Azerbaijan to diversify economy

by Yevgeny Krishtalyov, exclusively for VK

The 19th International Caspian Oil & Gas 2012 Exhibition and Conference has opened in Baku. The largest forum of the Caspian Region has gathered hundreds of world companies presenting advanced technologies for extraction and processing of oil and gas, transport and logistics and services.

Azerbaijani President Ilham Aliyev has traditionally attended the opening ceremony. He confirmed the strategic course for diversification of the country's economy using petroleum.

According to the president, the Azerbaijani economy has grown threefold in the last decade. The state received enormous amounts of investment from the world’s leading petroleum companies, leading to the positive development of Azerbaijan. However, the president emphasized that the strategy for development has seen new trends in the last 19 years and “today, the energy resources of Azerbaijan fully serve the interests of the Azerbaijani people.”

About $50 billion has been invested in petroleum so far. Over $150 billion has been invested in the Azerbaijani economy since 1995. Gold and currency reserves exceed $40 billion. The state is making use of petroleum, the oil business and industry to develop non-petroleum sectors. It has diversified the economy and the process continues, Ilham Aliyev says.

The president emphasized that Azerbaijan managed to benefit from its gas potential, which the world did not acknowledge. Discovery of the Shah Deniz field and its recognition as one of the largest gas reserves in the world drew great attention to the state. Azerbaijan has discovered the Umid and Apsheron Gas Fields in the last 2 years, increasing Azerbaijani gas potential. According to preliminary estimates, they contain about 700 million cubic meters of gas. This brings the Azerbaijani gas potential up to 2.6 trillion cubic meters of gas.

The process of developing the gas sector helped train national staff for petroleum facilities. Oil and gas are a means to build an advanced state.

According to Ilham Aliyev, the petroleum factor helped revive the economy and stimulate it. He noted that SOCAR plans a new petroleum complex in Azerbaijan: “It is a grand project that will determine the future of the energy sector and the non-oil sector in the upcoming decade.”

US President Barack Obama’s message to Ilham Aliyev was read out at the exhibition. It states that the US expects further cooperation with Azerbaijan to complete common goals and objectives in energy diversification, security and regional stability.

British Prime Minister David Cameron’s letter welcomes the agreement of Turkey and Azerbaijan to build the Trans-Anatolian Pipeline (TANAP).

Matthew Bryza, Director of the International Center for Defense Studies and former US Ambassador to Azerbaijan, told Vestnik Kavkaza that Azerbaijan has made real achievements in diversifying the economy. He reminded about the president’s plans to form a new petroleum complex based on state-private partnership under SOCAR leadership and other industrial facilities producing methanol. “The Azerbaijani economy has opportunities to continue with diversification via the private sector with support from the government, emphasizing the importance of the energy sector as the basis for growth. I see the results of such a process. The outcome may be seen throughout Azerbaijan”, Bryza says.

New French Ambassador to Azerbaijan Pascal Meunier, who arrived 3 weeks ago, commented on the diversification strategy. “This is not my first attendance at the petroleum exhibition in Baku, but I took part in the BakuTel exhibition last year,” the diplomat noted.

According to the ambassador, oil and gas have become part of the energy policy in the region, where Azerbaijan plays the key role. “I believe that it is a very good strategy to develop the non-petroleum sector and diversify the economy using the achievements of energy projects. In my understanding, the strategy of Azerbaijani development is to use petroleum resources for exports, income is spent on development of other sectors of the economy and creating employment,” Pascal Meunier explains.