Ilham Aliyev talks about energy security in Munich

By Vestnik Kavkaza

A roundtable discussion on energy security dedicated to the subject "Strategies for diversification" has taken place at the Munich Security Conference. The chairman of the Munich Security Conference, Wolfgang Fredrik Ischinger, said that the scope of issues discussed in the framework of the Munich Security Conference has expanded. In 2013, energy security was included on this list.

Azerbaijani President Ilham Aliyev spoke at the round-table discussion and said that it was impossible to discuss the issue of energy security separately from the issue of national security. Issues relating to energy policy issues are closely linked to national interests and the global political map of Europe in the South Caucasus.

"Azerbaijan plays its role in the energy security of the region. Now - after the signing of an important agreement related to the Southern Gas Corridor - we are becoming a significant partner for Europe. We have already achieved diversification of energy supply routes. Azerbaijan is a country that has no access to the open sea. Therefore, to secure major investments for production, we needed transportation routes. For this purpose, in 1994, at the very beginning of our energy strategy, we were able to draw investments in oil and gas production from an international consortium of oil companies," Aliyev said.

Azerbaijan was the country which began building oil and gas pipelines connecting the Caspian Sea with the Black Sea and the Mediterranean for the first time in history. Ten years ago, when the Baku-Tbilisi-Ceyhan oil pipeline was commissioned, Baku made an important step towards ensuring the energy security of Europe. Today, the oil coming from Azerbaijan accounts for 30-40 % of the energy balance of some European countries. Now it is the turn of natural gas. The big Shah Deniz field is Azerbaijan's enormous deposit. It is one of the largest gas fields in the world. Since 1996, Azerbaijan together with BP and other partner companies have been working on the development of this field. It is already producing Azeri gas and ensured its access to the regional markets: Georgia, Turkey, Iran and Russia are importers of Azerbaijani gas.

In 2012 Azerbaijan and Turkey signed an agreement on the Trans-Anatolian gas pipeline -TANAP. It marked a big turn in the energy security of Europe, since without this agreement the Southern Gas Corridor project would remain merely a good idea today.

In 2013, the Trans Adriatic Pipeline - TAP - was chosen as the main supply route. On September 20, 2014 the foundation of the Southern Gas Corridor was laid in Baku. Currently, Azerbaijan is implementing major energy and infrastructure projects in Europe. The investment cost of these projects, including the development of the Shah Deniz field and the construction of the pipeline, will amount to at least $45 billion.

Aliyev believes that there is a need for effective cooperation between all members of the team. Azerbaijan, Turkey and Georgia have achieved the implementation of the Baku-Tbilisi-Ceyhan oil pipeline, the South Caucasus gas pipeline and a railway, which will soon be finished. After the members of the European Union joined the team, there appeared a particular need for coordination and efficiency. "Sometimes, the regulations of European institutions take too much time. We face certain issues related to bureaucracy, but we cannot waste time, given that this project in necessary to us, the producer, as well as to the transit and consumer countries," the president said.

Gas coming from Azerbaijan will be the only new gas source for European consumers in the near future. All other projects, including projects related to the diversification of routes, provide not for the diversification of sources, but routes. The Shah Deniz field contains more than 1 trillion cubic meters of gas. Counting all the other fields, there are at least 2.5 trillion cubic meters of gas. This gas project will last for decades or centuries. This project will significantly change the energy map of Europe.

On February 12 Baku will host the first meeting of the Advisory Board of the Southern Gas Corridor project with the participation of senior officials from all the countries involved in the project, that is from Azerbaijan, Georgia, Turkey, Bulgaria, Greece, Albania and Italy. In the subsequent phases of the project, partners from the Balkan countries will be involved. Memorandums of understanding with Croatia and Montenegro have already been signed. "We need strong support and coordination of European organizations not to waste time on bureaucratic procedures at least. In order to protect the project from general rules and procedures which are time-consuming a special approach needs to be applied. We were efficient when working on projects which involved only Azerbaijan, Turkey and Georgia. We need similar efficiency and trust in this project as well. Since TANAP, TAP and Shah Deniz-2 involve major investments and other parties in addition to Azerbaijan, such as BP, and Turkey which is one of the largest investment partners. Therefore, we must bring profit to investors," Ilham Aliyev said.

Now the price of a barrel of oil is slightly more than $50, and this puts pressure on the stability of this project from the commercial point of view. Aliyev urged to approach this project as a guarantee of national security of countries involved in it. "Given the large volume of gas, we can still involve in this project countries that do not participate in the Southern Gas Corridor, but make up a large part of the Nabucco project. For example, Bulgaria did not use to be a member of TAP, but we made it a member of our team, since this country could act as a link between Greece and Bulgaria or between Turkey and Bulgaria. Thus, a contract has already been signed with Bulgaria. This means that one member of the Nabucco team is already a participant in TAP. We can expand this project with the help of Romania, Hungary and Austria and we can expand it even further, because there will be enough Azeri gas. Moreover, it is possible that new potential gas sources will emerge in the region. If this happens, the project will have an even larger scale," Aliyev said.

The work on the project is according to the schedule, construction has already begun, pipes have been ordered and contractors have already been selected. The TANAP project is scheduled to be implemented by 2018, and TAP by 2020.