Energy minister: Southern Gas Corridor has prospects for expansion in Eastern, Central Europe, including Balkans (Interview)

Oil&Gas Materials 8 May 2018 07:00 (UTC +04:00)
Azerbaijan plays an important role in energy security and implements projects changing the global energy map.
Energy minister: Southern Gas Corridor has prospects for expansion in Eastern, Central Europe, including Balkans (Interview)

Baku, Azerbaijan, May 8

By Maksim Tsurkov - Trend:

Azerbaijan plays an important role in energy security and implements projects changing the global energy map, Azerbaijan’s Energy Minister Parviz Shahbazov said in an exclusive interview with Trend.

This is the first interview of Parviz Shahbazov to the Azerbaijani media after his appointment as energy minister.

About OPEC+ agreement on reducing oil production

The minister reminded that following the results of the second meeting between OPEC and the countries that are not members of the Organization of Oil Exporters, the period of the agreement on reducing oil production was to expire by the end of 1Q2018. However, at the third meeting, held in December, it was decided to extend the deal until the end of the year.

"At present, the countries participating in the agreement are fulfilling their obligations, holding meetings, discussing the development of the mechanism of cooperation in the OPEC + format and its long-term perspective. All these are undoubtedly the result of justified expectations from cooperation in the framework of OPEC. Such cooperation demonstrates not only the protection of OPEC's reputation and interests, but also its importance both for oil exporters and consumers," Shahbazov said.

He added that this cooperation is a historic event from the point of view of the unity of OPEC and the countries not being members of the organization, and a progressive process from the point of view of the approach to crisis situations.

"The functionality of the decision taken to stabilize the world market oil prices is provided by the countries that have joined the "Declaration of partnership". Each member country remains committed to its obligations. Therefore, the cooperation under the auspices of OPEC, which continues from the end of 2016 to the present day, is commendable. This cooperation can also serve as a platform for oil countries to discuss the use of new technologies, new challenges in the energy sector and the risks that may arise under the influence of geopolitical factors, as well as the extent to which oil will maintain its position as a type of fuel in the world energy balance in the future," said Shakhbazov.

He went on to say that sharp price fluctuations that were observed in the world oil market before the Vienna agreement, have now been replaced by stability, which is accompanied by growth.

"The balance of supply and demand is gradually recovering. Commercial oil reserves, which play a crucial role in pricing, have declined significantly. Of course, we should not ignore economic growth and global economic indicators amid a positive trend in the oil market. According to forecasts by reputable international organizations, the world economy is expected to grow in 2018. This, in turn, is the main factor influencing the growth of demand for oil, which ultimately affects the price. Of course, if we talk about oil prices in the world, we should take into account all the factors," the minister said.

About cooperation between OPEC, Azerbaijan

The minister reminded that OPEC Secretary General Mohammed Barkindo visited Azerbaijan upon President Ilham Aliyev’s invitation on March 17-19, 2018.

"The industrial oil production for the first time began in Baku in the middle of the 19th century. Azerbaijan is in the focus of attention both because the advanced innovations in the fields of hydrocarbon exploration, production and processing for the first time were applied here, and because the country plays an important role in energy security and implements projects that change the world energy map,” the minister said.

Shahbazov stressed that OPEC's interest in Azerbaijan is linked with the successful implementation of transnational projects, as well as the country's joining the Cartel's initiatives as part of the process to stabilize oil prices in recent years and close participation in this.

OPEC highly appreciates the role of Azerbaijan in this process. This was once again noted at the recent Jeddah meeting of the Joint Monitoring Committee established to monitor the implementation of the deal on oil output cut,” Shahbazov said.

"Regarding Azerbaijan's accession to OPEC, I believe that at this stage it is more expedient for us to continue cooperation in the format of OPEC +," Shahbazov said.

Agreement with Iran on joint development of blocks in Caspian Sea

Shahbazov noted that intensive meetings of the Azerbaijani and Iranian presidents and the positive dynamics of relations for the recent years undoubtedly have an impact on bilateral relations and cooperation.

“We can see the results of meetings with Iran both in bilateral and trilateral formats, in the energy sector,” Shahbazov said. “In particular, progress is observed in the sale and purchase of electricity, as well as in the unification of the energy systems of Azerbaijan, Iran and Russia.”

The minister called the signing of the Memorandum of Understanding on the joint development of the relevant blocks in the Caspian Sea as important.

“Following the implementation of this document, our cooperation in the Caspian Sea will increase to a higher level and will also give impetus to regional cooperation,” Shahbazov said.

Oil and gas production forecasts in Azerbaijan

Azerbaijan plans to produce about 38 million tons of oil in 2018, the minister said.

He noted that 28 million tons of oil are planned to be extracted from Azeri-Chirag-Gunashli (ACG) block of fields, and 7.6 million tons of oil will account for the share of fields developed by Azerbaijan state company of SOCAR.

"In addition, it is expected that 2.4 million tons of condensate will be extracted from the Shah Deniz gas condensate field. It is planned that about 32 million tons of oil will be exported from Azerbaijan in 2018," Shahbazov said.

As for gas, it is projected that in 2018 the country will produce about 30 billion cubic meters.

"It is expected that 6.4 billion cubic meters will account for the share of SOCAR fields, 12.5 billion cubic meters of associated gas will be extracted from ACG and 11.1 billion cubic meters - from Shah Deniz. Gas exports are projected at just over 9.7 billion cubic meters," Shahbazov said.

About opening of Saudi Aramco office in Azerbaijan

Saudi Aramco, the national oil company of Saudi Arabia, is interested in participation in projects in Azerbaijan and joint participation in projects in other countries in exploration, production and processing of hydrocarbons, Shahbazov noted.

The minister said the decision to open a regional office of Saudi Aramco in Baku was announced during meetings with minister of energy, industry and natural resources of Saudi Arabia Khalid Abdulaziz Al-Falih and Director General of Saudi Aramco Amin H. Nasser as part of Shahbazov’s visit to Saudi Arabia.

“Cooperation with Saudi Aramco, which has big experience in exploration, production, processing and transportation of hydrocarbons, will open up the way for innovations in the production and processing sector in Azerbaijan,” Shahbazov said.

About possibility of Turkmen gas transportation along SGC

The volume of gas transported along the Southern Gas Corridor (SGC) may be increased at the expense of gas from Turkmenistan, the minister said.

He noted that the SGC is a project that has great opportunities to satisfy the interests not only of the participants, but of any country that will join it or will want to join in the future.

“The SGC initiated by Azerbaijani President Ilham Aliyev with the involvement of new exporters, transit countries and consumers, has the prospect of expansion in Eastern and Central Europe, including the Balkans,” he added. “This year we are completing the projects of the Shah Deniz Stage 2, the South Caucasus Pipeline Expansion and the Trans-Anatolian Natural Gas Pipeline (TANAP), and this shows that Azerbaijan has fulfilled its obligations.”

The minister noted that the participation and statements of representatives of Turkmenistan and Romania at the fourth Ministerial Meeting of the SGC Advisory Council also confirm that interest in the project is gradually increasing.

“Another important event expected this year is related to the Gas Interconnector Greece -Bulgaria (IGB) pipeline, the groundbreaking ceremony of which is scheduled for June,” Shahbazov said.

About development of generating capacities in Azerbaijan

Three major power plants will be commissioned in Azerbaijan in 2018, Shahbazov said.

The minister stressed that to increase the country's generating capacity, it is planned to commission the Shimal-2 TPP with the capacity of 400 megawatts, the modular power plant Lerik with a capacity of 16.5 megawatts and the Ordubad HPP with the capacity of 36 MW in the Nakhchivan Autonomous Republic, and Azerbaijan's power generation capacity will grow by an additional 452.5 megawatts.

Shahbazov further reminded that Azerbaijani President Ilham Aliyev set the task to complete the construction of the Shimal-2 TPP by the end of the year.

"Recently, we held discussions with Azerenerji OJSC and analyzed the current situation. We believe that the Shimal-2 TPP will be ready by the scheduled time," the minister said.

Shahbazov reminded that in accordance with President Ilham Aliyev's instructions given at the meeting of the Cabinet of Ministers devoted to the results of social and economic development in the first quarter of 2018 and the forthcoming tasks, the Ministry is currently working to forecast the domestic demand in 5-10 years taking into account the country's development, population growth and process of industrialization; determine the export potential based on the analysis of foreign energy markets and construct wind, solar and hydroelectric power stations based on the analysis of alternative and renewable energy sources.

Projects for creation of regional energy corridors

Implementation of the Iran-Azerbaijan-Georgia energy corridor project is one of Azerbaijan’s priorities, Shahbazov noted.

The minister said that the formation of electricity export markets and the creation of the North-South Energy Corridor are among the most important tasks facing Azerbaijan’s electric power sector.

“These issues were reflected in the instructions of President Ilham Aliyev at the meeting of the Cabinet of Ministers devoted to the results of social and economic development in the first quarter of 2018 and the forthcoming tasks on expanding the electricity export market,” Shahbazov said.

The minister noted that Azerbaijan’s geostrategic position at the junction of the East and the West, Europe and Asia and the measures taken regarding the International North-South Transport Corridor showed the importance of assessing Azerbaijan’s capabilities in terms of energy corridors.

“As an example of the work done in the direction of electricity exports, it is necessary to mention the relations of Azerbaijan with Iran and Russia,” the minister said. “The meetings of the presidents of Azerbaijan, Iran and Russia in Baku and then in Tehran gave an additional impetus to the development of relations in this direction. The corresponding structures of all three countries are taking steps to expand opportunities between the energy systems of Azerbaijan and Russia, Azerbaijan and Iran.”

“In April, Azerbaijan’s Azerenergy OJSC and Iran’s Tavanir company signed an agreement on the export of electricity to Iran, and then a tripartite meeting at the level of deputy energy ministers was held, where measures to unite the energy systems of the three countries were identified.”

“Azerbaijan already exports electricity to Turkey through Georgia,” the minister said. “The electricity is exported through the Azerbaijan-Georgia-Turkey energy bridge. Thus, Azerbaijan got the opportunity to enter the European market. Work in this direction continues.”

Prospects for development of alternative energy in Azerbaijan

Prospects of using alternative and renewable energy sources in Azerbaijan are great, Shahbazov said.

The minister noted that Azerbaijan has great potential to generate solar and wind energy, as well as biomass energy.

"Within the framework of the Strategic Roadmap for Development of Public Services (electricity, heat, water and gas) in Azerbaijan, territories and investments were assessed to create 420 megawatts of generating capacity through alternative and renewable energy sources, including 350 megawatts of wind energy, 50 megawatts of solar energy and 20 megawatts of biomass energy," Shahbazov said.

The minister noted that one of the main goals of his ministry is an in-depth analysis of the current situation in order to ensure development in the field of alternative and renewable energy sources.

"I believe that in order to develop this sector, it is necessary to improve the legislation, clarify the conditions and rules of joining the grid for energy producers, and provide financial support from the government. If this work is carried out, a favorable investment climate in the field of alternative and renewable energy sources will be created for investors, which, in turn, will allow the state to receive additional income from taxes and increase the export of saved gas resources," Shahbazov said.


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