CAST OFF!

The dream of building a new shipyard during the years of independence has come true. This major enterprise, opened in the capital's Garadagh district [Qaradag rayonu] on 20th September, is to boost Azerbaijan's economic and industrial potential to a large extent, since it is one of the biggest infrastructure projects to be implemented in the republic. Azerbaijan's President Ilham Aliyev attended the ceremonial opening of the shipyard.

A timely project

As the owner of the biggest cargo, passenger and auxiliary oil fleet in the Caspian, Azerbaijan is experiencing considerable demand for its vessels to be upgraded. Over the last 10 years the Azerbaijan State Caspian Shipping Company (Kaspar) has ordered 10 tankers, six ferries and several dry cargo vessels from shipyards in Russia and Croatia. Besides this, two dozen passenger and supply vessels, tugs and special purpose craft have been ordered by the Caspian Sea Oil Fleet and its international partners in the oil consortium to provide services to the sea drilling rigs in different countries. In total approximately $700 million dollars have been spent on upgrading Azerbaijan's fleet.

This is quite a large sum, but, given the dynamic economic activity developing along the former Silk Road between Europe and China and the wealth of natural resources in the Caspian Sea area, Azerbaijan's, Kazakhstan's and Turkmenistan's demand for new vessels will continue to grow apace. This caused Azerbaijan's government to think about building vessels in the country itself. They simply calculated that, if the enterprise were well organised, it could save them considerable sums of money which are currently going to foreign shipyards and with time they would be able to earn money from orders from neighbouring countries.

The final idea of setting up a state-of-the-art shipyard producing different kinds of ships was put forward by President Ilham Aliyev about six years ago. At that time, back in 2007, a memorandum was signed between the Azerbaijan Investment Company (AIC) and its South-Korean partner, the STX Offshore and Shipbuilding Company, on building this enterprise. But owing to the global economic crisis that started in 2008 some amendments had to be made to the agreement and then this joint agreement was cancelled altogether.

It did not take long to find a new partner. By November 2009 an agreement had been concluded with the Singapore ship-builder Keppel Offshore and Marine. In compliance with the contract, the new partner that was contracted to do the construction work and manage the company would have a 10-per-cent stake, the State Oil Company of the Azerbaijan Republic (SOCAR) would have a 65-per-cent stake and the Azerbaijan Investment Company (AIC) would have a 25-per-cent stake. The Singapore partner would be able to increase its stake to 20 per cent over a period of three years, according to the agreement. The cost of the first phase of building the shipyard was set at $405 million and the second phase at $60 million, mainly financed by SOCAR and AIC.

The foundation stone of the new shipyard was laid in March 2010, and in December of the same year the partners in the project signed an inaugural agreement on setting up the Caspian Shipyard Company joint enterprise. While discussions were taking place on financial and organisational issues, the actual building of the shipyard began, designed by the British company Royal Haskoning and the Netherlands ?TTC.

The first customers

The shipyard only took two and a half years to build. The shipbuilding facilities occupy an area of 620,000 square metres and the building slips and moorings are 1,630 metres long. State-of -the-art equipment from the top shipbuilding suppliers in Finland, Holland, Germany, the Czech Republic, Great Britain, South Korea and Singapore was used in fitting out the shipyard which boasts the biggest floating dry dock in the Caspian area, a must for the building and repairing of vessels. A second, similar-size floating dock and new production facilities and moorings are planned during the second phase of the shipyard's construction.

The enterprise's capacity is calculated to be the machining and assembly of roughly 25,000 tonnes of metal parts per year. So, by the end of 2014 the shipyard will already be able to build four tankers annually, each with a dead weight of 15,000 tonnes. Moreover, the production of oil tankers with a payload capacity of up to 70,000 tonnes, for which there is a high demand in the Caspian today, is envisaged in the second stage. The shipyard is equipped to carry out repairs on and servicing of 80-100 vessels of varying tonnage and purpose every year alongside the building of new vessels. As many as four supply and tug vessels for the marine oil fleet will be built at the same time as the tankers.

SOCAR recently reported that the first vessel to be launched at the Baku shipyard at the end of this year would be a tug for the port. In future Azerbaijan's State Oil Company, in particular its subsidiaries, the Caspian Sea Oil Fleet and its international partners in the consortium may become one of the shipyard's major customers. Over the next 20 years SOCAR will need more than 110 specially equipped vessels and floating constructions for various purposes for its oil and gas operations in Azerbaijan's sector of the Caspian alone. Upgrading SOCAR's oil fleet is an extremely pressing task, since most of the vessels being used today were built back in the 1970s and are already pretty much past their best.

"The international sea port of Alat will be open for business as soon as possible and next year a new railway link between Baku, Tbilisi and Kars will start operating. This development of the transport infrastructure should provide an extremely powerful impetus to growth in the freight carried along the Silk Road, so our country will need new up-to-date sea-going vessels meeting international standards in the very near future," Caspar's president Aydin Bashirov believes.  The Caspian Shipping Company has already submitted to the Baku shipyard a list of orders for 10 vessels, five dry cargo vessels and five tankers. At the same time, the shipping line has stopped purchasing these types of vessels abroad in the belief that it will be able to cut costs in the future by placing the orders at home.

It appears that the new enterprise will not be short of work. At the present time, the Cabinet of Ministers is drawing up a 10-year list of orders for the shipyard, which is to include orders from the defence and interior ministries as well as the State Oil Company and the Caspian Shipping Company; the company BP [British Petroleum] is to be the main contractor in the oil and gas projects in Azerbaijan's sector of the Caspian Sea. Therefore in the next five to six years only Azerbaijan and Russia will possess the technology and facilities to build ships in the waters of the Caspian Sea.