UNEXPECTED MOVE

In mid-November, Azerbaijan once again became the focus of attention as one of the major players on the European gas market. On 13 November, the presidents of Azerbaijan and Bulgaria, Ilham Aliyev and Georgi Parvanov, attended a ceremony to sign two Azerbaijani-Bulgarian documents in Sofia. In particular, the Azerbaijani Ministry of Industry and Energy and the Bulgarian Ministry of Economy, Energy and Tourism signed a Memorandum of Cooperation and the Bulgarian company Bulgartransgaz and the State Oil Company of the Azerbaijan Republic - a Memorandum of Understanding on the transportation of natural gas.

According to the agreement, Azerbaijan will supply Bulgaria with more than 1 billion cubic metres of natural gas in 2011-2012. According to the Bulgarian Minister of Energy Traycho Traykov, Azerbaijani gas will be transported to Bulgaria via a future branch of the pipeline connecting Turkey, Greece and Italy (TGI). And in the future, transportation can be carried out within the framework of Nabucco. In addition, the document envisages the possibility of transporting Azerbaijani gas in liquefied form through Black Sea terminals, which is a completely new form of diversifying routes of energy supplies to world markets. "Transportation of liquefied natural gas by special tankers through the Black Sea - Azerbaijan has never done this before - is a new form of transportation for Azerbaijan. And we're going to work and conduct research in this direction. This idea will be fully investigated," Minister of Industry and Energy Natiq Aliyev said at a press conference in Baku.

The minister said that Azerbaijan has another way of exporting hydrocarbons to world markets - the South Corridor. But the South Corridor is not only the Nabucco gas pipeline for Azerbaijan. "We see the South Corridor project in a wider context," said the minister.

It should be noted that the parties see the agreement between Azerbaijan and Bulgaria as part of the project, Bulgarian President Georgi Parvanov said following his talks with his Azerbaijani counterpart, Ilham Aliyev.

Aliyev, in turn, said that Azerbaijan's obligations in relation to Nabucco were confirmed at an energy summit in Prague, and Baku has the resource base required for this. At the same time, he said that a number of issues, including those associated with gas transit routes and financing of construction, have yet to be resolved.

We note that recently a number of analysts were ready to take Azerbaijan off the list of potential suppliers for the Nabucco gas pipeline. This is the conclusion they drew after the failed talks between Azerbaijan and Turkey on gas prices and transit conditions. Some interpreted this as Azerbaijan's decision to "punish" Turkey and Europe for Ankara's rapprochement with Armenia which has occupied Azerbaijani territories.

In addition, it was stressed that Azerbaijan is inclined to sell its gas to Russia and has already signed an agreement with Russia. By the way, now there is also an agreement with Iran, which was signed on 12 November between SOCAR and the Iranian National Gas Exporting Company (INGEC). As is the case with Russia, Baku intends to supply Iran with 0.5 billion cubic metres of gas annually.

But after Ilham Aliyev's working visit to Sofia, almost all analysts agreed that Azerbaijan confirmed that it was a stable and reliable partner - Baku is loyal to its word and is ready to deliver its gas to Europe if necessary conditions are met.

On the other hand, the outcome of the president's visit made it clear to European partners that the ball is in their court and the future of the energy security of EU countries depends largely on their own promptness. "The agreements that were signed are bilateral in nature. I am convinced that cooperation between Bulgaria and Azerbaijan in the gas sphere will be very successful. In the future, this cooperation will expand and attract other countries to this positive initiative. As a result of Azerbaijani gas supplies to Bulgaria, Azerbaijan will become a partner of the European Union in the gas sphere. I am sure that it is important for the European Union, and for us," stressed the president of Azerbaijan.

In this respect, the Europeans have much to learn from the same Bulgaria. While the EU delays funding for the construction of Nabucco and a number of other issues, Sofia has killed two birds with one stone.

First, by signing a memorandum on gas supplies from Azerbaijan, it raised the level of its own energy security through diversification of sources.

Second, Sofia increased its chances of becoming a centre of natural gas distribution in Europe in the long term. This was confirmed by the Azerbaijani president at the final press conference with his Bulgarian counterpart. "I am confident that Bulgaria will play a very important role in this issue - the import of Azerbaijani gas to the European continent," said Aliyev.

According to the RBC, Bulgaria suffered from the January gas conflict between Russia and Ukraine more than other European countries. In this regard, Sofia is actively seeking ways to diversify suppliers. Moreover, a new gas conflict is brewing between Moscow and Kiev due to Ukraine's failure to pay for gas supplies.

In particular, Bulgaria is involved in the South Stream project, which envisages the creation of a new gas supply route to Europe via the Black Sea.

But the pipeline will be put into operation in late 2015, so Sofia is interested in cooperation with Azerbaijan, which is ready to start deliveries in 2011.

As for Azerbaijan itself, the events of the first half of November, including the signing of gas agreements with Iran and Bulgaria, as well as President Ilham Aliyev's official visit to Belarus demonstrated once again that Baku adheres to an independent, balanced and stable foreign and economic policy, which implies mutually beneficial cooperation on an equal footing.

The multi-faceted policy of diversifying hydrocarbon supplies affects the economic prosperity of Azerbaijan as well. "Azerbaijan has clearly demonstrated that the oil-producing country can survive the crisis without any economic downturn and maintain its regional leadership in economic growth. According to the CIS Interstate Statistics Committee, in the first nine months of this year, Azerbaijan maintained its leadership in the post-Soviet area in the rate of GDP growth which accounted for 6.1 per cent. This is the only example of such success. In other regional oil and gas producing powers, the figures are disappointing," Russia's electronic newspaper Utro writes in an article entitled "An island of prosperity in the ocean of crisis".