This commentary is from USAK’s Energy Review Newsletter
http://www.turkishweekly.net/energyreview/TurkishWeekly-EnergyReview13.pdf
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After its independence, Azerbaijan began to search for new ways to attract foreign companies to the development and exploitation of its oil fields. In 1994 a new agreement which is also known as the Deal of Century has been signed, according to which exploration of offshore fields Azeri-Chiragly-Guneschli with the foreign oil companies admitted. Subsequently, 26 Production Sharing Agreements were signed. In early agreements Azerbaijan has small shares in exploration. The main reason was that at that time, thecountry has sought to strengthen its independence and attract more foreign companies. Thus, it can be concluded that it was mainly political than economic and with the increasing shares of Azerbaijani companies was growing.
After the discovery of large reserves, one of the main tasks was the exportation of hydrocarbons to the world markets. Parallel to this, Baku-Supsa and the Baku-Tbilisi-Ceyhan oil pipelines, and Baku-Tbilisi-Erzurum gas pipeline were built. Since 2006, oil has been exported by the main Baku-Tbilisi-Ceyhan pipeline and from the end of March this year first gas was exported via Baku-Erzurum pipeline to Turkey.
Alternative corridors for delivery of energy resources to the world markets and high oil prices have created favorable conditions for the expansion of its activities of the National Company of Azerbaijan, SOCAR. In a short time, the company has been able to resume its activities in the abandoned oil fields in the country and to increase the production of oil and gas. The company was able to obtain loans from international institutions, which allowed the company to undertake additional investments in the oil sector.
Since 2006, the company is returning to the international arena. The company has bought the marine terminal in Kulevi in Georgia, the refinery at Ceyhan in Turkey and planned acquisition of one of the four refinery factories in Romania. The company is interested in participating in the development of oilfields in Moldova.
In 2007, Azerbaijan has to review its oil strategy. The country does not intend to confine itself to export crude oil. At the same time, plans to be actively involved in the production and arketing of ready processed products to the European markets. The President Ilham Aliyev announced this during the signing of the Memorandum of Understanding on energy cooperation between the EU and Azerbaijan in Brussels in November last year.
There was provided of the modernization of refinery factories in Baku, with a view to the production of gasoline on European standards. Acquisition terminal at Kulevi on the shores of the Black Sea will contribute to export finished products to the markets of Eastern Europe. Terminals at Ceyhan and in Romania will break Azeri oil to European and world markets.
Recently, Minister of Industry and Energy Natig Aliyev, in an interview with journalists to the question whether Azerbaijan will use Odessa-Brody pipeline for exporting of its own oil, replied that Azerbaijan will be more interested in buying refineries factories in the territory of Ukraine. Azerbaijan also desires to establish its own oil tanker fleet in the Mediterranean Sea.
What is the explanation of the active policy of Azerbaijan in the international arena? Firstly, ithout any doubts, the finished product could provide a much more income for the country, rather than the sale of crude oil. Azerbaijan already has for more than a hundred years extensive experience in developing and implementing products in the international arena. The country has sufficient infrastructure and high professional specialists. Income from oil after developing of the projects, make possible to the implementation of its ownprojects.
In addition, Azerbaijan clearly understands that the oil may break through in 25-30 years time, and the country should take advantage of any opportunities as possible. In the future, Azerbaijan will be able to handle at those factories oil supplied from Kazakhstan and Turkmenistan, transit which it is addressed. In fortunately happens to be Azerbaijan will be able to establish a network of facilities in Central and Eastern Europe so that it will enhance their independence and relations with the countries of the EU, as well as improve their economic condition.
Rovshan Ibrahimov
For Your Comments:
rovsen@azerimail.net
This commentary is from USAK’s Energy Review Newsletter
http://www.turkishweekly.net/energyreview/TurkishWeekly-EnergyReview13.pdf
To subscribe email to energyreview@turkishweekly.net
