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AZERBAIJAN


  
  

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 7,124 6,090 5,600 102
         
GNI per capita
 US $ 810 710 650 146
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 316- (26/04/07)

Record oil extraction in Azerbaijan 
The pre-eminent fact about Azerbaijan is that it is having a massive oil and gas boom; but along with that it is acquiring 'the oil curse.' The traditional economy is being hollowed out, so that there will nothing left when it all runs out. Meanwhile there is a massive social polarisation, as a few at the top amass millions, whereas the very different millions at the bottom are destitute.

It is with mixed feelings, therefore, that Azeris are being told that in 2006, more than 32 million tons of oil was extracted in Azerbaijan, matching the Azeri record set in 1941. Currently 120 000 tons of oil is being extracted in Azerbaijan daily. 

In the first quarter of 2007, the Baku-Tbilisi-Ceyhan (BTC) oil pipeline became fully operational. "This is an important historic achievement and a perfect response to the people that doubted it would ever be implemented," stated President of Azerbaijan Ilham Aliyev at a recent government session, reports the newspaper Rezonansi. According to Aliyev, oil extraction in Azerbaijan will reach 42-43 million tons in 2007 and in 2008 the country will extract 50 million tons of oil.

Aliyev stated that along with the oil industry, the Shah-Deniz gas field will yield 1.2 billion cubic meters of gas in 2007. "If Azerbaijan meets only the country's needs and does not export any gas, the supply would be enough gas for Azerbaijan for the next 100 years," explained Aliyev. 

Azerbaijan is going to increase not only its gas drilling, but also plans to expand the export sharply. In 2007, according to first quarter data, natural gas drilling extracted 1.3 billion cubic meters. This is 30 percent more compared to the same indicator in 2006.

Azerbaijan nods towards democracy 
Under the circumstances of polarisation of society, liberal-democracy is in short supply. But there are a few hopeful signs all the same. Between April 16-20, the European Council discussed the fulfilment of the Caucasian republic's human rights obligations. 

The European Council has not been the only institution to address the issue of the Caucasian republic. The United Nations Human Rights Council's session in Geneva last March also held debates on the internally displaced population in the Azeri territory. The population is displaced due to a conflict with Armenia over Nagorno-Karabakh, a region occupied by Armenians that declared its independence from Azerbaijan in 1991, but that no international state has recognised. At the start of 2007, Amnesty International published an explicit report warning of the lack of freedom of expression and threats suffered by local informants in Azerbaijan.

The better repute that this ex-Soviet republic has acquired in the last few months is not accidental. After the 'information blackout' that followed the turbulent legislative elections in November 2005, the Azeri society is stretching and preparing itself to take on what they see as a 'political challenge.' That is to say, the presidential elections of 2008. The government will have to demonstrate that the 'little gestures' that Ilham Aliyev's executive council have carried out in the last few months - amnesty to political prisoners, the remodelling of some government portfolios, the liberalisation of foreign policy - have not been merely an image clean up to avoid criticism from the international community, but a convinced and convincing step towards a mature, definitive democracy.

Electoral ghosts
The election will be a real golden opportunity for the opposition. During the 2003 presidential and 2005 legislative elections, the opposition united its forces in a unique opposing platform against the 'electoral ghost' created by Aliyev's government. This was a field of entertainment perfect for some elections: those of 2008, in which the loss of breath of the opposition parties' union - that still hasn't decided on what terms it will compete - can recover with an announcement that respects international standards of cleanness and transparency.

For Razi Nurullayev, Azeri activist and founder of the Yox youth movement, the main challenge for the opposition is to 'mobilise and get society involved,' especially the youngest sectors. 'The young are caught up above all in their routines and their problems getting ahead in life,' explains Nurullayev, who now works in the consolidation of the 'Coalition of Civil Society,' a network of local and international non-governmental organisations, civil associations and influential persons, created in order to favour social debate and build bridges between political life and society. 'Citizen passivity is the base for some bad elections.' He is convinced that true democracy will never exist in Azerbaijan until the Azeris get fully involved in the day-to-day politics of the country.

Euroasiatic chessboard pawn
For the moment, the Azeri government has consented to put into action some of the recommendations made by the European Councils Venice Commission and the Organisation for Security and Cooperation in Europe (OSCE), with respect to introducing amendments in the electoral law. Now, for example, electoral committee members will be made up of an equal number of representatives from both the government and the opposition. 

However, in its April session, it is probable that the European Council will insist on a change of course in other areas, including judicial system reform, the fight against corruption and organised crime, the situation of human rights defence NGOs in the country, and freedom of expression and meetings. Premises that, according to the Azeri government, the European Council should make extendible to other countries that make up the institution.

Azerbaijan is a vital piece on the Euroasiatic chessboard. It shares a border with Iran - where 35% of the population is Azeri. That's 30 million against the 9 million that reside in Azerbaijan. Its rich energy resources place it in the centre of growing Caucasian importance in the international geopolitical situation. Azerbaijan, however, looks at Europe knowing that its outside credibility depends to a large extent on the democratic advances that it is capable of stamping on its political life during the months to come.

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ENERGY

India interested in joint ventures with SOCAR


India is interested in setting up joint ventures with Azeri state oil company SOCAR to expand cooperation in the oil and gas sphere, Indian Commerce Minister, Jairam Ramesh, said at a press conference in Baku on April 11th, New Europe reported.
"Indian companies have not taken part in the process of developing oil and gas fields in Azerbaijan over the past 15 years. Therefore we now plan to step up our cooperation with Azerbaijan in this sphere," he said. He said the national oil company of India is interested in setting up joint ventures with SOCAR to implement oil production projects in the Caspian. "India is currently actively investing in oil production abroad. In particular, in 15 countries around the world, including Russia, Vietnam, Sudan, Iran, Iraq, Brazil, Colombia and Egypt and has invested US$ five billion in the oil sector," he said. India is also interested in setting up gas sale ventures with SOCAR. "In addition, we are hoping for SOCAR investment in developing oil production on Indian territory," the minister said.

Shell mulls transporting oil from Kazak fields via BTC

A senior Shell official said on April 10th that the company is studying the possibility of transporting its oil from fields in Kazakstan via the Baku-Tbilisi-Ceyhan (BTC) oil pipeline. "Shell is studying the possibility of transporting its share of oil from the Kashagan field and other fields in Kazakstan via the BTC, New Europe reported.
In addition, the company is confident that all the work on the project to develop the Inam field, where it also has a share, will be carried out on schedule," Shell International Exploration and Production Executive Vice President Guy Outen said during a meeting with Rovnag Abdullayev, head of Azeri state oil company SOCAR.
Shell is interested in stepping up its activities in Azerbaijan and cooperating with SOCAR in the extraction, refining and sale of oil and gas, Outen said.
Abdullayev, in turn, informed Outen about work being carried out to expand the capacity of the BTC pipeline, the construction of the Kulevsky terminal on Georgia's Black Sea coast, which SOCAR has acquired, and the capabilities of the infrastructure used to transport Kazk oil via Azerbaijan.
"Azerbaijan has all the infrastructure to transport Kazak oil via rail to the Black Sea as well as via the BTC pipeline to the shores of the Mediterranean Sea," he said.
The contract to develop the Inam structure was signed on July 21, 1998. SOCAR has 50 per cent of the project, BP, the operator, has 25 per cent and Shell has 25 per cent.

AIOC fully redirects oil along Baku-Tbilisi-Ceyhan

Shareholders in Azerbaijan International Operating Company (AIOC), the operator for Azeri-Chirag-Gunashli (ACG) fields in the Caspian Sea, have decided to send all the oil produced at the ACG fields along the Baku-Tbilisi-Ceyhan oil pipeline (BTC) starting in April 2007, the AIOC press service said, Interfax News Agency reported.
The AIOC shareholders are also the owners of BTC Co., the operator of the construction and use of the BTC pipeline.
All the BTC pipeline's pumping stations in Georgia and Azerbaijan switched from diesel fuel to natural gas in March, the press service said. This will increase the pipeline's pumping capacity and provide companies that are part of AIOC and shareholders in the BTC pipeline with the opportunity to redirect exports of their oil to the BTC pipeline starting from April.
At present, up to 700,000 barrels of oil are being pumped via the BTC pipeline per day, a company representative said.
A record-high 750,000 barrels of oil were pumped through the pipeline on March 31st, the AIOC representative said. "However, the pumping capacity of the pipeline, which is two-months ahead of schedule, has virtually been brought to one million barrels per day," the representative said.
In addition to the BTC pipeline, AIOC oil is exported along three other routes: the Baku-Supsa oil pipeline, which is under repair, the Baku-Novorossiisk pipeline and by rail. AIOC has been actively using the Baku-Novorossiisk pipeline since April 2005 and the company began exporting oil along the Baku-Batumi railroad in June 2005.
With the launch of the BTC pipeline, however, AIOC has said on several occasions that it plans to free up the capacity of the Baku-Novorossiisk pipeline and discontinue rail shipments. At the same time, ExxonMobil, an AIOC shareholder that is not a member of the BTC pipeline, continues to export its oil from the ACG fields by rail.

Kazakstan, Azerbaijan mull Odessa-Brody-Gdansk

Kazakstan would like to see the Odessa-Brody pipeline to be extended to Poland's Gdansk and wants Russia to be involved in talks on the project, President Nursultan Nazarbayev said. "By 2012-2014 Kazakstan will evolve into a major exporter of oil to international markets. But the projected twofold increase in oil extraction by 2012-2015 is making us seek new ways (of transporting it). An Odessa-Brody-Gdansk project would be a good alternative for us," Interfax quoted Nazarbayev as telling joint news conference in Astana on March 29th after talks with Polish President, Lech Kaczynski. "I would like to make special mention of our interest in this (project.) And Russian organisations must be necessarily asked to participate," he said, Interfax News Agency reported.
"It's not a political, but an economic issue, because excess oil would be transported from Kazakstan through Russia," he said. "There is no railway running through the Caucasus. It must be built. A terminal must be built in Supsa and in Batumi. So, how could we transport (Kazak oil)? By increasing the handling capacity of the CPC north-Caspian pipeline," the Kazak president said.
"Therefore, we must take this issue seriously. If we do, by 2011-2012 we'll definitely put first oil through this oil pipeline (Odessa-Brody-Gdansk)," Nazarbayev said.
Nazarbayev said that "Kazak companies would like to buy oil refineries in Poland and to build a pipeline jointly, and to make investments and to have equity."
Meanwhile, Azeri Industry and Energy Minister, Natik Aliyev, said at a press conference on March 28th in Baku transportation of oil by Azeri state oil company SOCAR through the Odessa-Brody pipeline may become attractive if the company acquires a refinery in Ukraine.
"The question of Azerbaijan joining the Odessa-Brody is constantly brought up. However, we already have three oil pipelines to export our oil to the world markets: Baku-Novorossiisk, Baku-Supsa and the main export route - Baku-Tbilisi-Ceyhan. If we were to become the owner of some refinery in Ukraine, along with setting up our own chain of filling stations, then it will be profitable for SOCAR to transport its oil to Ukraine, with subsequent refining and sale of oil products," Aliyev said.
The minister said that at this stage Ukraine, if it wishes, might acquire on general terms, oil that Azerbaijan exports through Black Sea ports in Georgia and Russia, and transport it though the Odessa-Brody.
In another development regarding Odessa-Brody-Gdansk, Ukrainian Prime Minister
Viktor Yanukovich said Ukraine is examining the possibility of shipping oil through the Odessa-Brody pipeline to the town of Kralupy nad Vltavou in the Czech Republic.
"We are talking about launching it (the Odessa-Brody oil pipeline) as originally planned. We intend to make the first step in the direction of the Czech Republic to Kralupy," Yanukovich said at a joint press conference with European Commission Chairman Jose Manuel Barroso in Brussels on March 27th. "Today the issue is being coordinated with the owner of the section, Russia," he said.
In addition, Yanukovich confirmed Ukraine's interest in completing construction of the Odessa-Brody oil pipeline to Plock and Gdansk.
"Construction to Plock and Gdansk is the second stage in the pipeline's construction and it remains in our plans," he said.
According to Yanukovich, one of the first steps in the construction of the Odessa-Brody oil pipeline is the beginning of joint work on the Odessa-Brody-Kralupy project. "The solution of this issue will provide optimism to all participants in the projects, and this will be a real step toward putting the project into action," he said.
The Caspian nations partners in the project "are interested in this," he said. "We agreed with the Polish prime minister to jointly work in this direction," he said.
According to earlier reports, the prime ministers of Ukraine and Poland, Yanukovich and Jaroslaw Kaczynski, agreed on the project to ship oil through the Odessa-Brody oil pipeline to Kralupy, Czech Republic, in November 2006.

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FOREIGN RELATIONS

Putin invites Aliyev to attend St Petersburg forum

Russian President, Vladimir Putin, had a working meeting with his Azerbaijani counterpart, Ilham Aliyev, in the Kremlin on March 27th, discussing some economic issues and invited the Azerbaijani president to take part in the St. Petersburg International Economic Forum and in the CIS Summit this June, New Europe reported. 
Aliyev, in turn, said that he is ready to discuss the issues of bilateral interest and the current status in the region. “In many ways, the regional processes depends on the Russian-Azerbaijani close cooperation,” he stressed. 
Aliyev pointed to the stable, friendly and partner relations established between the two countries. “Azerbaijan is proud of these relations,” he said, adding that he will attend the St. Petersburg forum undoubtedly. 
Before the meeting, Putin praised Aliyev for "embracing every opportunity to meet and talk," and called his Azerbaijani counterpart "a welcome guest."
Meanwhile, a Russia delegation visited Azerbaijan on March 27th.
Russia and Azerbaijan have strategic, confidential and partnership relations, Federation Council Speaker Sergei Mironov said.
“Trustful personal relations between the Russian and Azerbaijani presidents are a pledge of continuity in the two countries’ policies after 2008,” he said. 
“On March 27th, during his visit to Moscow, Azerbaijani President Ilkham Aliyev had a good and open talk with Vladimir Putin. All issues have been discussed and mutual understanding found,” he said. 
“We are parliamentarians and our task is the formation of a legal field that consolidates agreements at the high level,” Mironov said. 
In reply to journalists’ question whether the problem of Nagorny Karabakh will be on the agenda of the Federation Council delegation’s visit, Mironov said “it would be wrong to be in Baku and not to touch on this problem, this open wound.” 
He pointed out that “only Baku and Yerevan have the way out of this problem.” Russia “will accept any decision the two countries will reach. If they wish, Russia will provide assistance guarantees.”

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