GAS NON-STOP

The closer Azerbaijan gets to its cherished goal of the comprehensive implementation of its gas-export potential, the more the maximum supply of gas to all regions in the country becomes a "question of honour" for the government. And plans are being made to resolve this very quickly: according to the state programme for the socio-economic development of the regions, in 2013 maximum figures for the level and quality of gas supplies will be achieved in the whole of the country's history.

The regions and Baku

And so, this year promises to become a turning point in the matter of solving the problem of gas supplies in Azerbaijan, because the process of providing gas to the country and work on the reconstruction of old and the laying of new gas lines is due to be completed in full. By the end of 2013 the level of gas supplies is due to be raised to 95% compared with the current level of just over 80%. The five percent which remain untapped will be provided for the sparsely-populated and outlying regions of the country, where the laying of gas pipelines is complex from the technical point of view, and is also economically inexpedient.        

It has to be said that significant work has been carried out in recent years in the development of Azerbaijan's gas-distribution system and in providing regular gas supplies to consumers. As a result, the number of the country's gas customers has exceeded 1.5 million and the level of supplies of gas meters has risen to almost 100%. At the same time, great attention is being focused in the context of the programme on supplying gas to populated areas located in the near-front and border areas; in 2012 the process of providing gas to Azerbaijan's Agdam and Qazax Regions was completed. In all, since the "Azerigaz" association and the Administration for the Export of Gas within SOCAR (Azerbaijan State Oil Company) have been operative, i.e. since 2009, 408 localities have been supplied with gas and the number of new customers has reached 315,524.

The problem of supplying gas to the Naxcivan Autonomous Republic (NAR), which because of Armenia's occupation of Azerbaijani territories could not be included in Azerbaijan's overall gas pipeline system, has also been completely resolved. Supplying the NAR with gas is being implemented through swap supplies (based on an equivalent network) to Iran on the basis of an agreement signed in 2004. According to the agreements, which are designed for 25 years, Iran supplies the NAR with 85% of the volume of gas this country receives from Azerbaijan (1-1.2m cu m daily). The Iranians take the remaining 15% as payment for the operations.

Along with improving the level of gas supplies to the country's regions, SOCAR is also focusing a great deal of attention on expanding the country's largest gas transportation system - Baku and the Abseron [Absheron] Peninsula.

It is enough to point out that in total, according to figures of 1 March 2013, the number of Azerbaijan's gas customers is 1.52 million, and more than a third of these (672,000) are in Baku, and all customers have been supplied with meters. Bearing in mind such a broad scope, SOCAR plans to implement a project for the re-design and updating of the gas-distribution system of the capital and Abseron, and the German E.ON company has already prepared and presented a feasibility study to the state oil company. The main reason for the implementation of the project is the fact that the country's gas-distribution system is outdated and does not comply with current requirements and the growing demand for gas. Some 90% of the existing infrastructure needs to be updated. 

In total, the project may demand expenditure of 1.2bn euros and it is planned to implement it completely through attracting foreign investments.

Bearing in mind the construction boom in Azerbaijan, especially in Baku, the question of supplying new building sites with gas remains a topical one. Supplying multi-storey residential buildings with gas is not a difficult one for the state oil company. SOCAR is ready to connect the new building to the distribution network within one week, but this is possible only if there is an acceptance certificate for the building issued by the Azerbaijani Ministry for Emergency Situations. The new building sites will be provided with water and electricity but gas connection is a responsible matter because supplying a building that has not been given a state certificate could be the cause of an explosion and a tragedy. SOCAR itself attests that the company has, of course, a vested interested in supplying customers with gas, increasing the level of supplies, charges and economic effectiveness, but in this case the question of customers' safety overrides everything else. 

Effective consumption

In speaking about cost-effectiveness, it is important to note that when it comes to improving the quality of gas supplies and the economic advisability of the distribution and sale of gas, ensuring a reduction in the level of losses during the transportation of gas is vital. This question is also one of the areas which SOCAR plans to develop in the future - the company plans to reduce the level of losses in the country's gas-distribution network to zero.

It has to be said that overall in recent years the number of losses has been reduced considerably. Whereas before it was 23%, last year this figure had been reduced to 9%. Improving it to a level which is accepted in the developed countries will be achieved by means of fully updating the capital's distribution system, as well as implementing other projects and programmes.

As part of supplying the republic's consumers everywhere with gas meters, work is also being carried out to install smart-card machines. For example, so far over 700,000 of these meters have been installed. They have a number of advantages, the main one being that this system enables the possibility of a customer acquiring a gas debt to be completely eradicated - the meter only operates by preliminary payment. Furthermore, customers no longer have to contact staff of the "Azerigaz" production association, sending their money to the controllers themselves, which frequently evokes mistrust among consumers.

Gas smart-meters will be installed everywhere in Baku and all the neighbouring localities by the end of 2013, although not all customers have been satisfied with them, pointing to low gas pressure following the installation of a "smart" meter along with what they say is an unfair increase in the consumption figure. There have also been other complaints, some of which the company agrees with and has dealt with accordingly. The company points out that the meters being installed - made by the French "Itron" company - have their own technical parameters and representatives of the company periodically monitor them to ensure they are operating to standard.

Along with work in supplying gas and constructing new local gas lines, SOCAR also has plans to construct new and re-design existing trunk gas pipelines. This work will be carried out in accordance with a special programme which is currently being prepared. Basically, all trunk gas pipelines were laid out in the 1970s and 1980s and, naturally, they require updating, re-designing and in some areas, replacing. Despite the fact that work on repairing and servicing these pipelines is carried out regularly, the preparation of a plan and the implementation of measures in accordance with it is advisable and necessary. We should add that by means of gas trunk gas pipelines SOCAR transports gas within the republic and also supplies it to Georgia, Russia and Iran (as part of swap operations for Naxcivan).

So, the size of the work and plans is quite impressive. And their full-fledged implementation, apart from confirming the development of Azerbaijan's economic potential, will help to ensure the consistent development of all the country's regions and various sectors of the economy, including agriculture, industrial production, tourism, and so on. And at the end of the day all this will help to resolve the main problem - the diversification of the country's economy and the strengthening of the non-oil sector.