Contract of XXI century
Azerbaijan entered a new stage of implementing its own energy strategy today. By signing documents on the final investment decision on Shah Deniz-2 project, the project partners, including State Oil Company of Azerbaijan (SOCAR), launched its physical implementation.
"Today is a historic day in the history of modern Azerbaijan," President of Azerbaijan Ilham Aliyev said at the signing ceremony.
Within the implementation of Shah Deniz-2 project, some $25 billion will be invested in the construction of new platforms, drilling, expansion of the Sangachal terminal located not far from Baku, expansion of the South Caucasus gas pipeline, as well as other related infrastructure.
However, in general, the project for delivery of Azerbaijani gas from Shah Deniz field to Turkey and Europe will not be confined to these investments. The total cost of the project for gas supply to European countries is estimated at $45 billion. Over 30,000 new jobs will be created as a result.
Additionally, the Trans-Anatolian gas pipeline (TANAP) initiated by Azerbaijan, as well as the Trans-Adriatic gas pipeline (TAP) will be constructed with these funds.
Azerbaijan has been recognized by the world community as a reliable energy partner. Along with oil supplies, the country provides almost all the neighboring countries of the region with gas. This increases their energy security, economic stability and diversification of sources.
Today, Azerbaijan has taken an important step towards ensuring the energy security of Europe.
"The Shah Deniz-2 project is one of the largest energy projects in the world," the president said. "This is a project of energy security, energy diversification, broad international cooperation among the countries and companies involved in this historic project."
A number of important decisions will be made in 2014 as part of supplying gas from Shah Deniz to Europe. In particular, these are the decisions on TANAP and TAP. In general, many important decisions are planned to be made in the future, but Shah Deniz project is the first step on a long way.
Signing documents on Shah Deniz -2 project is the beginning of the Southern Gas Corridor, opening the ways for gas from other Azerbaijani fields, and perhaps, from other countries of the Caspian basin in the future, as well as a new alternative source of supply to Europe.
Shah Deniz project and in general, the whole concept of Azerbaijani gas supplies to the West has had a lot of supporters and opponents for many years. However, most of them agree that this is a project that will change the energy map of the region and Europe.
Azerbaijan to satisfy Europe's thirst for gas
The demand for gas in Europe is expected to reach the 500 billion cubic meter per year mark by 2020, just as Azerbaijan begins it first large scale export of gas to the region.
The European Union is currently unable to produce the amount of gas it needs to maintain its economy on track and meet the huge demand required to run power plants, households and industry. Nor will it be able to do so in the future.
The EU's internal gas production by 2020 will be 135 billion cubic meters per year which is a little more than one fifth of its demand. Therefore in six to seven years the EU will have to import more than 70 per cent of is needs, or some 359 billion cubic meters per annum from various countries to maintain its economy.
Power plants will remain the major gas consumers within Europe, according to a number of statistics. Production of electricity which uses gas, grows every year in Europe and has been since 1996 up till today. Next in line as gas consumers are households and industry. These sectors are tightly connected with the economic situation and any change in the job market is reflected.
The good news for Azerbaijan is that pipelines will remain the primary source of gas transportation in the near future. This makes the country with three trillion cubic meters of gas reserves set to become one of the most stable gas suppliers for Europe via the planned Trans Adriatic Pipeline (TAP).
TAP's capacity is going to be 10 billion cubic meters of gas per year at the first stage and 20 billion on the second. TAP which would run from the Turkish-Greek border will face Azerbaijani gas flowing from the other pipeline - TANAP, otherwise known as the Trans-Anatolian gas pipeline. Gas for TANAP will be delivered by the existing South Caucasus Pipeline.
This pipeline system called the Southern Corridor, has the potential to meet up to 20 per cent of gas demand in the EU in the long term, said EU Energy Commissioner Günther Oettinger. Satisfying one-fifth of the EU's demand for gas for Azerbaijan translates into more than just a trivial business transaction.
Shareholders of Shah Deniz, which is the largest Azerbaijani gas field, agreed in Baku on Dec. 17 to invest an additional 25 billion dollars towards the project's development. The outcome of these huge investments is to create an additional 16 billion cubic meters of gas per year from the Shah Deniz field within a few years. It is planned to start exporting 10 billion cubic meters of gas per annum to Europe in 2020 and six billion to Turkey.
Among the shareholders of the Shah Deniz field with some 1.2 trillion cubic meters of gas are SOCAR, BP, Statoil, NICO, Total, Lukoil and TPAO.
During the ceremony marking the final investment decision of the Shah Deniz-2 project, mention was made of the various European countries that can expect to receive Azerbaijani gas. They include Albania, Greece, Italy, Croatia, Montenegro, Bosnia and Herzegovina, Macedonia, Slovenia, Bulgaria, Romania, Hungary and Austria. Many of these countries have a strong dependency on gas imports now. And furthermore there is no gas market or gas infrastructure in Montenegro.
The gas infrastructure which will be built for the Shah Deniz-2 project can be used effectively by the other perspective gas projects in Azerbaijan such as Absheron, Umid, Babek and Nakhchivan.
The Absheron's gas reserves are expected to be as much as 350 billion cubic meters. Drilling is expected to commence by the year 2017. Shareholders of Absheron are SOCAR, Total and Gaz De France Suez.
The Umid gas field was opened by SOCAR in 2010. Potential gas reserves of that field are expected to be more than 200 billion cubic meters. SOCAR is in the process of constructing a special offshore platform for this field's full development.
The other structure is called Babek with 400 billion cubic meters and Nakhchivan with 300 billion cubic meters of gas. The total reserves of the three Azerbaijani offshore gas fields Zafar-Mashal, Araz-Alov-Sharq, and Shafag-Asiman is estimated to be as much as 1.5 trillion cubic meters.
The Caspian Sea region where Azerbaijan shares the shoreline, is one of the oldest oil-producing areas in the world and is an increasingly important source of global energy production, the U.S. Energy Information Administration believes.
'The area has significant oil and natural gas reserves from both offshore deposits in the Caspian Sea and onshore fields in the region. Traditionally an oil-producing area, the Caspian area's importance as a natural gas producer is growing quickly', the EIA said in a report published on its official website.
According to the EIA's estimates, 2012 proved and probable reserves within the basins that make up the Caspian Sea and surrounding area amounted to 48 billion barrels of oil and 8.268 trillion cubic meters of natural gas.
In addition, the report stressed that the U.S. Geological Survey (USGS) estimates another 20 billion barrels of oil and 6.88 trillion cubic meters of natural gas as being as yet undiscovered, technically recoverable resources.
WB: Labor resources development agency should be established in Azerbaijan
The Azerbaijani Ministry of Labor and Social Protection continues work to establish the labor resources development agency as part of the joint social protection development project with the World Bank.
A lack of professional standards in different sectors creates problems not only for employers and employees, but also interferes with the normal activity of employment agencies, head of the WB office in Baku, Larisa Leshchenko said.
"Thus, this situation negatively affects the labor market and all sectors of the economy," Leshchenko added.
"Not only the formation, but further using of professional standards is important," he said.
"Some 200 such standards were created as part of our project," she said. "Meanwhile, the work is underway. It is necessary to create a special agency that would deal with issues of their application and further development of Azerbaijan's personnel potential."
At present, establishing a labor resources development agency is being discussed at the level of working groups, Azerbaijani Minister of Labor and Social Welfare, Salim Muslimov said.
"It is necessary to continue working," Muslimov said. "We will present our ideas to the market participants - confederations of trade unions and employers and listen to their opinions. A national classifier of professions will be created at a further stage. After using the professional standards, it will be possible to issue certificates to the employees, the accredited companies or associations in the future."