Azerbaijan’s economic performance has enabled a great variety of investment opportunities for the country
BAKU – Eight years past from the project of crude oil supply to Europe, Azerbaijan signs the second most important and strategic project for gas transportation called Trans-Anatolian gas pipeline (TANAP).
The first project signed by Azerbaijan in 1994 was $3.9 billion worth Baku-Tbilisi-Ceyhan (BTC) pipeline, which exports crude oil from Azerbaijan through Georgia to Turkey. The route is completed by the transportation from Mediterranean Sea to international energy markets. The bilateral agreement with Azerbaijan and Turkey was signed with the goal to meet oil demand in the world market. In addition, both sides believed that this project will provide political stability and long term sustainable growth for the economies of the Azerbaijan, Georgia and Turkey. The construction of advanced energy infrastructure and development of professionals with capability to put the whole mechanism in action, many international economic organisations such as, European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC) and different financial institutions provided source of capital for the project. Ownership of the BTC Co consists of 11 giants in energy industry. British Petroleum (BP) is the largest investor with 30.1% of stake in company. The other major shareholders are Azerbaijan’s SOCAR with 25%, US’s Chevron with 8.9%, Norwegian Statoil with 8.71% and Turkish TPAO with 6.53% shares.
As oil revenues grew, Azerbaijani government emphasised the importance of management of the revenues for future. The Eastern European country defined long term policies to be achieved for increasing economic growth prospect. The President of Azerbaijan Republic, Ilham Aliyev highlighted the idea to “convert black gold to human capital”, prioritising investments of oil revenues to people’s education. As a result, many state programs initiated to improve education in country and develop high skilled professionals which contribute to the economy. It was also indicated to escalate tourism sector to increase the proportion of state incomes from non-oil sector.
Twenty three years passed from the independence of the country, Azerbaijan becomes the leading economy in the region and advances in energy sector. In 2011, oil and gas rich country signed a new agreement of Trans-Anatolian natural gas project to supply commodity to European markets. The project infrastructure will be connected to Sangachal terminal and South Caucasus Pipeline expansion (SCPx) in 2018. TANAP pipeline will pass from Azerbaijan, Georgia, Turkey, Greece, Albania and Italy. The estimated cost of the construction is approximately $11 billion, with 80% ownership of Oil Company of Azerbaijan.
Mr. Aliyev stated that “revenues from TANAP are focused on the social economic welfare of nation and improvement of infrastructure.” He also noted that the investments in human capital, cosmic industry and other industries pose country to long term growth.
No doubt that the TANAP project is a key economic reform for European energy security realised by the cooperation of European countries and USA which will bring stability and provide energy security to the EU countries. Azerbaijani policymaker, Elman Nasirli says this gas project does not only support energy security, but it also has very significant strategic importance for whole Europe. Other experts have already started to plan about the future expansion of the project. An interesting idea has been proposed by Ilham Shaban, the director of Oil Research Centre. The economist said that the capacity and importance of the project can be increased further, if other countries with gas resources join the project. He highlighted Russia and Iran as countries with huge potential to improve the project.
– Goshgar Mikael, Correspondent (Europe)
Image Courtesy: Salvatore Freni Jr (https://www.flickr.com/