Energy could be an important factor in strengthening security and cooperation in Southern Europe and the Balkans, says Azerbaijani Ambassador Rahman Mustafayev in Tirana Times interview, as pipeline project gets green light from Albania, Greece and Italy. Azerbaijan’s economy is growing strong, and Albania presents strong economic cooperation opportunities, the ambassador adds.
Mr. Ambassador, on the eve of the upcoming visit of the Minister of economic development of the Republic of Azerbaijan Mr. Shahin Mustafayev to Albania, would you please comment on the purposes of this visit.
Official visit of our Minister of ED comes amid strengthening bilateral political relations between Azerbaijan and Albania. Our countries are opening to each other more and more, for the last two years there were many visits on high level. The recent visit to Albania of the Speaker of our Parliament (Milli Mejlis) Mr. Oqtay Asadov and his meetings with Albanian officials proved once more, that there is huge potential for growth in many areas of cooperation.
At the moment we have solid agenda, comprising of political, economic, energy, cultural and even city-to-city cooperation issues. Establishment of legal basis of our cooperation is also under way – we have 4 basic agreements signed and 8 are in the process of consideration. So upcoming study visitof our MED to Tirana and Durres -the first ministerial visit from Azerbaijan to Albania -is intended toidentify concrete areasof investments and cooperationin trade and economic field. We are working also at the finalization of the intergovernmental Agreement on cooperation in the fields of economy, industry and technology with the purpose of signing this agreement during the visit.
Can you tell us few words about the situation in the economy of Azerbaijan?
For the last 10 years Azerbaijan was one of the world’s fastest-growing economies, moving at a healthy 5-10% clip, and even hitting 25% in 2005-2007. Throughout 2010-2011 the growth was moderate. According to the IMF’s latest World economic outlook (of October 2012), in 2012 Azerbaijan’s GDP is projected to expand by 3.9% and inflation to decline to the level of 3.0%. In 2011 our nominal GDPreached $55 billion, that is,increased more than4 times over thelast 6 years(from 12 billionin 2005).With all these figuresAzerbaijanis obvious economic leaderof the region- the volumeof its economy amounts almost to 80% ofGDP for the whole South Caucasus.
What are the priorities of Azerbaijan’s economy?
For many years oil-and-gas factor accounted for much of the economic growth.From 1995 to2010more than$95 billionwere invested tothe country’s economy,including $55billion of foreign investments. But now we have new quality of growth – it is not only oil-and-gas driven, because, despitevast oiland gas reserves, Azerbaijan considersdevelopment of non-oil sector as the mainpriority ofeconomic policy. In9 months of2012$16billionwere invested to national economy, 27% up from the same period of 2011.The volume of investments in non-oil sector increased even more – by 31%. So it is natural that for 9 months of 2012 GDP growthin the non-oil sector reached the level of 10.3%, while overall GDP for the same period stood at 1.1%.
And results are now in -the share ofnon-oilsector in GDPamounts now toalmost 50% andAzerbaijan, in contrast to many other countries of the region, is not vulnerable to negative external spillovers and stress from global and euro-zone crises. I think thatthis is themost important achievementof our economic policyfor the last years.
Another important priority of our economic policy is thatfrom attracting loans and foreign investments Azerbaijan is shifting its policy to national-investment baseddevelopment. For example, out of above-mentioned $16 billion, invested to Azerbaijani economy in 9 months of 2012, only 30% were of foreignorigin, and the rest are national investments (state and private companies spending).As a result,in 9 months of 2012, 300 new small- and medium-sized enterprises were established in the regions of Azerbaijan and 94,000new jobs were opened. Since 2004, when the first National Program for Social and Economic Development of the Regions was adopted, almost 800,000 new jobs were created in different sectors of national economy.
And I would like to underline, that allthese investments are focused not only on the capital Baku and other main cities, but mainly on the regions of Azerbaijan with the main focus on the development of agriculture, new industries, transport and social infrastructure.
There were some articles in international mass media, that Azerbaijan started to grant financial aid to other countries. Is it correct?
You are right. This is another one – new and very important – dimension of our economic policy. Our foreign currency reserves will reach till the end of the year $50 billion- the figure, that ismore than 10 times bigger than overall amount of our foreign debt (the amount of our foreign debt makes only 8% of GDP). For this reason Azerbaijan now feels more comfortableto promote investment projects abroad and develop concrete programs of social and economic development for other, less developed countries.In particular,in March 2010,for the purposes of the development ofAfrican, LatinAmerican and the Caribbean countries Azerbaijan allocated the amount ofabout$ 100 million. Financial assistance is provided also by the channels of other international organizations.
You know, that one of the most important issues for Albania now is TAP. What is going on this track? How do you see the future of this project?
As you know, in August SOCAR – our oil and gas company, bp and TOTAL reached an agreement with TAP and its shareholders to secure funding for the TAP project. These funds will contribute towards continued work in several important areas during the period running up to the final routing decision, expected in 2013. The agreement also includes an option for the Shah Deniz shareholders to take up to 50% equity in TAP in case TAP is selected over Nabucco West. Funding agreement will be signed also with competing Nabucco West project. This step of SOCAR and his partners in Shah-Deniz II Consortium (SDC) testifies to their objective, responsible and proactive approach to the selection process. The purpose of doing this is to assist these projects to be more developed, to optimize their scopes, their technical studies and commercial offers.
Now all parties of the process – SDC, SOCAR, bp, TOTAL, TAP, transit governments – are doing their job. And in this context I would like to praise the Government of Albania for its extremely supportive position and policy towards Southern Corridor and TAP. Recently, on October 8, representatives of SDC, TAP and regulatory authorities of Greece, Albania and Italy held their first joint meeting in Athens to discuss TPA Exemption issues. In general, since August of 2012 the political climate started to change positively towards TAP. The signing of Inter Ministerial Agreement between Italy, Albania and Greece in New York at the end of September is a good testimony to this progress.
So, there are some positive developments, but much more should be done within coming months, since, as you may be know, the schedule of final-route-selection process set up by SDC, is very tough, and also because of the fact, there was almost half-year delay from February 10, when TAP was selected over ITGI, till August 7, when governments of Italy and Greece expressed their support to TAP in public in Rome. So till the end of Quarter 1 of 2013 the final route of delivery of Azerbaijani gas to Europe should be selected, within Quarter 2 all Gas Sales agreements should be concluded and till the end of June 2013 SDC should make final investment decision.
Can you comment on Albanian-Azerbaijani cooperation in the field of energy?
We understand how important it is for Albania economically and politically to be on “European Energy Map”. And I would like to reconfirm in this context once more, that SOCAR is ready to cooperate with Albanian government to decide jointly how TAP, if wins, could contribute to the development of Azerbaijani-Albania energy cooperation and gas sector development in Albania. We participated at the Gas Market Development Workshop in Tirana on August 3, 2012 and are ready to participate at “Gas Master Plan Development Symposium”, hosted in Tiranaon November 13 by the Albanian Government through METE in orderto continue our meetings and discussions with Albanian and foreign colleagues on this issues.
And finally, I would like to add what I consider very important. Future deliveries of Azerbaijani gas to Europe from SD Phase 2 will be a critical factor in promoting energy security of European countries. Energy and economic importance of this project for Europe, and especially for hosting countries, will be enormous. For the first time in the history of XX-XXI centuries European continent will have a reliable alternative access to gas from the rich resources of the Caspian region.But, in myopinion, importance of Southern Corridor is not limited only to itsenergy diversification and economical dimensions. Establishment of gas corridor Azerbaijan-Turkey-Greece-Albania-Italy-Europe (in case TAP is selected)could be also an importantfactor in strengtheningsecurity and cooperationin the regionsof Southern Europeand the Balkans. And this would be another and very important added value to all countries and people of the region.
