities and implement it. I am confident that we will talk of new successes at the forthcoming fourth meeting of the Council at the beginning of next year.
Issues of energy security, as I have already noted, are issues of national security, and Azerbaijan plays an important role in this area both in the region and in Europe. The steps we are taking in the field of energy diversification are bearing fruit. This is also very important. The advantage of the projects Azerbaijan is implementing lies in the fact that both routes and sources are being diversified. After all, the main market for us today is Europe, and new sources are also of great importance for Europe. Of course, the routes are also important, but when we talk about energy security and energy diversification, first of all we mean new sources. The only new source for European countries is Azerbaijan because all other sources have been supplying Europe with natural gas for many years. The only new source is Azerbaijan. This is a great source located nearby.
Most importantly, the Azerbaijani state has a strong political will and financial resources to implement the Southern Gas Corridor together with partners. I should also note that if the Azerbaijani state had not invested in the implementation of these four projects, I am sure that no-one else would have invested in them either. Various projects on the supply of Azerbaijani gas to Europe were the topic of discussion for at least 10 years. These discussions were unsuccessful because no-one wanted to take the first step and invest. Everyone expected this step from someone else. Seeing that these discussions remain unsuccessful every year, we started the TANAP project with the Turkish side in 2012. After that, the Shah Deniz-2 project was launched. Following this, the TAP project was chosen and we started to work. Therefore, Azerbaijan shows political will and also makes economic and financial contribution, so that the South Gas Corridor project could be implemented. This project is of historic importance for us because the Southern Gas Corridor will strengthen our long-term development and will bring us additional revenues.
The implementation of the Southern Gas Corridor project kicked off new projects. Next in line is the launch of the Greater Absheron project. In fact, work has already begun. In two to three years, we expect first gas from the Absheron project – estimated reserves there are about 350 billion cubic meters. In addition, Umid-Babek and Shallow Water projects are being implemented in parallel. In the coming years, these projects are expected to start functioning, i.e. production will begin. So we are strengthening our oil and gas potential. We plan to export even more natural gas and oil. In parallel, we have become an important partner as a transit country. Oil and oil products are delivered from the east coast of the Caspian Sea through Azerbaijan to world markets. Our role is increasing. Our transport infrastructure is expanding. Everything is available – the Caspian Shipping Company, the Baku Port, railways and terminals. We have done everything. I am sure that oil and gas industry projects will bring even greater benefit to Azerbaijan from now on. We will increase both our economic profits and our role in the region and the world.
We are doing all this for our country to become even stronger, for our positions to become even stronger, for Azerbaijan to enjoy even greater authority in the world and, most importantly, for the Azerbaijani people to live even better. Therefore, we invest our oil revenues in other sectors and see excellent results. In four months of this year, Azerbaijani exports have increased by 41 per cent. In particular, non-oil exports have increased by 22 per cent. Agricultural exports have increased by 44 per cent. Our rich oil and gas fields will ensure the development of the country for many years to come. Azerbaijan will continue to develop comprehensively.
My warm greetings to all the guests again! I wish the exhibition and conference success. Thank you.