Local TV channels have interviewed the President of the Republic of Azerbaijan, Ilham Aliyev.
Sanan Rzayev, CBC TV channel: Mr. President, Azerbaijan took several additional steps last year to help ensure Europe’s energy security and that of the European Union. On July 18, the President of the European Commission, Ursula von der Leyen, visited Baku. A Memorandum on Strategic Partnership in the field of Energy was signed between Azerbaijan and the European Union. Mr. President, I would like to know how you would evaluate the pace of realization of that idea. And what do this Memorandum and this cooperation promise to Azerbaijan and the European Union this year and the next?
President Ilham Aliyev: It is a significant event in the development of Azerbaijan's oil and gas sector. Of course, the visit of the President of the European Commission testifies to the attention being paid to this issue by the European Commission and by Mrs. Ursula von der Leyen personally. In recent years, energy security issues have been the center stage of the global agenda. This issue has always been on the agenda of international organizations and the most influential international forums. The way Azerbaijan has been implementing its oil and gas industry projects has consistently earned us the great respect of our partners. But after the start of the Russia-Ukraine War, other issues may have overshadowed energy security issues and become a top priority on Europe’s agenda. This is understandable. Of course, interest in Azerbaijan's energy resources has increased significantly. However, even before that, there was an established opinion that Azerbaijan is a reliable partner for many countries, including countries that are members of the European Union. Azerbaijan's opportunities have increased, and we were successfully doing our work at home and moving toward more profitable markets. Of course, after the Southern Gas Corridor was commissioned, we also began exporting gas to the European Union countries. We took into account the fact that we expect additional production both from the “Shah Deniz” field and from other fields. For example, if everything goes according to plan, the so-called “deep gas” will be produced from the “Absheron” field this year and, if there is no force majeure obstacles, from the “Azeri-Chirag-Guneshli” field next year, in 2024. We plan to start producing “deep gas.”
In other words, there is potential that Azerbaijan’s confirmed reserves are well known. I have stated the figure many times - 2.6 trillion cubic meters, but I am sure it will be much more. Because our experience of operating the oil fields suggests that as drilling continues, the volume of reserves proves more significant than the initial estimates. Azerbaijan's fields will supply gas to international markets for at least another 100 years, i.e., as technologies develop, production opportunities will increase. Therefore, 2.6 trillion cubic meters is the confirmed minimum volume of our potential. Considering the construction of all the gas pipelines, we aim to increase the supply with the European Union. But to do this, of course, we must invest in production, and we are doing that because the existing gas pipelines require expansion. TANAP and TAP pipelines are designed for the volumes we contracted, and we did not consider the need to double the supply to Europe in such a short period. In other words, the document signed with Mrs. Ursula von der Leyen refers to this very matter.
Of course, the implementation of this Memorandum continues quite successfully. In 2021 we supplied a little more than 8 billion cubic meters of gas to Europe, whereas this year, it will be roughly 12 billion cubic meters. As a whole, about 24 billion cubic meters of exports are expected this year. Therefore, we are already becoming a serious actor in the gas market, including the European market. We are already thinking about doubling the throughput capacity of TANAP and TAP. Of course, we are consulting with our partners about this. As for the TANAP project, things are easy here because we are the primary participant and a shareholder in this project, and the main financial burden falls upon us. Our share in the TAP project is 20 percent, so we will have to work more on reaching a consensus. We have always approached oil and gas projects strategically because we understood that if gas and oil pipelines are not implemented, we will remain in a somewhat locked-up space with our resources.
International energy companies first consider the economic aspect of the issue – when to invest and when to expand. So, we cannot expect international energy companies to invest billions in projects that will be needed in five years. Therefore, we are trying to reconcile our strategic outlook– we have never been wrong in this matter yet – with our partners' economic opportunities and economic policy, and we are working in this direction now.
After the commissioning of the Interconnector Greece-Bulgaria, new promising directions will open up and have already surfaced. Azerbaijan’s gas has already entered the Bulgarian market, and this year it will also enter the Romanian market. So, we are approaching a certain version of the Nabucco project. If you remember, there were active discussions about this project for years, but later it was deemed unnecessary. Work on creating a network of interconnectors, for example, the Interconnector Greece-Bulgaria, is progressing rapidly. I also know that work is underway on an interconnector connecting Serbia to the common system, including negotiations on gas supplies with Serbia. The creation of this network will allow us the opportunity to send our gas resources to that market. If the Ionian-Adriatic Sea project is implemented, this project will cover three more Balkan countries that currently do not receive Azerbaijani gas.
We have started active negotiations on the gas supply of Albania. For now, Albania is only a transit country without a gas network, and this work requires considerable expenditure. We have offered our services as close friends and partners, and work is currently underway on selecting gasification sites and agreeing on which cities to supply with gas.
So, if we take a broad look at the energy map of Europe, the Balkans, and Western Europe, this map is clearly crisscrossed by various arteries, allowing us to plan a long-term strategy. Of course, we should not forget the so-called “green transition” program of most European countries. Under such circumstances, it is assumed that fossil fuels will be abandoned altogether after a certain period. However, according to my observations and trends in the European gas market – this program is in play, of course – the current situation regarding energy security will encourage European institutions to approach energy security from a more realistic perspective. Therefore, I am sure that oil and gas will unlikely be abandoned in the foreseeable future.
Nigar Mahmudova, Khazar Television: I also wanted to follow up on the energy topic. You have already mentioned the rising demand for Azerbaijan's energy potential and that all this opens up new opportunities for us. What are the new opportunities opening up? We are talking about the economy and political strengthening of Azerbaijan. It would be interesting to hear from you on this, Mr. President.
President Ilham Aliyev: Regarding new opportunities, in principle, I answered this in the previous question. What else can be done? Of course, we have now started energy negotiations with several countries, countries that were not our partners before. All the projects planned before the Russia-Ukraine War were almost progressing as planned. At the Advisory Council meeting for the Southern Gas Corridor held in Baku every year, there was already an exchange of views on the successful completion of the TAP project, which is the last segment of the Southern Gas Corridor. However, new topics will be discussed at the next Southern Gas Corridor Advisory Council meeting, which will be held next month, and the number of participating countries will increase. For example, completing the TANAP project would mean completing our main work in this area. After that, we thought we needed to export our gas resources using the existing infrastructure. But as you can see, based on the request of the Romanian side, we have already been supplying gas to Romania as of January. Because during the year, Romania’s Energy Minister had been in Azerbaijan twice, and I visited Romania at the end of the year. In the meantime, our respective agencies were in talks, and the interconnector was already operational, making it technically feasible. Of course, without the technical capacity, we cannot expand the geography of our gas exports, and technical capacity in the European space is not within our competence. In other words, European countries do it themselves, and the more connections there are, the more potential customers we will have.
I do not want us to get ahead of ourselves. Still, since the beginning of the Russia-Ukraine War, we have received requests from more than ten countries – from countries that are buying our gas now and are interested in additional volumes of gas, and also from those that have never bought gas from us but want to join this program too. Of course, the role of Azerbaijan is increasing here, and we must take advantage of that. We have never made our oil and gas policy a critical factor in the overall political context. Because we believe that these matters should be separated, but now, since the energy policy in the world is fully aligned with the overall geopolitical situation, this factor cannot be denied. Of course, our economic and political importance is growing, and if we look at the gas pipelines that feed Europe, we will see that there are not so many of them. In other words, existing suppliers are simply increasing gas production because there is a massive demand in Europe. Azerbaijan is the only one among the new suppliers. Considering that we have an extensive resource base, we already have the infrastructure and very active cooperation with the European Union in the energy field and all other fields; attention is focused on Azerbaijan. Of course, we understand our responsibility and try to be a reliable partner for new partners.
Ilgar Mikayiloglu, Real Television: Mr. President, theories, opinions and statements were regularly voiced regarding the Trans-Caspian gas pipeline in 2022. But in reality, what is this information based on and our position on that?
President Ilham Aliyev: Discussions about the Trans-Caspian pipeline have been going on for many years, but there has yet to be a result. The total throughput capacity of the Trans-Caspian pipeline is estimated at 30 billion cubic meters of gas. There are several critical issues regarding the implementation of this project, one of which is who will finance this project. Because when it comes to our projects, whether it is Baku-Tbilisi-Ceyhan or the Southern Gas Corridor, everything was clear. Azerbaijan took the leadership upon itself, created a team of countries and companies, and attracted international financial institutions. Notice which institutions participated in financing the Southern Gas Corridor – the World Bank, the European Bank for Reconstruction and Development, the Asian Bank, the European Investment Bank and the European Infrastructure and Investment Bank – the world's leading financial institutions. Azerbaijan, as a country, these institutions and companies invested their funds and implemented this project. There is still no clarity regarding the Trans-Caspian pipeline project. In other words, who will take this project forward and what will be its financial capacity? To calculate this, a feasibility study should be prepared. Companies should be involved in preparing it. That is to say; these are not issues that are resolved in one day or one year. If this project is launched today, it will take a few years to complete all the studies – geological surveys, environmental surveys, technical capacities, and financial capacity. All these are open questions. I believe it is erroneous to discuss the Trans-Caspian pipeline project without answering these questions first. We, as a country, have always supported this project, and I have stated several times that if we are approached, we are ready to present our capabilities, make our infrastructure available and address other necessary issues. But we cannot initiate this project because it is not our gas.
In parallel with this, even if all the issues I have listed are resolved, another issue will emerge in the second stage. Let us say that the Trans-Caspian gas pipeline has been built, and it reached Azerbaijan’s shores. What is next? What route will it follow toward Europe? TANAP? TANAP has a total throughput capacity of 16 billion cubic meters today, and almost all of it has now been supplied by us, Azerbaijan’s gas. The expansion of TANAP's capacity up to two times is also associated with our gas because we can produce at least 10 billion cubic meters of additional gas in the next five to six years if everything goes according to plan. Of course, the only way to do this is through TANAP and, as I said, interconnectors. In other words, what will happen beyond the borders of Azerbaijan? That is, will a new pipeline be built across Azerbaijan? Possibly. Who will build it? Therefore, these are all open questions. The topic of the Trans-Caspian gas pipeline has been politicized for many years. I am against it. I have always been in favor of working on real projects. After answering all these questions, this project can be implemented. Because in principle, this project can be economically viable, but a feasibility study is required. It must be confirmed. Contracts must be signed with the owners of gas, and its price must be stipulated. Because the longer the distance, the higher the cost. But we have always given political support to this project. If we are approached about this project, we will do our best to help.
Sanan Rzayev, CBC TV channel: Mr. President, if you would allow me, I would like to continue the question about the gas price and the energy sector. When you answered the previous questions, you touched in detail upon the issue of the volume of our gas reserves, especially our plans in the Balkans and Europe. This is one side of the matter. On the other hand, bizarre opinions have been circulating in the foreign media recently that Azerbaijan is buying Russian gas for subsequent exports to Europe, world markets, etc. In this regard, I would like your opinion on this and the motive behind such claims.
President Ilham Aliyev: I think this is information manipulation, and I have every reason to think so. I must say that this was first announced by Mr. Schröder, former German Chancellor and former head of one of the Russian energy companies. Then this theory was circulated in the media, and our opponents welcomed it with joy, trying to accuse us of playing some unfair game. It completely defies all logic. Even if we look at the volume of our exports in absolute terms, it is clear that this is out of the question. Yes, we used to buy gas from Russia; it was long ago when I was still working in an industrial company. It was profitable. At that time, our gas was insufficient, and we bought gas not to consume petroleum in electricity production, i.e., to get more benefits. Of course, fuel-fired power plants pollute the environment. Today, all our power plants run on gas, water and other partially renewable sources. Also, if I am not mistaken, in 2006 or 2007, gas purchases from Russia were stopped due to a sharp increase in prices – they practically doubled. At that time, we were told that the price would be twice as high. The price was already relatively high compared to the price for the Western European countries, and the volumes offered were due to drop four times. We used to buy 4 billion cubic meters of gas, but they told us on behalf of “Gazprom” that they could supply us with only 1 billion cubic meters of gas. This conversation occurred at the end of the year, in November, after the country's energy balance had already been approved. Under such circumstances, we had only one month to decide. Instead of the expected 4 billion cubic meters, we could get only 1 billion cubic meters. But we got out of the situation. As they say, every cloud has a silver lining. This situation compelled us to pay more attention to production in our own country, and we stopped buying gas from Russia. About 15 years have passed since then.
Now we are talking about buying 1 billion cubic meters of gas from Russia. The contract was signed at the end of last year, but we have yet to receive even half of that volume. Why are we doing this? Yes, our consumption is increasing, and the population is increasing. Enterprises that did not work at total capacity when the reserves were insufficient – methanol plant, urea plant, petrochemical plants – are now working at full capacity. Look at the volume of production and exports in Azerbaijan last year alone. We will see that we exported 22 billion cubic meters of gas, and I think we imported only 200 and 300 million cubic meters, i.e., one percent. This year we will export 24 billion cubic meters of gas and import the remainder of those 1 billion cubic meters. So, amateurs or provocateurs can claim that we would buy gas from Russia to resell it. In this case, we are facing both. However, attempts to constantly slander Azerbaijan and diminish our role and importance are not new. I remember that at one time, they used to say that Azerbaijan did not have oil and that the Baku-Tbilisi-Ceyhan pipeline would not be built. Then they said that Azerbaijan does not have gas, and now they are saying this. Let them say whatever they want. We have done our job, and we are doing it successfully.
Tofig Abbasov, Azerbaijan Television: Mr. President, one of the strategic events of last year was that a four-party agreement was signed with your participation in Bucharest on 17 December. We are talking about the Strategic Partnership Agreement, in which Azerbaijan, Georgia, Romania and Hungary envisage the production, then increase and transmit green energy in our territory. There is a tremendous knock-on effect behind this event. First, we have almost launched a new index of diversification of our energy policy. Then we created a new cooperation format. Because according to the information I have, that Agreement was reached in Baku, and our partners, i.e., Georgia, Hungary and Romania, warmly welcomed that document. First of all, I would like you to comment on the implementation prospects of this agreement. On the other hand, if we call everything by its name, you have just talked about the place of the pro-Armenian factor in politics. It is no secret that France was trying very hard to involve Romania in its anti-Azerbaijani front, and they even took into account what the Western media had written about it – that they would send arms and ammunition to Armenia through the Black Sea and on the condition of using the territory of Romania. Can we say that on the matter I have just mentioned, our diplomacy successfully prevented and thwarted that destructive plan?
President Ilham Aliyev: As far as this project is concerned, its essence has yet to be thoroughly analyzed. Because it was a novelty and came as a surprise to many, when we started working on this project, we clearly saw what steps should be taken to implement it. Therefore, it started to take shape after we joined this project. Because this project is an idea, a general concept that has preexisted for many years. Even the feasibility study has been underway, and the initial transmission capacity of the project was calculated at one thousand megawatts of electricity. After we joined the project and did all the analysis, we suggested that once we had joined it, let us do it on a larger scale. We proposed that it should be 4,000 megawatts instead of 1,000 megawatts. Because the costs are high and the cable will be laid anyway. Therefore, we can achieve more by laying the cable with greater capacity. The implementation of this project also raises investment interest in Azerbaijan. Because we currently cannot export so much electricity. We export, and our average export capacity is around 1,000 megawatts. However, the investment projects currently implemented in Azerbaijan – two projects are already being implemented, one is a solar power plant, one is a wind power plant, and the third project is to be implemented in the coming months – will provide us with more than 700 megawatts of clean green energy.
In parallel with this, according to the memorandums of intent signed with two of the world’s leading companies, the construction of solar and wind power plants with a capacity of up to 22,000 megawatts is planned in Azerbaijan. Time will tell whether these 22,000 megawatts will be harnessed or only half or 30 percent of this volume will be implemented. However, I think that at least half of this volume is entirely feasible, very feasible. The main issue is its future fate – how will it be transmitted? Because we need to expand our existing transmission lines. I am going back to the Zangezur Corridor. In our opinion, electricity should be transmitted through that corridor as well. For this purpose, we are building a large receiving and converting station in the Jabrayil district. If this project is realized, a station should be built on the border between Nakhchivan and Turkiye. At the same time, transmission opportunities in Turkiye should also be expanded because it is not designed to receive that much energy. So, it is a global project that can be fully realized. Because the companies investing billions of dollars in Azerbaijan today have calculated everything, they are confident that this energy will be consumed both in Azerbaijan – the current economic situation in Azerbaijan is such that they are satisfied – and there will also be export opportunities.
Another issue – it is also essential, as it has been somewhat left out of the general context – is that if we implement these projects together with our partners, I can say that Azerbaijan will not invest a single manat. All of it will be realized as foreign investment projects. Thus, the natural gas we use for electricity production will not be used and will be exported. So, our natural gas exports will rise because we will also export the gas saved in the new fields of “Absheron,” “Umid-Babek,” then “ACG,” and “Shah Deniz.” A second winning opportunity will present itself both for Europe and us. The viability of this project is relatively high. Why am I saying this? Because first of all, the President of the European Commission, Mrs. Ursula von der Leyen, participated in the signing of this agreement. Her participation suggests that this is a priority project for Europe and that there will be no financial constraints related to the implementation of this project. So far, no decision has been made as to which countries will invest and, in what volumes, and what country will receive the funds allocated by financial institutions, i.e., who will return the loans later. There have been no talks on this yet. But everything will depend on the feasibility study. Thus, Azerbaijan will become a country of even greater importance for Europe.
We have already started the energy dialogue with the European Union. As part of this energy dialogue, natural gas, green energy, and hydrogen are on the agenda. Therefore, this field has excellent prospects and a project that can benefit Azerbaijan’s economy significantly.