Baku, February 29, AZERTAC

The second Ministerial Meeting of the Southern Gas Corridor Advisory Council has been held in Baku. President of the Republic of Azerbaijan Ilham Aliyev attended the meeting.

The meeting participants included energy ministers of the Southern Gas Corridor member countries and representatives of various organizations, as well as EU Commission Vice-President for Energy Union Maros Sefcovic, Turkish Energy and Natural Resources Minister Berat Albayrak, US Special Envoy and Coordinator for International Energy Affairs Amos Hochstein, Director General for International Energy Affairs of the UK Department of Energy and Climate Change Edmund Hosker, State Secretary of the Council of Ministers of the Italian Republic Claudio De Vincenti and others.

President Ilham Aliyev addressed the event.

Speech of President Ilham Aliyev

Dear ladies and gentlemen,

Dear guests,

I would like to greet you all in Azerbaijan, and express my gratitude to you for participating in the 2nd Advisory Council of the Southern Gas Corridor.

Today’s meeting is very important, we will review what has been done during the last year, and, of course, we will plan our program for 2016.

The first advisory Council of the Southern Gas Corridor held a year ago in Baku was our attempt to create coordination between all the members of the project. And this attempt was very successful.

During this year we had numerous meetings in bilateral and multilateral formats and the level of coordination and cooperation of today shows that we are on the right track. One of the important achievements of 2015 was a groundbreaking ceremony and beginning of the implementation of TANAP project in Turkey, the project of Kars last year. With the presidents of Turkey, Georgia and Azerbaijan we participated in the ceremony. As you know TANAP project was instrumental in the implementation of the Southern Gas Corridor project.

Everything goes according to the schedule, we are on the right track. And also among the achievements of 2015, I would mention particularly coordination of our efforts. We are now working in a big team, a team of many countries and, of course, the level of cooperation, coordination and mutual trust is important in the implementation of this large-scale project.

Southern Gas Corridor is a large-scale infrastructure and energy project of Europe. Large gas reserves of Azerbaijan so far are the only resource base for Southern Gas Corridor, particularly Shahdeniz, which is one of the largest gas fields of the world.

But I hope that there will be other sources of supply. We are building a pipeline capable of transporting large volumes of natural gas and I think the future plans and achievements will depend on the level of mutual trust between us.

I think that today we already have a very solid format of cooperation. I’d like to express gratitude to the governments of all the countries involved in the project. I’d like to express gratitude to the European Commission and the government of the United States for their valuable contribution to the implementation of this project.

Southern Gas Corridor is a project of energy security. Today we will talk about energy security. We understand that it is part of national security of countries. Energy resources, diversification are a key factor in industrial and economic development of any country. And those countries which are rich with natural resources, of course, they are a safe side, they do not depend on external supplies, but at the same time they need markets. They need long-term markets which are regulated by legislation, markets which can absorb the volumes producers can supply.

And we, I think, here in the project of Southern Gas Corridor have a very good balance of interests between producers, transit countries, at the same time consumers. And I think the successful implementation of our plans in the coming two or three years will also demonstrate that this project has a very good potential for the future.

I remember when Azerbaijan signed back in 1994 a contract with the major oil companies of the world on the development of large oil field Azeri-Chirag-Gunashli we thought that the implementation of that project and building the oil pipelines to Black Sea and Mediterranean Sea would mean that we have completed our task.

But now after 22 years since that historical day we see that we are still in the process. We have a lot of achievements, I would say in the energy sector Azerbaijan’s government implemented all its promises and achieved all what it planned. But we are still in the process because one project brings another one. We already created a corridor and then used this corridor for other projects. That is how the project of delivering natural gas to Georgia and Turkey also started to be implemented. We added to that project the railroad connection between Azerbaijan, Georgia and Turkey, which hopefully this year will be inaugurated. And it leads to regional cooperation, and broad cooperation between different countries of Eurasia.

Energy security again is today on the top of agenda of world politics, international organizations. In the beginning of this year I participated in Davos Economic Forum and Munich Security Conference. Energy security in both of these most important international conferences of the world was on agenda.

And, of course, Azerbaijan, the country which has demonstrated strong commitment to its energy policy, the country which always advocated for free competition, market economy, cooperation, not confrontation in the energy field, plays its important role in energy diversification, energy security. And at the same time I think it demonstrates our reasonable policy in the implementation of this project.

Energy factor should never be part of any kind of a political initiative or political demand. We need to separate energy cooperation from political format and only in this case we can achieve success. And I think that the cooperation which we established in this format demonstrates that we are committed to the implementation of the project of Southern Gas Corridor. For Azerbaijan this means that for many-many years ahead, for decades Azerbaijan will benefit from sales of natural gas in the quantities Azerbaijan can produce. At the same time, we will create a very strong cooperation between the members of the project. And this cooperation will lead to achievements in areas related to other sectors of economy.

This project also is important in relations between the European Union and Azerbaijan. Energy security is an important element of our cooperation.

So for our country the benefits of this project are obvious. And I am sure that all the countries which are represented here in this room will have the same. We will achieve what we need and in good atmosphere of friendship and partnership. And I think that friendship and partnership is crucial for the implementation of the corridor.

At the same time, I am sure that today at the meeting of the Advisory Council you will also raise the issues which need to be resolved in 2016. 2016 is an important year for the implementation of this project and we should, of course, look at the issues from the point of view of timely implementation. There can be some delays, there can be some internal obstacles, but I think the governments of our countries will continue to use all the authority to overcome these obstacles.

Each country is responsible for the implementation of the project on its territory, and I think that 2016 will be an important year from this point of view. Last year we already made the substantial progress. I think the public opinion in our countries also positively, in general, assessed the importance of this project and with this strong partnership and cooperation, I think, we will meet the targets. The implementation of TANAP project is now in a very active phase, and, I am sure, that it will be implemented on time, maybe even before the schedule. And the same, of course, we would like to see with respect to the implementation of Trans-Adriatic project. I hope that this year the construction will start, and in coordination with the production and construction of South Caucasus Gas pipeline we will achieve our goal.

We are united in the implementation of this project and the presence of our guests and the representation of the high political level here today shows that all our governments and all our partners - we pursue the same goal to implement Southern Gas Corridor historic project of the 21st century on time and with maximum benefits to all of the participants.

Once again I would like to thank you for your contribution and participation in today’s meeting and express my feeling that we will achieve good success and good progress today.

Thank you.

X X X

President Ilham Aliyev made closing remarks at the meeting.

Speech of President Ilham Aliyev

First of all I’d like to welcome Madame Mogherini, and express my gratitude to her for joining the closing session of the Advisory Council of the Southern Gas Corridor. This morning we opened the discussion with vice president Sefcovic, and we are closing the discussion with two vice presidents of European Commission. This is a good illustration of the importance the European Union is paying to this particular project and to the issues related to energy security.

Our relations with European Union, which, of course, we will today broadly discuss with Madame vice president, have a good history and a very big potential for development. It is not only energy security - we work jointly on a number of issues related to political dialogue, economic cooperation. European Union is our main trading partner. Almost half of our trade is trade with member states of European Union. We work closely on the issues related to security in the region, predictability, multiculturalism, cultural diversity. Azerbaijan, I think, proved for many years of cooperation that it is a reliable partner, and we want to strengthen our bilateral ties with member states, and with European Union in general.

By the way, I would like to inform you that together with one-third of the member states of European Union Azerbaijan has already signed or adopted declarations or agreements on strategic partnership. So this reflects, actually, the substance of our cooperation.

Today I would like to express special gratitude to vice-president Sefcovic for his personal valuable contribution to the implementation of the project of the Southern Gas Corridor.

A year ago, in Baku, we had the first Advisory Council, and I’m very glad that now we have the second council a year later. This shows that this process will continue. I am sure that these meetings will be traditional until we implement this large-scale project. I also want to use this opportunity and express gratitude to the government of the United States and personally to Mr. Hochstein for his contribution, and express gratitude to your government for continuous support shown to Azerbaijan in the implementation of all our energy initiatives, which started more than twenty years ago. Today the role of the United States in helping to implement this project is very important and I am sure that fruitful cooperation will continue and we will see good results also in the future.

I would like to express gratitude to all the members of the Advisory Council for active participation, for contribution to today’s discussion and also for underlying in the declaration, to be signed very soon, the strategic role of Azerbaijan as a key enabler of the Southern Gas Corridor. We are very grateful for this appreciation of our role, we are grateful that our initiatives to establish this format of Advisory Council were supported by our partners, by European Commission. We see practical results, we see good results of this format of cooperation.

During last year, of course, we spent a lot of time in bilateral and multilateral formats to address important issues. But this is a unique format where all the members of the Southern Gas Corridor, financial institutions, European Commission, United States get together to review what has been done and to plan for the future. Last year, 2015, was a successful year of the implementation of the project. We spoke about that this morning. I am sure that 2016 also will be very important and crucial in the implementation of this project. I am sure that we will resolve all the outstanding issues in order to clean the way towards successful and timely implementation of this project.

The Southern Gas Corridor is one of the largest infrastructure and energy projects in Europe. Multi-billion investment, more than 40 billion investment will be made in all the four segments of the project. And on all the four segments of the Southern Gas Corridor we have very good progress. It’s a project of partnership, cooperation. We established a strong partnership and, as Madame Mogherini mentioned, it is not only energy as today we established partnership for many years to come. Our cooperation will not end after the completion of the project, it will continue and be a more active cooperation after we implement the project because all of us will be inter-related, inter-dependent. The project of the Southern Gas Corridor for many years will bring benefits to all of us - to producers, to transit countries, to consumers. It’s a project of energy security.

As I said this morning energy security today is one of the most important elements of the national security of countries. This is a project of energy diversification. In the Southern Gas Corridor we see diversification of not only routes, but sources, which is more important.

It is a project of sincere cooperation and partnership between us. So far, the only resource base of the Southern Gas Corridor is gas from Shahdeniz, which has more than one trillion cubic meters. As you know, the reserves of Azerbaijan, the proven reserves are more than 2.5 trillion cubic meters. Therefore, I am sure, that the future projects, which we plan to implement together with our partners, will bring additional volumes to this project. We are building the pipeline, which can deliver large volumes of gas, much more than what we planned to produce in 4-5 years. Therefore it is a long term project of energy cooperation, diversification, stability, predictability.

The Southern Gas Corridor project is changing the energy map of Europe. Azerbaijan will get access to a big market, which is regulated by rules, practice and legislation, and European consumers will get gas from a reliable, friendly, source, a new source, which can provide the supply for decades. And I am sure that will happen because all the projects, which Azerbaijan initiated during the last twenty years, were successful.

Azerbaijan is a country where the first oil in the world was produced in the mid-19th century. And then in the mid-20th century the first oil from the official platform was also produced in Azerbaijan. Just three years after restoration of independence Azerbaijan signed the contract, which was known and is known as the Contract of 20th century. For the first time in the world we opened Caspian Sea reserves for foreign investments and invited foreign oil companies to be our partners. And I’d like to express my gratitude today to BP as our main investor and strategic partner and the company which has strong commitment to Azerbaijan and works with us already for more than twenty years. And also to SOCAR - Azerbaijan’s State Oil Company - which transformed as a result of this international cooperation into one of the major energy companies of the world.

In 1994, we were just three years old, three years of independence. Madame Mogherini mentioned that today part of our discussion will be devoted to resolution of the conflict between Armenia and Azerbaijan. Just four months after the ceasefire regime between Armenia and Azerbaijan was established we signed that contract in September 1994. Unfortunately, during all these years the conflict didn’t find its resolution because of unwillingness of Armenia to withdraw its troops from occupied territories, unwillingness to implement four United Nations Security Council resolutions demanding immediate and unconditional withdrawal of the Armenian troops from the territory of Azerbaijan.

In 1993, we had a civil war in Azerbaijan. Economy was ruined, it was in stagnation, inflation was more than 1000%. In these circumstances, foreign companies believed in our future, believed that Azerbaijan is a reliable partner and signed the deal in 1994, which actually laid a foundation for today’s project. If we look at the history of achievements, we`ll see that in 1994 the agreement on Azeri-Chirag-Guneshli oil field, which is one of the biggest oil fields in the world, was signed. Two years later, in 1996, again the agreement was signed between SOCAR and a BP-led consortium on Shahdeniz project, which is today a resource base for the Southern Gas Corridor. Then, the construction of Baku-Supsa oil pipeline to connect for the first time via a crude oil pipeline the Caspian and Black seas was started. In 1997, first oil was produced by the BP-operated consortium from the offshore field of Chirag. Then we had a period of active cooperation, investments, and a groundbreaking ceremony of Baku-Tbilisi-Ceyhan oil pipeline took place in 2003. In 2006, the inauguration of Baku-Tbilisi-Ceyhan pipeline took place. For the first time Caspian-Mediterranean was linked with an oil pipeline and without that pipeline today Azerbaijan’s economic development would have been absolutely different from what it is today.

In 2007, a gas pipeline connecting Azerbaijan, Georgia and Turkey was inaugurated, which is today under expansion. This project is an important segment of the Southern Gas Corridor. In 2011, a memorandum of understanding was signed between European Commission and Azerbaijan on strategic cooperation in energy sector. It was a very important document to stimulate diversification. In 2012, a historical agreement was signed between Turkey and Azerbaijan on the construction of TANAP pipeline, Trans-Anatolian, which is now being successfully implemented. Frankly speaking, without that agreement today situation would have been completely different with respect to this project. Then, investors after that agreement agreed and made a final investment decision on investing in Shahdeniz-2 project. That was in 2013. In 2014, a groundbreaking ceremony of the Southern Gas Corridor took place here in Baku. In 2015, a groundbreaking ceremony of TANAP took place in the Turkish province of Kars. Hopefully, 2016 will be the year of a groundbreaking ceremony of TAP project. And then 2018 will be the year of the completion of TANAP, and a year, maybe a year and a half later the completion of the project.

So if you look at the project from this point of view, you will see that without the history of cooperation and investment, today`s achievement wouldn’t have been possible. All what we are planning now is based on the solid foundation. During all this period of time Azerbaijan showed itself as a very reliable and capable partner.

We established very close relations with neighbors, with many countries of European Union. And today we witnessed this very efficient and very frank and sincere cooperation. The main purpose of creating this format of the advisory board was to have coordination because we are all now are one team: Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania, Italy. I am very glad that representatives from Croatia and Montenegro also participated in today’s meeting and this shows that we will have more extensions of the Southern Gas Corridor. Reserves of Azerbaijan`s gas and potential additional reserves and infrastructure, which we plan and build, will allow us to bring our natural resources to many more countries. We need to successfully implement the project and I think that today’s achievement shows that this will be possible on time. Then we will build on that project our strategy for long term and for that purpose, of course, this cooperation and coordination should continue, and I`m sure it will continue.

I would like to use this opportunity and to invite you to visit Azerbaijan next year to attend the third Advisory Council of the Southern Gas Corridor. I am sure that by that time we will hear good reports about new achievements. I wish you all success, and thank you for your participation.