ON A ROLL

Azerbaijan 2012 | ENERGY | INTERVIEW

TBY talks to Natiq Aliyev, Minister of Industry and Energy, on the Trans-Anatolian Pipeline, oil and gas revenues, and renewables.

What is the significance of the Trans-Anatolian Pipeline (TANAP) project within your future plans to increase gas exports to Europe?

The package of gas agreements that Azerbaijan signed with Turkey includes the construction of TANAP and the terms and rules for gas transit through Turkey. The agreements are internationally and politically important, as proved by the joint declaration on the Southern Gas Corridor signed by President Ilham Aliyev and the president of the European Commission, José Manuel Barroso. TANAP will be the first project of this magnitude transporting large volumes of gas to Europe. Azerbaijan's geopolitical and geostrategic situation enables the country to become a major transit hub for energy supplies destined for both Europe and Central Asia. The European Commissioner for Energy, Günther Oettinger, visited Baku in 2011 to participate in a group designed to evaluate and address potential legal, political, commercial, and technical issues that could arise in connection with the development of the Southern Gas Corridor. The European energy map is changing, and thanks to the long-term projects developed in Azerbaijan and the region, these changes will have a big impact on us. We are in a key decision-making phase regarding regional energy security. Azerbaijan's main advantage is its diversified network of pipelines and reliable transport infrastructure, which positions the country as a key energy partner for Europe and the US.

Since Azerbaijan has extensive experience in the energy sector, how can the country contribute to the development of the region?

As a result of the successful realization of the national oil strategy, Azerbaijan has attracted many foreign investors, and the continuation of this trend is one of our main priorities. The country's role in the energy sector has evolved over the years, reinforcing our position as the state's largest investor in countries such as Georgia, Ukraine, and Turkey. The Kulevi Oil Terminal in Georgia is a good example of such a trend; Azerbaijan supported Georgia by opening petrol stations and developing a gas distribution network. In Turkey, one of the most important Azerbaijani assets is Petkim, a company that produces petrochemical products. Currently, Petkim's products represent 27% of the Turkish market. Azerbaijan is also further expanding its relations with Pakistan in the energy sector, carrying out the exploration and production of oil and gas fields in a country with great potential. We are sharing our broad experience in the field to contribute to the development of other countries.

You were quoted saying that Azerbaijan's annual oil and gas revenues reached $20 billion in 2011. What were the final results of 2011 in terms of production and revenue?

President Ilham Aliyev approved a decree on the long-term strategy for the use of oil and gas revenues in September 2004. The decree encourages investment in the oil and gas sector and promotes the active development of the non-oil sector of the economy, the development of SMEs, large-scale infrastructure development, the implementation of poverty reduction measures, human capital development, a strengthening of the country's defense capabilities, and other such strategies. Although oil production in 2011 decreased by 5%, the country's non-oil industry grew by 11.1%, demonstrating that the oil revenues from previous years have been fueling the growth of other sectors of the economy. Moreover, large portions of the major investments made in 2011 were aimed at increasing currency reserves. For the first time, Azerbaijan's foreign currency reserves reached $40 billion, which proves that we have been able to maximize the effective use of oil revenues.

What were some of the other major industrial and energy achievements of Azerbaijan in 2011?

Azerbaijan has strengthened its position as an oil and gas major after new large gas fields were discovered in 2011. The discovery of 200 billion cubic meters (bcm) of reserves and 30-40 billion tons of condensate at the Umid gas field will lead to heavy production in the next three to four years, spearheaded by SOCAR's $5 billion investment. In addition, exploration was successfully conducted at the Absheron gas field, and according to the preliminary data, there are an estimated 350 bcm of gas reserves. Azerbaijan is also operating the world's first solar and wind hybrid-electric power station, which will enable the country to initiate new efforts in the field of renewable energy. There are a number of other important projects such as the development of a solar park, which will further strengthen Azerbaijan's industrial potential.

What are the key priorities for the Ministry in the field of renewable energy?

The favorable geographical position and climatic conditions of the country allow us to increase the proportion of renewable energy in the future and reduce the impact on the environment. Over the last few years, we have prioritized the development of important wind and solar projects, and one of our focuses for the future will be on electrical and thermal energy. The state strategy will outline the answers and guidelines for the long-term development of our potential in the alternative energy sphere. In this regard, Azerbaijan, as a full member of the International Renewable Energy Agency, is fully committed to complying with the organization's activities and tasks. It is no coincidence that President lham Aliyev signed a decree in honor of the worldwide implementation of alternative energy sources, as our energy goals are reflected in the use and further development of alternative and renewable energy in our country. In the coming years, Azerbaijan will maintain emphasis on its energy-saving and environmental protection policies.

What role will Azerbaijani SMEs play in the further development of the industrial sector? What are the major development plans that the Ministry is implementing?

One of our main priorities for the future is to further strengthen and develop the base of Azerbaijani SMEs, because there is a need to create large industrial enterprises in our country, such as the recently inaugurated Ganja aluminum plant. Our aim is to increase the activity of SMEs in the industrial sector of the country and to attract further investments in this field. At present, we are successfully implementing a number of state and regional development programs to achieve our future goals.