Baku, June 1, AZERTAC

An official opening ceremony of the 27th International Caspian Oil & Gas Exhibition on the sidelines of the Baku Energy Week has been held at the Baku Expo Center.

President of the Republic of Azerbaijan Ilham Aliyev attended the event.

The head of state made a speech at the opening ceremony.

Speech of President Ilham Aliyev

-Dear ladies and gentlemen.

First of all, I would like to express gratitude to the organizers for restart of Caspian Oil and Gas Show after two years break due to pandemic. I am glad that today we have guests from all over the world and I hope that discussions during the Oil and Gas Show and the Baku Energy week will strengthen dialogue on such important issues as energy security and diversification of energy resources. Azerbaijan invested its own energy security during the years of independence and provided fully demands for domestic market and also is playing more and more important role for energy security of growing number of countries. This was not the case in the early years of our independence and I`d like also to mention that Caspian Oil and Gas Exhibition and Conference which is already taking place for 27 time, played a very important role in attracting attention of global energy players to Azerbaijan, the country at that time newly independent with a lot of difficulties with big part of its territory under occupation and facing a lot of challenges.

Therefore, the role of organizers of Caspian Oil and Gas Show was really very important in order to attract attention and also to attract investments. And from the very first year of holding this conference Azerbaijan announced its openness for the world. We announced that we want to see Caspian Sea as an area of cooperation and investments. And the first international investments to the Caspian oil and gas fields was made by us and our partners. But, at that time, as I said, energy security was not fully provided. There have been shortages of electricity, gas supply, blackouts. So we really started to work hard in order to provide our own energy security and that was done. At the same time in parallel we were actively working with international investors, leading energy companies of the world in order to increase production of oil and deliver it to international markets. And in the end of last century I think the remarkable event took place, the first oil pipeline from Azerbaijan to Georgian Black Sea coast Supsa was inaugurated. And that allowed us to start export and to start supplying the needs of many more countries. At the same time, we jointly with our partners worked on gas exploration fields, particularly Shah Daniz, which is one of the biggest gas fields in the world. And in 2007, Baku-Tbilisi-Erzurum gas pipeline was inaugurated and that was the first time when Azerbaijani gas started to be exported to the regional markets of Turkiye and Georgia. A year before that in 2006, we managed to construct, at that time it was considered and still I think, is a remarkable event, Baku-Tbilisi-Ceyhan oil pipeline which connected the Caspian Sea with the Mediterranean Sea, and was a new route and a new source of oil to international market. Since that time, Baku-Tbilisi-Ceyhan and all other energy transportation infrastructure of Azerbaijan is working without any disruption. This, of course, is a demonstration of predictability, reliability and also demonstrates that we are capable to implement such a huge infrastructure projects difficult from technical, financial points of view and also these projects we implemented in a very complicated political environment. So, that was surely the important milestone in the issues related to regional energy security and, of course, it is strengthened the regional cooperation between Azerbaijan and its neighbors-Turkiye and Georgia. But our plans were bigger than that and, of course, we wanted to be able to develop huge gas reserves of Azerbaijan. For that, of course, we needed a new pipeline, the pipeline I would say of the 21st century-the Southern Gas Corridor. And the Southern Gas Corridor`s successful completion on the last day of 2020 demonstrates our common will, demonstrates that we can work as a team, and we can achieve great success. So integrated pipelines system of 3.500 km crossing many countries, going on the seabed and climbing to high mountains is a demonstration of our potential and our friendship. Therefore the energy projects which were initiated by Azerbaijan and at early stage created framework for regional cooperation now transformed into a global energy project. The Southern Gas Corridor is the project which we can be proud of, at the same time, it allows us to increase production from huge Shah Daniz gas condensate field, and it happens. It’s only one year and five months that Azerbaijan is using this brand new modern infrastructure to transport its gas reserves. But already the expansion of our presence on European continent with our natural resources is something which is needed for us and for our partners. We managed to increase the production and our export. Last year Azerbaijan exported 22 billion cubic meters of natural gas, this year the projection is 24, and the next year it will be even more. There can be different figures depending on the activity of production and also on activation of other fields which are situated in Azerbaijani sector of the Caspian Sea, because our gas potential is not limited only with Shah Daniz. Other fields are also very promising. Some of them will start production next year. So that will be an important contribution to energy security, especially now, when the demand for Azerbaijani hydro carbons is more than ever before. And we, as a responsible country take that into account and we try to support countries which due to different reasons face difficulties. Now corresponding structures of Azerbaijan are in permanent contact with growing number of countries. When we were working on implementation of Southern Gas Corridor we established a very close cooperation with countries through the territory of which the pipeline crosses and also international financial institutions and, of course, energy companies and governments of leading countries, and also European Commission. So annual meeting of the Southern Gas Corridor Advisory Council which takes place every February in Baku is a clear example of this team work. And when on February 4 this year, we had the annual meeting of the Southern Gas Corridor Advisory Council, we actually thought that the biggest part of our plans has already been implemented. The Southern Gas Corridor is already in operation. Now we need only to work how to build new bridges, how to build new connections into connectors, and how to expand our presence on European gas market. But, of course, now when we speak on 1 June, the situation is completely different. And the demand for Azerbaijani gas grows rapidly. Of course, we need to take that into account but at the same time our potential consumers should also understand that it is not possible to extract large volumes of gas within one year. For that we need contracts, we need to start and speed up negotiations. We need, of course, to work with our traditional partners, investors, energy companies in order to increase the production. And also we need to expand the existing facilities. That was something which we did not plan in the coming years, because the Southern Gas Corridor as they said is an integrated pipeline system consisting of three pipelines. The last segment of it the Trans-Adriatic Pipeline’s capacity is 10 billion cubic meters.

So, now we think about the expansion, because there is a demand for that. And that, of course, will take time, take a lot of financial resources, and also close coordination, cooperation and active dialogue with all countries involved. And we are ready for that. Minister of Energy of Azerbaijan and SOCAR already got all my instructions and they are in the process of active negotiations. By the way, Baku Energy Week will be an excellent opportunity, because we have guests, high-ranking officials from many countries to address these important issues. At the same time, of course, we need to continue our active dialogue with members of the Southern Gas Corridor team, including governments. Of course, I would like to express gratitude to the governments of Turkiye, Georgia, Bulgaria, Greece, Albania, Italy, participants of the Southern Gas Corridor for their active cooperation. Taking into account that there are now new challenges, and new demands, of course, we are already in negotiations with other potential consumers. But for that, of course, only our efforts will not be sufficient. There must be investments in infrastructure in Europe, building new interconnectors and, of course, agreeing on the terms, because as we all know in gas business, you first sell the gas, sign the contract and then start to invest and extract. But all what I say is just to give outlook from our point of view. But, at the same time, we will do everything what we can to speed up the process and it already started. I would like to express also gratitude to the governments of US and UK, our great supporters throughout all the time of our energy policy and performance. With their great support we managed to achieve these results. I would like also to express gratitude to international financial institutions, World Bank, EBRD, Asian Development Bank, EIB, Asian Infrastructure and Investment Bank. All those banks which financed Southern Gas Corridor, I hope will also provide financial support to implementation of our new plans, particularly expansion of TAP. We can also think about the expansion of TANAP, because as I said already, the demand for Azerbaijani gas is growing. The potential is here, political will is here. Therefore, we should not waste time. We should bring our capacity of our infrastructure to the potential level of transportation of natural gas.

Therefore, not only TAP will need expansion, rapid expansion, but also South Caucasus pipeline and TANAP. So we are working on that. I would like to mention that fruitful cooperation between Azerbaijan and the European Commission also played very important role in implementation of the Southern Gas Corridor project and will play important role in implementation of our future plans. We are in permanent contact with the European Commission on that and as a result of discussions which took place in the beginning of February this year in Baku between Energy Commissioner of EU and our Minister of Energy we established energy dialogue between EU and Azerbaijan. The agenda is very broad, of course, traditional issues like oil, gas at the same time electricity, renewables, hydrogen, and energy efficiency. So, I think that these broad range of issues and their active cooperation on these issues will allow us to have more gas for export. Because next plan on our agenda which already is in the process of implementation is renewables. Azerbaijan, I think, demonstrates excellent performance. First, because we already proved ourselves as a reliable country, as a country which respects its obligations. I’d like to say that since 1994 when the first contract-PSA contract- was signed with foreign companies until today, not a single word was changed in the contracts. And that is also demonstration of our positons, we respect our obligations and also want our partners to respect their obligations. Therefore, credibility was an important factor. Second, of course, stability, political and economic stability in Azerbaijan. And of course, excellent performance, building the infrastructure for oil, for gas, for electric lines. By the way, Azerbaijan is exporting not only oil and gas, but also electricity, huge potential, experience. All these factors play an important role in attracting major energy companies to invest in renewables. And this year already we had two groundbreaking ceremonies with leading energy companies, ACWA Power and Masdar and now the construction of two - one wind and one solar- power plants of total capacity of 470 megawatts is already underway. And next year, these two power plants will be commissioned. And this is only the beginning. Because we are already in an active phase of negotiations with many leading energy companies on renewables. We have huge potential in the Caspian Sea, which has been already evaluated and according to information, which I was given the capacity and potential of Azerbaijani sector of the Caspian Sea is 150,000 megawatts. This is a huge volume. At the same time, a great potential is now on the territories which have been liberated as a result of the second Karabakh war, particularly in Kalbajar and Lachin and other areas. And we estimate this potential around 9,000 to 10,000 megawatts, only wind and sun. But if we add hydro, which is also a great potential that can be another, probably 1,000 megawatts or more. And all that now is seriously addressed by our government. And the more we have international investments on renewables, the more natural gas we will save for export. This is natural. So combination of all these factors and of course, including the energy efficiency, and reduction of losses in our transportation system, all that will add to increase of gas exports from Azerbaijan. This is our target. I am sure, we will achieve these goals, because so far, everything what we planned not only in oil and gas business, everything what our government planned we achieved, and achieved with maximum degree of efficiency.

Now traditional Caspian Oil and Gas Exhibition and Conference and now Baku Energy Week, of course, will address all these important issues, oil supplies, how to increase oil supplies. Because now Azerbaijan is also providing important transit facilities for other countries. And this potential also can be used to maximum degree. Unfortunately, it was not used to the maximum degree. Unfortunately, the potential of Azerbaijan as an important transit country was underestimated by potential suppliers, but I think now they changed their mind, because everybody understands that diversification is one of the important factors of energy security.

And we worked on diversification from the very first day of our energy strategy. Therefore, we have diversified export routes, three oil pipelines to different directions, four gas pipelines to different directions, electric lines. We export electricity to four neighboring countries and plan to export electricity to Europe and for that we want also to activate the Zangazur corridor, which could be an important transportation route, not only for cargoes, but also for electricity. We are working on that and already started practical investment. So, diversification for all is important. Therefore, I think, now those who underestimated the potential of Azerbaijan as a reliable transitor, now will change their mind and we see initial hints of that, and we are ready. We are ready to help everyone who needs help. We are ready, because we have a political will. Our policy is always aimed at building bridges, strengthening cooperation. And plus, we have infrastructure we have brand new seaport. We have railroads connecting us with all destinations, highways, a number of international airports. After we complete three international airports construction, one already has been completed, in the liberated territories will be nine, and a geographical location.

So, transit potential of Azerbaijan also should be taken into account while we are planning our future plans with respect to oil and gas cooperation.

What I am saying is, of course, important for our international partners. I’d like also to underline the importance of strategic partnership between SOCAR and bp. bp is our strategic partner and a leading investor in oil and gas. And I'm very glad that bp also shows interest in renewables. And now SOCAR and bp are discussing the construction of a solar power station in liberated Jabrayil district. The capacity will be more than 200 megawatts. I hope soon we will have good results. And also the future plans, because future plans which I said will not be possible to implement without cooperation with our traditional energy partners.

Of course, we are ready to cooperate with every company, with every country, which also wants to be with us on this important time when geopolitical situation in the world is completely different from what it was several months ago. But at the same time, all that what I'm saying now, is important also for our internal development and energy factor, energy diplomacy, and project strengthen our economic potential. They allow us to re-channel the funds which we accumulate from oil and gas sales to non-energy sector of our economy. In parallel with very, I would say, brave economic reforms. And we see the results. I can just give several figures of this year. Our GDP this year grew 7.2% and in non-oil sector more than 11%, non-oil industry more than 15%. So, these are all the reflection of reforms and also re-channeling the funds which we accumulated. In other words diversification is not only for energy supply, but diversification is for our economy. We are achieving that, and today business climate in Azerbaijan, I think, is absolutely a good example of how it should be. Today Azerbaijan is one of the countries which is very attractive for foreign investments. Because as I said before, first, we have great experience in oil and gas. We value our partnership with traditional companies. We never violated any word in the contract which we signed. We enjoy rapid development and of course, reconstruction in Karabakh and Zangazur will add economic potential. Of course, very low foreign debt, which is only 12.5% of GDP, also creates good economic environment.

We can attract more loans, which just don't do it because we don't need it. We want to reduce foreign debt to GDP down to 10%. That was my instructions to our government. But in the meantime, when we see, or if we see that there are projects of global importance, and the projects are important for Azerbaijan, of course we will ask our traditional partners, leading financial institutions to help us. We have already a great experience in Southern Gas Corridor and other projects.

So, I think that I should conclude now. Probably, I talked too much, but that's probably because, we had a two-year break. And we missed this great event, which, as already was said, is the leading international energy event in the region. And I like once again, to express gratitude to our guests for being with us and wish Baku Energy Week success. Thank you.