NEW GOALS FOR NEW YEAR

It has become a tradition to see the signing of important documents between Azerbaijan and Turkey on cooperation in the energy sector in every December. In 2020, the energy ministers of both countries signed the Memorandum of Understanding on the construction of the Igdir-Nakhchivan gas pipeline to diversify gas supplies to the autonomous republic. At the end of last year, the coverage was significantly expanded: Azerbaijani and Turkish governments signed six documents in total to strengthen cooperation in the supply of natural gas, power production, and mining industry. Respective documents were signed at the 1st Azerbaijan-Turkey Energy Forum held in Baku on December 21-22 under a joint chairmanship of the Azerbaijani Energy Minister Parviz Shahbazov and Turkish Minister for Energy and Natural Resources Fatih Donmez.

Energy cooperation

Azerbaijan and Turkey have established productive cooperation in the oil and gas sector, in particular, in the production and export of oil and gas, oil refining, as well as the trading of oil and petrochemical products. The two-day forum organised through the Joint Intergovernmental Commission on Economic Cooperation between Azerbaijan and Turkey expanded the horizons of joint activities through the development of new areas of cooperation. The key topics of the business program were gas, electricity, mining and green energy projects in the liberated territories of Azerbaijan.

Minister Shahbazov said that Baku and Ankara agreed to continue cooperation not only in the oil and petrochemical fields. “We also held negotiations on cooperation in power supply, energy efficiency, and the regulation of the energy sector. We will continue cooperation with Turkey in all energy-related issues and in other sectors of the economy. We look forward to achieve the same level of success we have in the oil and petrochemical sectors,” Mr. Shahbazov said.

Minister Fatih Donmez recalled the successful implementation of the Baku-Tbilisi-Erzurum, Baku-Tbilisi-Ceyhan and TANAP pipeline projects and underlined that the cooperation between Ankara and Baku has made a significant contribution to the security of energy supply to the region and Europe.

“Energy cooperation between Turkey and Azerbaijan is not limited only to hydrocarbons. Since 2019, Turkey has conducted five trainings for Azerbaijani experts, mainly on the liberalisation of the electric power market, legislation framework for renewable energy sources, and investment models. I believe that the transfer of our successful practices jointly implemented in the oil and gas industry to the renewable energy sources sector will boost our relations,” Mr. Donmez said.

The parties also signed the Protocol of the 1st Azerbaijan-Turkey Energy Forum, as well as documents on mutual understanding on the supply of natural gas, cooperation in the mining industry, earth sciences and on cooperation between Azerenerji OJSC and Türkiye Elektrik İletim Anonim Şirketi (TEİAŞ).

Welcome to a new gas pipeline to Nakhchivan!

According to the Ministry of Energy of Azerbaijan regarding the goals of the memorandum on the supply of natural gas, the document creates a legal framework for perspective commercial agreements between SOCAR and BOTAS on the supply of gas to SOCAR’s enterprises in Turkey.

Turkey is concerned about the problem of the gas shortage in Europe and is ready to contribute to the solution of the problem, Turkish minister F. Donmez said. Ankara is open to dialogue on expanding the capacity of the gas transportation infrastructure to increase the volume of gas supplies to the EU. “Currently, we hold some preliminary talks to increase existing capacities to meet the growing demand for natural gas in Europe. However, it is impossible to solve all these issues overnight, as we need to consider the upstream factor. Increasing the pipeline capacity alone is not enough. The main thing is to work on increasing production volumes in the Caspian Sea,” Mr. Donmez believes.

Also at the forum, the parties discussed the construction of the Igdir-Nakhchivan gas pipeline. Although the process has not yet reached the stage of physical construction of the pipeline since the signing of the memorandum last year, Turkish officials assure that the project is ongoing.

The throughput capacity of the Igdir-Nakhchivan gas pipeline is expected to be 500 million cubic meters annually, or 1.5 million cubic meters daily. In Turkey, the length of the pipeline will be approximately 85 km. Under the same project, it is also planned to build one gas metering station.

“Thanks to the diversification of gas supplies, the project will strengthen the energy security of the Nakhchivan Autonomous Republic (NAR) and, in general, deepen the ties between Azerbaijan and Turkey,” Mr. Shahbazov said underlining the importance of the pipeline for Azerbaijan.

F. Donmez added that Ankara expects to start the construction works as soon as possible. “We hope that SOCAR and BOTAS soon complete their work to implement the project. After the completion of technical studies, we expect that the construction of the pipeline will begin as soon as possible,” Mr. Donmez said.

As for the expansion of gas cooperation between Baku and Ankara, the parties review a variety of possibilities, including trading liquefied gas and the production and sales of hydrogen. “Azerbaijan and Turkey have great prospects for further energy cooperation. This includes extended cooperation along the entire value chain in the oil and gas sector, joint participation in related production projects in third countries, conversion of Azerbaijani natural gas to liquefied gas in Turkish ports with its subsequent sale on world markets,” minister Shahbazov said.

Other promising areas for the development of the Azerbaijani-Turkish cooperation include the operation of underground gas storage facilities, as well as the production, transportation and storage of hydrogen.

Electricity is priority

Power generation was one of the important topics of the Baku forum. The participants have mainly discussed the potential of Azerbaijan and its energy projects planned for the implementation in the liberated territories of Garabagh and East Zangezur, as well as the opportunities to involve the Turkish companies to these works.

The Ministry of Energy of Azerbaijan believes that the potential of the liberated territories for the development of renewable energy sources thanks to abundant water resources of the region, as well as tenders to create 700MW wind and solar energy plants, construction of a 100MW-wind power plant in the Lachin-Kalbajar zone and other ‘green energy’ plans open up wide horizons for Turkish investors.

“The experience and support of Turkey in energy efficiency and market relations are very important for Azerbaijan. On the path to clean energy, we see Turkey as our biggest ally. As an example of this support we can show Turkey’s withdrawal of its candidacy for the establishment of the Clean Energy Center of the Organization for Economic Cooperation in Azerbaijan,” Mr. Shahbazov said.

Minister said that they were reviewing the proposals of Turkish companies on the export of electricity from Nakhchivan to Turkey and on the construction of a 550 MW gas turbine power plant in Nakhchivan.

In turn, Mr. Donmez said that Azerbaijan had serious investment plans on renewable energy sources, especially in Garabagh. “Solar and wind power plants will be installed there to meet the energy needs of Garabagh. Turkish companies that have experience in this field will visit Azerbaijan for meetings and negotiations. We will be glad to reach an agreement with our Azerbaijani partners. So far there is no agreement, but the negotiations are ongoing. As part of the Green Energy Concept to be implemented in the liberated territories, we will continue to be close to Azerbaijan, both through the state and private sectors,” F. Donmez said.

Another attractive area for cooperation for Ankara is electricity trade with Azerbaijan. “In fact, there is a de facto connection between the power grids of Nakhchivan and Turkey. We want to make it functional again and have reached a mutual agreement on this issue. Nakhchivan has opportunities for generating electricity. Surplus volumes could be sold to Turkey,” the Turkish minister said.

The next Azerbaijani-Turkish forum is agreed to be held in Turkey. It will, probably, be devoted to discussions on specific projects. But the first step towards this has already been taken in Baku.

Azerbaijan and Turkey agreed to cooperate in the mining industry

On December 22, State Agency for the Use of Mineral Resources under the Ministry of Environment and Natural Resources of Azerbaijan, AzerGold CJSC, Main Directorate for Research and Exploration of Deposits under the Ministry of Energy and Natural Resources of Turkey and the international mining company MTA signed in Baku a quadrilateral Memorandum of Understanding on cooperation in the mining industry as part of the 1st Azerbaijan-Turkey Energy Forum.

Zakir Ibrahimov, Chairman of the Board of AzerGold CJSC, said that the document covered exploration, assessment of mineral resources, exchange of information and experience.

“The document is about scientific and technical cooperation in geology, mining, and joint geological exploration. In addition, the signatories will consider the possibility of creating a joint venture or company to operate in Azerbaijan. MoU is another successful step taken for the future development of Azerbaijan’s mining sector,” Mr. Ibrahimov said.

Turkish Minister for Energy and Natural Resources, Fatih Donmez, added that the document on cooperation could "turn into a specific mining project in the future."