Saturday, 30 September 2023 12:40

Ilham Aliyev: We have great plans

The Karabakh region of the Azerbaijan Republic will be a budget ‘recipient’ in the nearest years, but in the medium term, Azerbaijan’s GDP will significantly grow driven by the integration of the liberated region. In less than a day, Baku established full control over the entire territory of the country after performing the anti-terrorist operation in the Karabakh economic region on September 20, 2023.

Earlier in 2020, the successful counter-offensive operation launched by the Azerbaijani army in Karabakh on September 27 and continued till November 8, resulted in the liberation of 5 cities, 3 settlements and over 215 villages within 44 days. Thus, two military operations put an end to a multi-year cycle of occupation, defiance of the United Nations resolutions on the return of lands, and devastation and desolation of 20% of Azerbaijan’s territory. Full restoration work is currently underway on the liberated lands, including construction of roads, settlements, airports, and telecommunication infrastructure. According to the envisaged investment program, expenditures on Karabakh and East Zangazur amounted to around 12 billion AZN by the end of 2023 (investments made in the year 2022 - 2.4 billion). Initial results have been achieved in a short period of time – Karabakh’s industry grew by 30%, President of Azerbaijan Ilham Aliyev said.

From the state budget for 2024-2027, Azerbaijan plans to appropriate a total of 13 billion 682 million AZN (at the current rate - $9.8bl) for implementation of construction, restoration and rebuilding projects in Karabakh and East Zangazur.

  Oil sector

 At the meeting held with BP’s management staff on September 20, 2023, President Ilham Aliyev emphasized the essential role the Contract of the Century signed in 1994 played in laying a cornerstone of the country’s economic development during a hard and historic period of challenges that Azerbaijan went through.                    

September 20 is Azerbaijan Oilmen’s Day – the signing date of the international agreement known as the Contract of the Century under the leadership of the national leader of Azerbaijan Heydar Aliyev.  The project turned 29 in 2023. Since the launch of ACG development in 2001, the total amount of revenues gained from sale of profit oil produced from the block of fields has exceeded $160bln.

According to the data as of 2022, a total of 560.2 million tons of oil was produced since the commissioning of Azeri-Chirag-Gunashli (ACG) fields.

Azerbaijan’s net profit from the development of Azeri-Chirag-Gunashli (ACG) block of fields has totaled $168 billion since 2001.

The volume of investments made into the country’s economy between 1995 and 2021 totaled $280 billion. If Azerbaijan’s GDP was $2.417 billion in 1995, in 2021 it totaled $54.62 billion. Azerbaijan’s nominal GDP totaled 125 billion 5.5 million AZN in 2023. 

Karabakh’s full integration into Azerbaijan’s economy can raise the state’s GDP by 0.8%, this forecast was voiced by the representative of the Plekhanov Russian University of Economics, Anatoliy Kolesnikov. Thus, all regained regions will be integrated successfully into the economy and social life of Azerbaijan.

ACG is the largest block of Azerbaijan’s oil fields and the world’s first-ever agreement that was signed twice, which underlines its long-standing significance up to the present day.

The rising oil demand promotes the growth of the investment attractiveness of Caspian fields.

Oil production from Azeri-Chirag-Gunashli (ACG) block of fields totaled around 68 million barrels (9 million tons) in the first half of 2023.

In total, around 77 million barrels of oil (10 million tons) was produced from ACG block in the first half of 2022. Thus, oil production from this contract area decreased by 11.7% in January-June 2023.

According to BP, the size of expenditures on the development of ACG block decreased by 4.1% down to $978 million compared to the first half of 2022. From the mentioned sum, operational and capital expenditures totaled $232 million and $746 million respectively, the company said.

Average daily oil production from the block totaled 375, 000 barrels in the first half of 2023 (424,000 barrels in the first half of 2022).

In the meantime, production from Chirag platform averaged 23,000 barrels per day (25,000 barrels per day in the first half of 2022 – Interfax-Azerbaijan), Central Azeri – 98,000 b/d (108,000 b/d), West Azeri – 91,000 b/d (109,000 b/d), East Azeri – 61,000 b/d (62,000 b/d), Deepwater Guneshli – 67,000 b/d (78,000 b/d), and West Chirag – 35,000 b/d (42,000 b/d).

 Transition stage

It seems like data on production from conventional sources will soon be replaced with other data on generation and export of renewable energy – solar, wind, and hydro power. On December 17, 2022, the governments of Azerbaijan, Georgia, Romania and Hungary signed an agreement on a strategic partnership in the field of green energy development and transmission. One of the important points of the agreement was the Black Sea submarine cable project. Once implemented, a 1,195km long cable (1,100km –subwater, 95km – onshore) will be linked to Romania, which will allow South Caucasus states and Romania to benefit from broad opportunities of electricity export and trade on basis of hourly market prices.

“At this stage, we have already conducted preliminary technical studies and they give us the basis for the successful implementation of the project”, Vice Prime Minister, Minister of Economy and Sustainable Development of Georgia Levan Davitashvili said. “High-level coordination between countries is very important for the successful implementation of the project”, the Vice Prime Minister said.

According to Levan Davitashvili, the feasibility of the project has actually been confirmed, and soon there will be a complete sketch of how the Black Sea submarine cable project should be implemented, which will create the means of supplying renewable energies from Georgia and the South Caucasus in general to the European Union. 

Shah Deniz gas export rose from 2022’s 19 bcm to 24 bcm in 2023, according to the data mentioned by President of Azerbaijan in his speech. “This volume will keep growing further.  With respect to our potential, here are just a couple of figures for your attention. Twenty-seven gigawatts of wind and solar onshore, 10 gigawatts of wind and solar energy in the territories liberated during the Patriotic War of 2020, and 157 gigawatts of wind energy in the Azerbaijani sector of the Caspian Sea - almost 200 gigawatts of potential. Of course, we need to have enough export routes. And, of course, to implement all these projects in stages... In January 2023, Masdar and SOCAR signed an agreement on development of wind and solar power plants with the capacity of 4GW in Azerbaijan. It is only a short-term project, and mid-term projects will increase the volume to 10 gigawatts. And this is absolutely doable. We have a road map for both projects. This project alone, in cooperation with MASDAR, will transform Azerbaijan into a significant source of green energy exports”.

“Today, Azerbaijan not only satisfies all its needs with energy but also exports crude oil, oil products, natural gas, petrochemicals, and electricity. Our program with respect to renewables has an entirely different agenda. Firstly, this sector has enormous potential. Secondly, it will help us to diversify our export and, of course, create a new ecologically-friendly sector of our economy”, President of Azerbaijan said.

“Important MoUs and agreements signed by Azerbaijan with international energy companies will allow us to produce up to 22 gigawatts of wind and solar energy. And, of course, for that purpose, we need export routes, as I already mentioned.  On the 17th of December, Azerbaijan, Georgia, Hungary and Romania signed an agreement to build a Black Sea sea-belt electric cable from the Black Sea coast of Georgia to the Black Sea coast of Romania. And this agreement was witnessed by President of the European Commission.  Thus, we plan to build a cable that will transport green energy from Azerbaijan at the level of four gigawatts. But that will not be enough. That is only what has already been agreed upon. Our plans are much broader. The investment climate in Azerbaijan is very positive, and we accumulated considerable investments in the oil and gas sector. But now our target is renewables. So, in other words, we have great plans. And I am sure that we will succeed”, the head of state of Azerbaijan noted.

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