Ilham Aliyev attended the Ministerial Meeting of the Southern Gas Corridor Advisory Council

12 february 2015, 16:50

President of the Republic of Azerbaijan Ilham Aliyev has attended the Ministerial Meeting of the Southern Gas Corridor Advisory Council.

The head of state addressed the first meeting of the Advisory Council.

Speech by President of Azerbaijan Ilham Aliyev

-Ladies and gentlemen,

Dear friends.

First of all, I would like to welcome you all in Azerbaijan. Today we have the first meeting of the Advisory Council of the Southern Gas Corridor. I`d like to use this opportunity and ask you to convey my gratitude to the leadership of your countries for supporting our initiative to have this meeting in Baku. It is really a good time to have this meeting because practical implementation of the project of the Southern Gas Corridor starts this year. This project unites us, and it needs additional coordination and, of course, exchange of views and opinions. I am sure that during today`s meeting the exchange of views, discussions will help to contribute to successful implementation of this project.

Azerbaijan is known as a country where the first oil in the world was produced in the middle of the 19th century, and also the first oil from the offshore fields was produced in Azerbaijan in the middle of the 20th century. So, the history of oil industry of Azerbaijan is very rich. Also I would like to say that during the World War II Azerbaijan`s oil accounted for more than 80% of the oil produced in the Soviet Union and Azerbaijani oil workers contributed a lot to the victory over fascism. If not for the oil of Azerbaijan, most probably, the outcome of the World War II would have been different.

But by the time of the collapse of the Soviet Union our oil industry was not in good shape. Onshore fields were mostly exhausted and when Azerbaijan became independent in 1991 oil industry was in crisis. Not only oil industry, in general, we faced serious crisis – military, political and economic crisis, civil war, Armenian occupation. We didn`t have financial resources, we didn`t have technical capabilities to develop our huge oil fields. Only after 1993, when President Heydar Aliyev was elected, situation stabilized, civil war was stopped, we started reforms, and one of the important elements of the reforms was the opening of Azerbaijan to the world. We started to attract foreign investment, we created very good investment climate in Azerbaijan, and due to that fact we now enjoy the situation when Azerbaijan`s economy is sustainable, stable. With respect to the per capita direct foreign investment Azerbaijan is in the leading positions in the former Soviet Union area.

1994 was a year of the beginning of the new energy strategy of Azerbaijan. The contract between our government and a consortium of major oil companies of the world was signed in 1994. The contract immediately was named the Contract of the Century because of the scale of the investments and because of the fact that Azeri-Chirag-Gunashli oilfield, which was the resource space for the contract, was one of the biggest oil fields in the world. For more than 20 years the field has been in operation and a major contributor to the oil production of our country. Therefore, 1994 was really the year of the beginning of the energy strategy and for the first time the Caspian Sea was, if I may say so, opened for foreign investment.

But due to the fact that Azerbaijan is a landlocked country we needed to have a pipeline system to transport our oil. And, definitely, the coordinated efforts based on regional cooperation between Azerbaijan, Georgia and Turkey in the beginning made it possible to have a sophisticated modern pipeline system to transport oil and then gas to international markets.

I would like to remind you some of the important milestones in the implementation of energy policy of Azerbaijan, which actually led to today`s situation when we are talking about the Southern Gas Corridor. The Southern Gas Corridor project is based on what has been done here in Azerbaijan together with our partners for the last 20 years. In 1996, the contract on Shahdeniz gas field was signed between Azerbaijan and the consortium of foreign companies led by BP. Shahdeniz gas field is a main resource base for the Southern Gas Corridor. In 1997, first oil from Chirag platform was produced. Probably that was a record in the history of oil industry, when since the signing of the contract to the production of first oil only three years passed. In 1999, the pipeline connecting Caspian and Black seas – Baku-Supsa was built, and thus Azerbaijani oil started to be exported to the Black Sea port of Supsa in Georgia. That was an important element of diversification because for the first time the Caspian and Black seas were connected with a crude oil pipeline. In 2006, the Baku-Tbilisi-Ceyhan oil pipeline was commissioned. For the first time Caspian and Mediterranean seas were connected with a pipeline. In 2007, the South Caspian gas pipeline, which connected Baku, Tbilisi and Erzurum in Turkey with a gas pipeline, was constructed.

So, all these important milestones were crucial for the implementation of energy policy of Azerbaijan and together with our partners in Georgia and Turkey we managed to achieve all the goals and targets which we had in front of us. That also was a very good example of fruitful regional cooperation. The three countries managed to achieve very ambitious goals through supporting each other and cooperating. But that was only, if I may say so, the beginning of our plans. Huge gas fields of Shahdeniz plus other gas fields dictated the necessity of building the Southern Gas Corridor for transportation of gas from Azerbaijan to international markets. There also were important milestones in the implementation of this project. In 2011, a Joint Declaration on the Southern Gas Corridor was signed by president of the European Commission and myself in Baku, which identified Azerbaijan as one of the main contributors and enablers of the Southern Gas Corridor.

In 2012, the agreement between Turkey and Azerbaijan on the construction of Trans-Anatolian gas pipeline – TANAP was signed. This agreement played a crucial role in the implementation of the project of the Southern Gas Corridor because after many years of discussions about the project, which will be the main project for transportation of Azerbaijani gas, TANAP was introduced by us and immediately got strong support from all our partners. So TANAP has a special place in the implementation of the Southern Gas Corridor and, as you probably know, the practical implementation of TANAP has already started. In 2013, Trans Adriatic Pipeline was selected as a main export route to Europe. And 2014 marked a groundbreaking ceremony of the Southern Gas Corridor here in Baku on September 20th, exactly 20 years after the signing of the Contract of the Century, which was signed on September 20, 1994. So this is a short history of what has been done. Therefore once again I would like to say that without all those important elements, which already were created in Azerbaijan and in the neighborhood, today the Southern Gas Corridor project would have remained a good idea, a good intention. But today this project is a project which is already in the phase of its implementation.

I would like to note that the partnership between SOCAR and BP, our main investor played a very important role in the implementation of our oil and gas projects. This partnership has continued for 20 years, and will continue for many more years to come.

Once again, the resource base for the Southern Gas Corridor is Shahdeniz field, where BP is operator. And, taking into account huge gas reserves beyond Shahdeniz, and according to our estimations, proven gas reserves of Azerbaijan are more than 2.5 trillion cubic meters. The fields like Absheron, Umid and others will definitely contribute to the project of the Southern Gas Corridor and, most probably, we will have more production and more export than we anticipate today.

The important element of our cooperation is, of course, coordination of our efforts. I think today`s meeting of Advisory Council will concentrate on that. There will be presentation about what has been done and what is planned to be done. But coordination and efficient communication between all the countries and companies involved in this project will be the main prerequisite for the success. We must work as we did before, when we had a trilateral cooperation between Georgia, Turkey and Azerbaijan. That trilateral cooperation and the high level of mutual trust and mutual support allowed us to implement the project which I already mentioned. But now it is a more challenging situation because we have many more participants and players. Therefore, we need to have maximum level of mutual trust, and we need to support each other, and all of us need to contribute to the implementation of this project so that we do everything on time.

The Southern Gas Corridor is a project of energy security. It is energy security for us because it will allow Azerbaijan to export huge volumes of our natural gas to international market. It is energy security for consumers and transitors. Today energy security cannot be separated from national security of any country when energy resources become not only the source of prosperity, predictability and stability, but sometimes the source of rivalry and hostility. In our case, our philosophy always was that energy resources should contribute to stability, predictability, cooperation and mutual support. And I am sure that win-win situation for producers, transitors and consumers, balance of interests between the three components of the project will be actually the main reason for successful implementation of our project.

Diversification of energy resources is an issue which is discussed now on the main arenas of internal organizations. Azerbaijan is playing its role in diversification. When we are talking about diversification we are talking about diversification of sources, not only diversification of routes. Diversification of routes is important, but when the sources are same it doesn`t change a lot. Diversification of sources is important. Here, the Caspian gas, gas from Azerbaijan is the only new gas source for European consumers in the coming years.

This will, of course, create an absolutely different picture. Today we have a team of countries with strong support from the European Commission. I am very glad to see Mr. Sefcovic today at this meeting, which adds optimism to our plans. I am sure that all what we had in our minds in order to implement this project will be done, the project will be implemented in time, and we will all celebrate the implementation of the Southern Gas Corridor. But in order to do it we need coordination, mutual trust and very active interaction between all the countries involved in this process. Once again I would like to thank you for being together with us today, and wish the Advisory Council success.

Thank you.

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EU Commission Vice-President for Energy Union Maros Sefcovic praised President Ilham Aliyev`s role in the realization of the Southern Gas Corridor project. He said Europe was interested in diversification of energy sources and supply routes. Maros Sefcovic said that according to calculations in the future imports would account for 84% of gas and 94% of oil consumed in the European Union.

The Advisory Council then discussed the issues on the agenda.

At the conclusion, the participants of the Ministerial Meeting of the Southern Gas Corridor Advisory Council signed a joint statement for the press.