GAS POLYGON

In the early days of the present oil strategy, Azerbaijan adopted a policy of diversifying energy supplies to world markets. Baku clearly indicated that attachment to any one country or project was out of the question. The country's leadership adheres to this principle. During Ukrainian President Viktor Yanukovych's visit to Baku, the two presidents discussed the details of a project to transport liquefied natural gas to Ukraine, following an agreement reached in Davos in January this year.

I have to record that the gas project is not the first element of energy cooperation between Azerbaijan and Ukraine. Just last year, about 1.5 million tons of Azerbaijani oil were transported to Ukraine. Moreover, Azerbaijan's SOCAR Energy Ukraine company, with an investment of $81.3 million, is already operating in that country.

But the project to supply liquefied gas is, of course, even more important for friendly Ukraine, if we recall the numerous political and economic scandals that have wracked the country in recent years due to the lack of domestic gas resources and failures in the pumping of Russian gas to Europe. Ukraine is seeking additional safeguards to ensure its stability as a partner in the European energy market.

As for Azerbaijan, Baku has long established itself as a reliable partner in the energy market. Baku's interests in this case are purely economic and commercial. Ukraine is another area on the map to receive gas supplies from Azerbaijan, and the more such routes, the better - this is clear both in terms of energy security and financial gain. President Ilham Aliyev said that Azerbaijan has proven natural gas reserves of 2.2 trillion cubic metres, while it is planned to invest billions, or perhaps tens of billions of dollars, in the near future to increase production. "Today we supply our gas resources to all neighbouring countries. Of course, we are interested in increasing supplies to these traditional markets, as well as in entering new markets. As consuming countries are looking for new sources, so producing countries are interested in new markets," the president said.

It is appropriate to recall here that besides the already well-established gas supplies to neighbouring countries mentioned by the head of state, Azerbaijan is, in principle, open to participating in a number of major projects for the delivery of gas to Europe - starting with the long-suffering, or rather much-discussed, Nabucco project to the Trans-Adriatic Gas Pipeline (TAP), the White Stream and ITGI projects (Turkey-Greece-Italy gas pipeline), which together represent the so-called 'Southern Corridor'. There has been a lot of talk about this project being unrealistic. But after Azerbaijani President Ilham Aliyev and European Commission President Jose Manuel Barroso signed a 'Joint Declaration on the Southern Energy Corridor' this January, and then Azerbaijan's Minister of Industry and Energy Natiq Aliyev and European Union Commissioner for Energy Gunther Oettinger signed a protocol of intent, the 'Southern Corridor' project, in particular Nabucco, entered the implementation stage. According to experts, this is a clear signal to investors that the project will happen.

There is also the Azerbaijan-Georgia-Romania Interconnector (AGRI) project, which is not a constituent of the 'Southern Gas Corridor' but is, nevertheless, also focused on the delivery of Azerbaijani gas to the European Union. On 14 September 2010, Azerbaijan, Georgia, Romania and Hungary signed the Baku Declaration on the Azerbaijan-Georgia-Romania Interconnector project. And on 14 February 2011, a protocol on the AGRI project was signed, by which Hungary became a full member.

The project provides for the transportation of Azerbaijani natural gas through pipelines to the Black Sea coast of Georgia, where the gas will be liquefied at a special terminal and then shipped by tanker to a terminal at the Romanian port of Constanta. Then, the liquefied gas will be translated into natural gas and, using the country's existing infrastructure, sent on to meet the needs of Romania, as well as those of other European countries. This project involves the supply of 2 to 8 billion cubic metres of gas per year.

It is also planned to supply liquefied natural gas to Bulgaria. Three versions of the AGRI project are under consideration, with capacities of: 2, 5 and 8 billion cubic metres of gas per year. According to preliminary data and depending on project capacity, it will cost from 1.2 to 4.5 billion euros.

These are the projects that Ukraine is joining. It has already announced the construction of a terminal for liquefied natural gas in Odessa (this project is already seen as a priority national project) and says it is ready to cooperate with Azerbaijan in the building of an LNG terminal in the Georgian port of Kulevi as part of the AGRI project. According to Azerbaijan's Deputy Minister of Industry and Energy Natiq Abbasov, the Ukrainian side expects to receive at least 2 billion cubic metres of liquefied gas from Azerbaijan by 2015.

In short, in its quest to expand the scope of energy supplies to world markets, Azerbaijan is working consistently with all interested parties. And thanks to steady, friendly and trusting relationships with existing partners, the number of those interested parties can only increase in the long-term...