Trends exclusive interview with the President of the State Oil Company of Azerbaijan (SOCAR), Rovnag Abdullayev
Question: 20 September 2006 saw an official opening ceremony of the Baku-Tbilisi-Ceyhan (BTC) main export oil pipeline. I cordially congratulate you on this significant occasion and it would be very interesting to hear your visions on the relevance of BTC for Azerbaijan and for the region in whole.
Answer: Thank you. But the congratulations should be addressed to all people of Azerbaijan, as the Baku-Tbilisi-Ceyhan main export oil pipeline will play considerable role in the life of every Azerbaijani citizen.
BTC is an historic opportunity for direct and uninterrupted transportation of energy resources to the world markets. You can say that even before BTC the Azerbaijani oil had been transported abroad via the Baku-Novorossiysk and Baku-Supsa oil pipelines. You are quite right. However, Id like to draw your attention to the fact that starting from this year there has been fixed a considerable rise in the oil production in the country under the Contract of the Century. Over the past time the figure of 30 million tons has repeated numerously. And there is firm aspiration to produce the same volumes in Azerbaijan this year.
It is only the beginning. The production will increase year by year. If some years ago we could get satisfied with the northern and southern routes for the transportation of energy resources, today it is necessary to commission new capacities. The BTC opens for Azerbaijan a possibility for the transportation of steadily increasing hydrocarbon volumes to the Mediterranean Sea.
As to regional relevance of the BTC, here Id like to cite Azerbaijani President Ilham Aliyev, who stated that the BTC has gone out of the regional frames. With consideration of Kazakhstans joining to the oil pipeline, as well as international significance that the energy security gained, the BTC can be attributed as the project of world relevance.
Question: During your recent statements you have sounded an interesting idea on SOCARs aspiration for independent development of some Azerbaijani fields. How real does it seem? What fields will be put under exploration?
Answer: It is quite real. Once I said our country in whole and the SOCAR, in particular, had passed the phase of economic and financial difficulties, which were peculiar to 1990s. Today only few companies can boast of such tremendous personnel and technical potential that the SOCAR has accumulated over the past decades. It altogether makes us confident in the success of the task defined.
The state program on development of fuel and energy complex in 2005-2015 envisages the preparation of the Karabakh and Ashrafi fields for industrial development. In accordance with the program, we intend to restore the exploration work in the Umid, Babek, Nakhchivan and other fields.
Question: At present the foreign firms conduct the major part of geophysical work for western companies active in the Azerbaijani section of the Caspian Sea. Does the SOCAR consider the opportunities for implementation of exploration work for foreign companies?
Answer: The exploration and geophysical work has been implemented for operating companies in the waters of Azerbaijani section of the Caspian Sea by Caspian Geophysical JV, founded by the SOCAR in 1994. Starting in 1995 seismic survey was conducted almost in all contract areas, including Azeri-Chirag-Gunahsli, Shah-Deniz, Garabakh, Ashrafi fields with the use of Baki vessel and further Gulavar vessel. Besides, the exploration-geophysical work on the onshore fields of Azerbaijan is carried out by the Geophysics and Geology Department of the SOCAR privately.
In general, along with independent development of some fields, geophysics and geology is one of the perspective directions of the SOCARs activities We have concluded the development of a program on complex development of geophysics and geology by 2015 and launched its implementation. Though hundred million dollars are required for it, we will be able to find necessary funds for this purpose.
I met with the employees of the Geophysics and Geology and put tasks for them. Not so much time has passed from that period, whereas there is survival in the activities of the Unit. Thus, the estimated value of the work done over the first 6 months of 2006 exceeded the similar figure of 2005. The unit successfully carried out a large-scale seismic survey at the order of Azneft PA, Azerbaijan Shengli Oil Company, Kura Valley Operating Company, Azgerneft JV, Binagadi Oil company and others.
The SOCAR specialists together with Tumenneftgeofizika trust have recently won a tender announced by Gobustan Operating Company. Work under the project will start in August. Earlier the Unit has been involved in fulfilling the orders set by Azneft PA, but the cooperation with the said consumers testify for high confidence put for Azerbaijani geologists and geophysicists. At the same time improvement of technical basis of management is underway.
Question: What is the situation at the Oil Rocks? There are rumors that many platforms are outdated. Is it possible to establish in this case a museum of oil industry of Azerbaijan?
Answer: Indeed, many platforms have a long become outdated. But it would be inexpedient to carry out their refurbishment from the economic point of view. Therefore, we selected another way, which stipulates the construction of individual platform on different oil-bearing areas of the field. In general, it is planned to construct 7 similar platforms.
The situation in the Oil Rocks is encouraging. Moreover, one can assert with confidence that the Oil Rocks is going through second survival. Almost a month ago there were drilled 4 high debit wells from platform 1887. 340 tons of oil a day was produced from three wells. By the end of the year it is planned to drill 32 wells more from this platform. There could be established a museum, that you mean, and but it will not occur so soon.
Question: Do you expect to receive a credit rating?
Answer: Perhaps, the SOCAR can be granted with a private credit rating, but only after transition to international accountancy standards. However, Id like to note that despite absence of a credit rating the SOCAR today enjoys such confidence abroad and we receive loan without problems. For instance, we have recently received a credit for purchase of rights for investing in the Azeri-Chirag-Gunashli project.
As of 1 July 2007 the SOCAR should get prepared for compiling the accountancy and present a financial accountancy on international standards. At present employees of the SOCAR attend training on national accountancy standards, developed by the Finances Ministry in accordance with the international accountancy standards. In the end of all it is planned to conduct an international audit in the company.
Question: What about the quality of oil products output by the Baku-based ORPs amid the international standards?
Answer: The biggest problem for us today is content of benzol in petrol. Now we are carrying out project work for the construction of a big industrial complex Alkilen/Oxipro at the Heydar Aliyev Oil Refinery Plant with the composition of 5 technological rigs for production of high octane components for gasoline. After the commissioning of the rigs the Azerbaijani gasoline will meet the world standards and enter the world markets without problems.
Question: Could the SOCAR expand the market of export of oil products, for instance at the expense of construction of filling stations in some countries or conclusion of long-term contracts on oil delivery?
Answer: Indeed, there are plans on the construction of filling stations in Ukraine, while before the implementation of the project it is necessary to analyze the project. In particular, the economic constituents for delivery of crude oil to the market and its refinery abroad or direct delivery of oil products. We could be involved in the implementation of such project, because we possess crude oil, oil products, specialists on refinery and are capable of organizing the export of this product. However, the project will depend on the facilities that Ukraine will offer for the Azerbaijani business.
Question: What are your visions on the project on exploitation of Odessa-Brody-Plotzk pipeline?
Answer: A while ago I met with the delegation of Ukraine, which includes representatives of Ukrtransnaphta and Ukrnaphta, as well as Polish specialists, which carry out joint activities with the Ukrainians within the framework of the European Unions (EU) grant. Representatives of the Ukrainian delegation provided information about the extension of the Odessa-Brody oil pipeline to the Polish city Plotzk and voiced their will to establish jointly with the SOCAR enterprises, which would conduct oil refinery.
We are interested in alternative routes for oil export to the European markets. The perspectives of the Odessa-Brody-Plotzk pipeline should be regarded from this aspect. This EU-supported project might contain positive milestones for Azerbaijan.
Question: How much active are the foreign oil companies within the framework of perspective onshore fields?
Answer: We have set a task on independent development of the rest fields of the SOCAR and we possess necessary potential. However, it does not mean that we are going to cut down cooperation with the foreign companies. The relevant talks are underway and economic milestones of the projects offered are being studied.
Question: Its interesting, how will SOCAR celebrate the Day of Oilmen this year?
Answer: It is really a very remarkable holiday for all of us. The Contract of the Century on the development of Azeri-Chirag-Gunashli offshore fields was signed 20 September 1994 and the project is being successfully implemented. Later President Heydar Aliyev announced 20 September as the Day of Oilmen.
The SOCAR established a special working group on the preparations for the celebration of the holiday. The group has developed a special plan of measures, which will be carried out within the units of SOCAR on 20 September. Moreover, it was decided to organize festivities as this year the Day of Oilmen coincides to the historic event like the opening of the Baku-Tbilisi-Ceyhan main export oil pipeline.