1 January 2013 – 6:43pm
Author: Interview by Ramin Naziev, Baku, exclusively to VK
– What economic developments in Azerbaijan in 2012 would you recall?
– In general, this year can be considered to be stable. Given the variables such as GDP and other macroeconomic trends, the governmental forecasts of the beginning of the year are true. During the year the country experienced economic growth, Azerbaijan ends this year with positive indices. According to preliminary estimates, in 2012, economic growth was 2.5%. And it is necessary to take into account such a factor as the 6% decrease in oil production in the country. But the development of the non-oil sector compensated for the decline in the oil sector. In 2012, the share of the non-oil sector rose by 10%.
In 2012, the Azerbaijani government prioritized energy policy. There were memorable events such as the signing of the agreement with Turkey on the TANAP project (Trans-Anatolian pipeline). The first agreement on the joint use of the pipeline was reached in the autumn of 2011, and in 2012 the project was launched, a consortium was created, and all the questions on TANAP were discussed and contracts were signed. According to the bilateral agreement, Azerbaijani gas will be supplied to Turkey and from there distributed to several countries in Europe. By 2018 it is planned to export 16 billion cubic meters of gas through the pipeline, and by 2022 – more than 30 billion cubic meters. Therefore, implementation of the TANAP project in energy policy is one of the significant events.
The year 2012 is remembered for the changing relations between the Azerbaijani government and the oil company BP (British Petroleum). Under the agreements of the “Contract of the Century”, the obligations of both parties were again discussed. A question was asked about the periodic reduction of oil production since 2010. At the initial stages of the negotiations there was some tension, but at the end of the year the agreement between the state and BP on energy issues was reached. In 2010, oil production in the country was 51 million tons; in 2011, the figure dropped to 46 million, and in 2012 – to 45 million. This led to a revision of the relationship between the state and the oil companies; commitments and prospects for the future have been re-considered, so in 2013 oil production in the country is expected to increase.
– What are the dividends of signing a contract with Turkey on sharing TANAP, what are the differences between the TANAP and “Nabucco” projects?
– The implementation of TANAP brought to the agenda the question of to what extent the “Nabucco” project would be appropriate. Both projects included the supply of Azerbaijani gas to Europe. TANAP provides gas exports of 32 billion cubic meters and “Nabucco” of 80 billion cubic meters of gas. Today, natural gas production in Azerbaijan is 28-30 billion cubic meters per year. The development of the “Shah Deniz-2” deposit will start in 2016. That is, until 2016, the country will not enjoy a sharp increase in gas production. After the launch of “Shah Deniz-2” an increase in gas production in the country by 37 billion cubic meters a year will take place, and since 2016 every year, gas production will be increased by 9.10 billion cubic meters.
A sharp increase in gas production is planned after the commissioning of the “Absheron” deposit. By this time in the country about 50 billion cubic meters of gas will be extracted. According to these indicators, it can be said that almost all the gas extracted from the site of “Shah Deniz-2” will be supplied via TANAP.
Today Azerbaijan exports 6 billion cubic meters of gas to Turkey (after 2016 – 16 billion cubic meters) and supplies 13 billion cubic meters of gas to Russia, about a billion to Georgia, as well as to Greece and Iran. There is a bilateral agreement under which Azerbaijan exports 400 million cubic meters to Iran, and Iran, in turn, sends the same volume to Nakhichevan.
In brief, in connection with the implementation of TANAP there is a problem of gas supply by “Nabucco.” Prior to 2022, before commissioning the “Absheron” deposit, Azerbaijan can supply gas only to the Trans-Anatolian Pipeline. Even if the “Nabucco” project is implemented, Azerbaijan will not be able to supply gas to two pipelines at once. Therefore, implementation of the “Nabucco” project will only be possible if the project is connected to Iraq and Turkmenistan. Then, before using the “Absheron” deposit, our country will symbolically be able to participate in this project, but the bulk should be assigned to Iraq and Turkmenistan. Iraq at the first stage is capable of sending 15 billion cubic meters of gas, although today there is gas production of 4 billion cubic meters a year there. In Turkmenistan, gas production is around 40 billion tons, but it is necessary to consider the fact that Turkmenistan already has its own market. So connecting Turkmenistan to “Nabucco” today is unrealistic for both economic and political reasons. The status of the Caspian Sea is not yet fully discussed. The failure to lay a pipeline from Baku to Ashgabat and a number of other political reasons shows the disinterest of official Ashgabat in joining the “Nabucco” project.
In short, in 2012 in terms of energy policy expectations have reduced for the implementation of the “Nabucco” project because of the start of the implementation of TANAP. Thus, Azerbaijan has sent a clear message that the gas politics of the country gives an advantage to cooperation with Turkey. And the supply of natural gas to Europe via Turkey is an important element of the strategic partnership between the two brotherly countries.
To be continued
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