REVIVING TRADITIONS

On July 18-19, 2018, Italian President Sergio Mattarella made his first visit to Azerbaijan. The parties discussed the prospects for bilateral relations, laying down the legal basis for the future development of cooperation in various fields.

Italy traditionally retains the first place among the trade partners of Azerbaijan. It accounted for 21% of the total foreign trade turnover of Azerbaijan in 2017, when the volume of mutual trade between the two countries reached $4.7 billion. This is equal to half of the total trade turnover of Azerbaijan with the EU states. Azerbaijan’s export to Italy prevails over the import. True, the trade surplus is due to the sale of Azerbaijani oil through Italian ports. Italy provides 15% of its national demand for oil purchasing it from Azerbaijan. In addition, no matter how some forces in Italy and outside the country try to prevent the construction of the Southern Gas Corridor, when it is completed, this country will become one of the main buyers of Azerbaijani gas.

Given the boosting of the post-oil economic policy by Azerbaijani government, it is quite realistic to notice a significant increase in the share of the non-oil sector in mutual trade with Italy in the foreseeable future. Meanwhile, Italian companies are actively involved in the development of Azerbaijani deposits. As Italian President Sergio Mattarella said at the Azerbaijani-Italian business forum in Baku, over the past ten years the contribution of Italian companies to the oil industry of Azerbaijan (investments and technologies) has exceeded €5 billion.

Italian technology

In recent years, we can often hear about the diminishing role of oil and natural gas as energy sources but they will not leave the scene, as they will become an important raw material for the production of petrochemical products. Thanks to developing petrochemical industry in Azerbaijan, it will be possible to achieve diversification of the national economy, opening new markets for domestic products. But to achieve these goals, it is required to have not only large financial resources, but also modern technologies for the production of competitive products.

Thus, the opening ceremony of the polypropylene plant SOCAR Polymer during the visit of the Italian President to Azerbaijan was a significant event in this context. The construction works have been carried out by the Italian company Maire Tecnimont.

SOCAR Polymer is the first large enterprise built in the petrochemical industry of Azerbaijan during the last 40 years. Total investment costs are $816 million, of which $768 million has already been invested.

SOCAR Polymer is the first company created as a public-private partnership in the petrochemical industry of Azerbaijan. So, the Russian Gazprombank provided 60% of the investment, while the remaining funds were invested by SOCAR, Vitol, Paşa Holdinq, Gilan Holdinq and Azərsun Holdinq. In accordance with the principle of “project financing”, a loan of $489 million was received without the guarantee of the main shareholder. This is the first such financing practice for Azerbaijan.

After reaching the designed production capacity, SOCAR Polymer will produce 184,000 tons of polypropylene of 19 types and 120,000 tons of high-density polyethylene of 12 types annually. The products will be shipped daily with 60 high-tonnage trucks. At the same time, 70% of the output will be exported, which will bring the share of the non-oil sector in Azerbaijan's exports to 19%. The company's annual revenues are projected at $6.3 billion, one-third of which is net profit.

SOCAR President Rovnag Abdullayev said that taking into account the high professionalism demonstrated by Maire Tecnimont in the construction of a polypropylene plant in Sumgayit, the same Italian company was commissioned to design, purchase and construct 14 new facilities for the upgrade of the Heydar Aliyev Oil Refinery. Another Italian company, Technip Italy, is the general EPC contractor for the Azerkimya reconstruction project, which is the main supplier of raw materials to SOCAR Polymer.

Profitable direction

Yet another important events were the agreements signed in Baku in the presence of the presidents of Italy and Azerbaijan including the Memorandum of Understanding between Azerbaijan Railways CJSC and the State Railways of Italy. The document opens new prospects for the Italian business community in terms of transporting goods through Azerbaijan to China, Iran, India, and other countries.

As President Ilham Aliyev noted, the Baku-Tbilisi-Kars railway opened less than a year ago is the shortest route for Italian goods to Asia and back. If the traditional sea route took 30-35 days, the new railway enables the delivery of goods from Asia to Europe in just two weeks. In May 2018, the largest sea trade port in the Caspian Sea was put into operation in Alat, which for the first time will be able to handle up to 15 million tons and later up to 25 million tons of cargo annually. In addition, Azerbaijan owns the largest merchant fleet consisting of 200 vessels.

Historical roots

The history of political, economic and cultural relations between Italy and Azerbaijan dates back to the 15^th century when political and diplomatic ties were established between the Azerbaijani state Akkoyunlu and the Republic of Venice. From 1469 to 1478, the Embassy of the Venetian Republic functioned in Azerbaijan. At that time, Azerbaijani diplomats negotiated in the Kingdom of Naples.

On the occasion of the visit of the Italian President to Baku, the Heydar Aliyev Center and the Italian Uffizi Gallery organized and exhibition in Baku, where the visitors could see the portraits of commander and poet Shah Ismail Khatai and Shah Tahmasib made by Italian painters Cristofano del Altissimo and kept at the Uffizi Gallery.

Pieces of Italy are reflected in architectural sights of Baku built by Azerbaijani millionaires in 19-20^th centuries, including the Palace of Marriage built by oil tycoon Murtuza Mukhtarov in honour of his wife Lisa Tuganova. This building in fact is a copy of the Venetian Palazzo de Loge, whose beauty struck Tuganova during her visit to Venice. The building housing the Presidium of the National Academy of Sciences of Azerbaijan is a true representation of the Venetian Gothic style. The history of the Ismailia Palace  built by oil tycoon Musa Naghiyev is very sad. It was built in memory of his untimely departed son Ismail. The Baku Palace embodied the architecture of the Venetian palace of Ka Dor with its golden decor and multicolour marble.

It is possible that in the future new buildings representing Italian architectural style will appear in Baku. To continue the good tradition of cooperation in this field will allow a memorandum of understanding between the Azerbaijan University of Architecture and Construction and the Polytechnic University of Milan, signed during the visit of President Mattarella in Baku.

Furthermore, the respective institutions of Italy and Azerbaijan signed a technical agreement on cooperation in the veterinary area and the declaration on cooperation in the field of higher education. Italy is ready to cooperate with Azerbaijan in such areas as protection, reassessment of environment, agriculture and transformation of the processing industry, infrastructure, transport, logistics, and construction. In short, Baku and Rome intend not only to increase the volume of mutual trade turnover in traditional sectors of economy but also to expand the spheres of bilateral cooperation.