OIL MATTERS MOST

The Azerbaijani president's official visit to Ukraine and its achievements have confirmed the strategic nature of relations between the two countries. This was Ilham Aliyev's fourth visit to Kiev. The Azerbaijani leader had previously visited Ukraine in 2004, 2005 and 2006. In turn, President Viktor Yushchenko has paid two official visits to our country. These facts clearly show that the two leaders trust each other and that the two countries have established partnership at the highest level. Thus Azerbaijani President Ilham Aliyev said in Kiev that Azerbaijani-Ukrainian relations have today entered a new level of development.

Indeed, there are few countries in the post-Soviet area with which Azerbaijan has established close and developed relations that do not arise from the immediate demands of domestic and foreign policy. Their legal basis here is the agreement on friendship, cooperation and partnership of 16 March 2000, as well as more than 90 intergovernmental and interdepartmental agreements which cover almost all spheres of life in the two countries. During the current visit, this list was supplemented by another seven agreements, including one on cooperation in the spheres of security, state service, information and information technology, culture and tourism, youth and sports. But the most important document is certainly the declaration on friendship and strategic partnership and the charter of the council of the Azerbaijani and Ukrainian presidents.

Declarations signed by heads of state are usually an important element in the programme of official foreign visits, and their content indicates the level of development of bilateral relations. In this case, we can point out that the content of the Kiev Declaration fully reflect its title. In this document, the parties confirmed the unity of their positions on the most important issues of the international and regional agenda. This is especially important in view of the growing role of both states and the authority of their leaders in modern European politics and the active foreign policies of Ukraine and Azerbaijan.

For Baku it is important that, in this declaration, Kiev supports the 14 March 2008 UN General Assembly resolution "On the situation in the occupied territories of Azerbaijan" and the principle of a swift solution to the Nagornyy Karabakh conflict on the basis of the sovereignty, territorial integrity and inviolability of the internationally recognized borders of Azerbaijan. Incidentally, during the negotiations in the Ukrainian capital, Aliyev personally thanked Yushchenko for Ukraine's support for this resolution during the vote in New York.

Another priority area for dialogue and cooperation is GUAM. The declaration reiterates that the parties favour the development of this organization as a priority and notes the need to intensify cooperation within it in order to solve conflicts.

Both Azerbaijan and Ukraine are important partners of the European Union in the implementation of the European Neighbourhood Policy in the post-Soviet area. In this regard, the coordination of both countries' efforts in the process of European integration is a clear necessity. This understanding is also reflected in the Kiev Declaration, the parties to which stressed their readiness to participate jointly in European integration processes, first of all, in the context of implementing transport, communication and energy projects and to cooperate and exchange experience while building their bilateral relations with the EU. Incidentally, in matters concerning European integration Kiev has gone much further than Baku and we have something to learn from our neighbour. Specifically, Ukraine's experience in adapting national legislation to European law, preparing an agreement on free trade with the EU, solving issues of illegal immigration and readmission, ensuring a more privileged visa regime for its citizens travelling to EU countries for humanitarian purposes (students, tourists, scientists, cultural figures and others) and a whole number of other issues of European integration, deserve attention and study.

Issues of economic and energy cooperation have traditionally taken priority in the structure of Azerbaijani-Ukrainian relations. Thus it is no surprise that, according to last year's trade figures, Ukraine was our country's sixth largest trading partner (after Turkey, Russia, Italy, Iran and the USA) - the volume of trade with Ukraine amounted to $500 million. In the first quarter of 2008, this figure reached $150 million dollars, which testifies to a positive dynamic in the development of bilateral trade. Both capitals agree that further growth in mutual trade and the development of investment cooperation are directly linked to the implementation of major international transport and energy projects involving Ukrainian and Azerbaijani companies.

From this point of view, Kiev places special emphasis on the need to support the Odessa-Brody-Plotsk-Gdansk project and the work of the Sarmatia consortium (the agreement on its establishment was signed during the Vilnius energy summit on 10 October 2007) which studies the possibility of transporting the energy resources of the Caspian Sea to the European market through the territory of Azerbaijan, Georgia, Ukraine and Poland. Ukraine attaches special importance to this project, considering it to be an important factor in strengthening its own energy security. Ukraine raises the issue of not just transporting oil through its territory, but also developing a separate infrastructure - the construction of a factory, the establishment of a chain of petrol stations in Ukraine and so on. "The most important point is that we are forming a new export position on oil products to EU countries," Yushchenko said in Kiev. In this context, according to the Polish and Ukrainian press, Ukraine even suggested that Azerbaijan (SOCAR) and Poland consider setting up (possibly in Brody) an oil refinery for the deep processing of Caspian oil.

It must be noted that the Odessa-Brody oil pipeline was built in 2003 to transport, first of all, Kazakh oil from the Black Sea to Europe via Ukraine. But the pipeline was not filled for two years because no-one wanted to use it. Since 2005, the pipeline has been used in reverse mode to pump Russian oil to the port of Odessa. At the end of 2006, Ukrtransnafta and Transneft signed an agreement on the transportation to Odessa of at least 9 million tonnes of oil per year from Russia. Until recently, Russian oilmen actively exported oil via Odessa. Last year about 9.6 million tonnes of oil were transported through the pipeline and 40 per cent of this oil belonged to TNK-vr and LUKoil, about 10 per cent to Gazpromneft and a little more than 7 per cent to Rosneft. This year the situation is different because discounts on this direction are no longer valid. But it is still on the Russian export schedule until the end of this year. The schedule approved from April to December says that 7.2 million tonnes of oil, of which 1.6 million tonnes belong to small Russian companies, will be transported via the Odessa-Brody pipeline. The rest is Kazakh oil that is transported through Russia. However, the head of the state-owned national joint-stock company Naftohaz Ukrayiny, Oleg Dubina, said recently that the Odessa-Brody oil pipeline may stop using Russian oil at the end of the half-year because oil will be transported not from Brody to Odessa, but in the opposite direction. In order to change the working scheme of the oil pipeline, it is necessary to replace the current Urals technological oil with light Caspian oil.

It is no secret that Viktor Yushchenko and the Ukrainian government are counting on Azerbaijan from this point of view. The Ukrainian president said during the Kiev talks that both projects are profitable and promising. Baku is interested in them, but is more reserved. In Kiev, President Ilham Aliyev confirmed his political support for the Odessa-Brody project, but said it is necessary to wait for the confirmation of its economic profitability. "There is political support from countries involved in this project. We managed to agree on economic and technical details, to test them in practice and see the result," Aliyev said at a joint news conference on the results of the negotiations. A working group was set up in Kiev to submit a report on this issue by 1 July. The Azerbaijani president added that during negotiations, they discussed Azerbaijan's participation in this project in a wider format. It is a question of possible joint measures to refine and distribute oil and supply oil products to the markets of Ukraine and neighbouring countries. "This is a project that must continue within a very wide range of cooperation, not just between Ukraine and Azerbaijan, but also other countries involved in this project. Today we are talking about the establishment of an energy corridor that will link the Caspian and Baltic seas. This is a new element of regional cooperation," Aliyev said.

Cooperation between the two countries also seems promising in the development of the rail and ferry transport corridor Baku-Tbilisi-Poti/Batumi-Ilyichevsk and in the expansion of the pilot corridor for container deliveries from Kazakhstan to Ukraine and Moldova through Azerbaijan (Almaty-Aktau-Baku-Poti).

A significant indication of the truly strategic relations between the two countries is the signing in Kiev of the charter of the council of the Azerbaijani and Ukrainian presidents. As we know, the decision to create this format for dialogue and cooperation was confirmed by the joint Azerbaijani-Ukrainian declaration of 7 September 2006. It is planned that the council of the presidents will be engaged in consultations on topical issues of bilateral relations and international policy and, what is also important, it will control the implementation of agreements reached between the two countries and their leaders. Both capitals hope that the work of the council will strengthen coordination in the process of bilateral cooperation and increase its effectiveness.

The Kiev talks also focused on humanitarian cooperation. The parties agreed that Days of Ukrainian Culture will be held in Baku in autumn this year and that a monument to the classical figure of Ukrainian literature, Taras Shevchenko, will be unveiled in the Azerbaijani capital soon.