Azerbaijan changes investment making direction

Oil&Gas Materials 17 May 2015 12:38 (UTC +04:00)
Export and market players for some reason have been strenuously trying to focus Azerbaijan’s energy interests namely on Europe in recent years.
Azerbaijan changes investment making direction

Baku, Azerbaijan, May 17

By Seymur Aliyev - Trend:

Export and market players for some reason have been strenuously trying to focus Azerbaijan's energy interests namely on Europe in recent years. It is understandable, since the largest project of our time - the Southern Gas Corridor - is being actively implemented at the country's initiative.

However, it is not quite right to focus the country's interests only on this region, primarily because the fastest-growing markets with annually increasing energy consumption are located on the opposite direction - in Asia.

Naturally, today, Azerbaijan's main pipeline export routes end in the Mediterranean and Black seas. Nevertheless, Indonesia accounted for 10 percent of the total volume of Azerbaijan's oil export in 2014, Thailand - five percent and India - four percent.

Asia also accounted for 15 percent of all exported petroleum products of Azerbaijan. Moreover, through its trading company, SOCAR trades the oil of the third parties and actively operates in the South-Eastern Asian market.

Azerbaijan needs a bridgehead to enter the Asian market. Taking into account the development of this region's countries, the competition there is very strong and it will be very difficult for Azerbaijan to gain a foothold in these countries' market. Nevertheless, the transport factor, namely, the country's access to the sea should also be taken into account.

Vietnam can play a role of such a bridgehead for Azerbaijan. President of Azerbaijan Ilham Aliyev visited this country in May 2014 and President of Vietnam Truong Tan Sang paid a return visit a few days ago.

During the visit, the sides discussed the cooperation in all spheres. There was put forward a proposal to increase the trade turnover between the two countries from $422 million in 2014 to $1 billion. Vietnamese president also promised to create optimal conditions for the operation of Azerbaijani enterprises in this country.

Despite the prospects for development of cooperation in all spheres, the oil and gas sector remains among the priorities. Today, SOCAR closely cooperates with PetroVietnam national company. The Vietnamese company considers the possibilities of developing the fields in Azerbaijan.

At the same time, the State Oil Company of Azerbaijan actively studies the possibilities of increasing its own oil-in-place reserve by participating in the development of fields beyond the country. Many Vietnamese fields were discovered during the Soviet period and Azerbaijan oil workers played a great role in this process.

Furthermore, SOCAR could build an infrastructure in this country for storing fuel and energy resources and to significantly increase the effectiveness of its operation in this market.

In any case, investing in Asia is today one of the important vectors. Diversification is important not only in the routes of energy resources, but also in the investment markets, all the more so, when there is an opportunity to enter the promising Asian market. Azerbaijan has never missed such opportunities and apparently it is not going to miss it this time either.

Seymur Aliyev is the head of Trend Agency's Russian News Service