"ENERGY RESOURCES SHOULD UNITE"

A lot has changed in Azerbaijan's oil and gas sector in  the 19 years the Caspian oil and gas exhibition and conference have been held in Baku - many contracts on the development of prospects has emerged,  the number of large deposits has increased, millions of barrels of oil and billions cubic meters of gas have been produced... But one important factor for the image of the country has remained unchanged - the confidence of foreign partners in the investment potential of Azerbaijan's fuel and energy sector. This aspect was repeatedly emphasized during the 19th Caspian Oil & Gas 2012 exhibition and conference which was joined by over 300 companies from 35 countries worldwide.

Reliable partner 

Yes, much water has flown under the bridge since the first oil exhibition and conference in Baku. One can confidently say today: Azerbaijan has emerged as an oil and gas state and secured an important place among world leaders in this sector. Suffice it to mention that Azerbaijani oil accounts for 25-35 per cent in the energy balance of several countries. As President Ilham Aliyev said in opening remarks at the Caspian Oil & Gas 2012, the country's role as a reliable partner for our friends and European consumers gradually increasing. "At the same time, we have resolved another issue facing any oil and gas rich country - the issue of diversification of export opportunities. We now have seven oil and gas pipelines through which our resources are exported in all directions. We do not depend on one route," the president said.

He added that Azerbaijan's energy policy is very open, it is a policy of good will. In some cases, considering the difficulties of some countries, we extended our helping hand. "I think that if similar trends in the world's energy policy grow at this stage and in the coming years, then it will be easier to predict all the problems. In short, energy resources should not divide but unite. I think that Azerbaijan's experience in this regard is very applicable and can be studied," Ilham Aliyev said. 

At the same time, as mentioned above, cooperation between foreign investors and local companies and authorities in Azerbaijan has been even more successful. "We have cooperated with BP, our main energy partner, for about 20 years. I think this cooperation and this experience are in a sense unique. They can also be studied," the president added. In fact, this has been underlined by US President Barack Obama in a message to the participants of the Caspian Oil&Gas 2012. He said, "We will continue to advance our already strong partnership as Azerbaijan cements its ties with Europe via the Southern Corridor, uses its energy resources to spur the development of a modern diversified economy, and takes on increasingly important responsibilities on the world stage."

His statement was reinforced by the fact that US Secretary of State Hillary Clinton visited the Caspian Oil & Gas 2012 exhibition as part of her brief visit to Azerbaijan. This attests to both high status of the event and the significance the West attaches to the energy cooperation with Azerbaijan. While reviewing the exhibition, Clinton was acquainted with the stand of the American Chamber of Commerce (AMCHAM). "The USA is working closely with Azerbaijan in the field of energy security. This is a common strategic interest to both countries and one of the global challenges of our time," Hillary Clinton said in a news briefing at the end of her visit, expressing deep appreciation to Azerbaijan for its role in the efforts to diversify oil and gas supply routes.

In this regard, it is also worth pointing to a statement by the energy adviser of the British Foreign Office, Angus Miller, that "Azerbaijan is a key and reliable partner of the European Union and the Southern gas corridor is extremely necessary for the EU." In other words, the West and the Old World are confident in Azerbaijan as a reliable partner and are interested in continuing business partnership in the sphere of energy with it.

Reliable investor 

It should be acknowledged that Azerbaijan's reliability as a partner has led to quite an impressive amount of investment in the country - $120 billion since 1995, of which $50 billion was channeled into the non-oil sector. And this is not the limit, given the discovery of new gas fields which have greatly increased the country's gas potential. Azerbaijan's proved natural gas reserves constitute 2.6 trillion cubic meters.

According to President Aliyev, gas fields will serve the country for about a hundred years to come, while oil reserves for over 50 years because the block of fields Azeri-Chirag-Guneshli (ACG) has more oil more than initially thought. In total, according to SOCAR president Rovnaq Abdullayev, Azerbaijan's has proved hydrocarbon reserves of 4.2 billion tons of fuel equivalent.

Over the entire development period, i.e. since 1997, the total volume of oil production from ACG has reached 272 million tons. According to the first vice-president of SOCAR, Xosbaxt Yusifzada, 134 million tons of this volume is Azerbaijan's profit oil. In January-May 2012, the field gave an output of 15 million tons, of which 9.5 million tons was Azerbaijan's profit oil.

He also noted that in 1996-2011, as part of the oil and gas contracts, exploration work was carried out on 18 structures and 34 wells with a total headway of 159,000 meters drilled in Azerbaijan. "These wells have increased Azerbaijan's proved reserves by 2 billion 775 million tons of fuel equivalent," Yusifzada said.

The growth of foreign investment has favorably influenced SOCAR itself. Today it is one of the world's major oil and gas companies investing in long-term projects abroad. Suffice it to note that SOCAR's annual pre-tax profit amounted to 879 million manats last year, up to 2008 by 81 per cent, while the aggregate amount of assets as of beginning of 2012 amounted to 17 billion manats, or 36 per cent more than in 2008.

As you know, SOCAR already acts as an investor in projects in Georgia (the company has invested $110 million in petrol stations, $400 million in the Kulevi oil terminal and $176 million in Georgia's gas distribution network), Romania (9.5 million Euros in 13 petrol stations), Ukraine (66 stations and three oil depots have cost $160 million). According to the SOCAR vice-president on economic issues, Suleyman Qasimov, the investment in the creation of SOCAR's commercial unit, SOCAR-Trading, constitutes 60 million Swiss francs. In November last year, SOCAR signed an agreement with Exxon Mobil to acquire its Swiss branch Esso Schweiz GmbH in a deal worth 330 million Swiss francs.

But the leading country for the volume of foreign investment is, of course, Turkey. In the next seven to eight years, SOCAR intends to invest about $10 billion in projects in this country and an impressive $17 billion considering the construction of TANAP (the Trans-Anatolian gas pipeline).

The figures are impressive, both in terms of their volume and the nature of the projects. Perhaps they will change by the 20th Caspian Oil & Gas exhibition and conference next year. But clearly only in the direction of growth.