The Fifth Ministerial Meeting of the “Southern Gas Corridor” Advisory Council was held

On February 20, the Fifth Ministerial Meeting of the Southern Gas Corridor Advisory Council was held at the Heydar Aliyev Center in Baku. The President of the Republic of Azerbaijan attended the meeting. Energy ministers of the Southern Gas Corridor member-states, representatives of various government agencies, as well as European Commissioner for Budget and Human Resources, acting co-chair of Advisory Council Gunther Oettinger were among the participants of the event. Also, such companies as BP, TANAP, TAP, SNAM, Fluxys, LNG Croatia, Plinacro, ICGB AD, Transgas and international financial institutions including the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank and the Multilateral Investment Trust Agency (MIGA) were represented at the Meeting.

At the beginning of the meeting, a group photo was taken. Afterward, the President of the Republic of Azerbaijan Ilham Aliyev delivered a speech. First, President greeted the participants of the Fifth Meeting of the Southern Gas Corridor Advisory Council, including European Commissioner for Budget and Human Resources Gunther Oettinger, state representatives of the USA and Great Britain, high-level government officials from Georgia, Turkey, Greece, Bulgaria, Albania, Bosnia and Herzegovina, Croatia, Montenegro, Romania, Turkmenistan and Italy involved in the implementation of Southern Gas Corridor Project, state representatives of Serbia, Hungary and San-Marino attending the meeting for the first time, as well as representatives of international financial institutions.  President Ilham Aliyev expressed gratitude to the governments of the United States and the United Kingdom for their continuous support in the implementation of all energy projects initiated by Azerbaijan, in particular, the Southern Gas Corridor. In addition, he expressed gratitude to the European Commission for the creation of the Advisory Council in 2015 and active participation at all meetings of the Council. President thanked Commissioner of the European Commission Gunther Oettinger for his significant role in strengthening the cooperation between Azerbaijan and European Union in energy issues and advancing the Southern Gas Corridor Project. Also, the head of state showed appreciation to government representatives from Bosnia and Herzegovina, Croatia and Montenegro for their active participation in the expansion of cooperation in the energy sector in Europe and diversification of energy supplies of Azerbaijan. “We are working on many important projects on the development of the energy sector in Azerbaijan. Our joint efforts would not have been possible without close support provided by the international financial institutions”, said President Ilham Aliyev regarding BP company, calling it strategic partner and investor, and such world leading financial institutions like the World Bank, the European Bank of Reconstruction and Development, the Asian Development Bank and European Investment Bank. President highly appreciated their financial support in the Southern Gas Corridor Project and investments in the implementation of energy projects in Azerbaijan.  

The head of state named the Southern Gas Corridor as the “project of common interests and mutual importance”. It is a part of Azerbaijan’s energy strategy founded in 1994 – the year when Azerbaijan signed an agreement with the Consortium of international oil companies on the development of the huge oil field Azeri-Chirag-Gunashli. That was the beginning of our cooperation with international energy companies”. President stated that it was the first time when international investments came to the Caspian Sea; so, from this perspective 1994 was a turning point in the development of Azerbaijan. “As a result, we focused oil revenues on diversification of the economy and build modern infrastructure. And today we concentrate on the non-energy sector. It is our priority. However, the energy sector will still be the leading sector of Azerbaijan economy and an important part of regional cooperation”.

Recalling contract regarding “Shahdeniz” gas field signed in 1996, President named that area as the “main resource base of Southern Gas Corridor”. “I hope it will not be the only source; but at the moment, there is not another one. It is a huge gas field and its natural resources are already being produced and exported”. 

As President stated, at that period the main aim in the energy sector was to diversify transportation of energy resources and create modern infrastructure. “Therefore, commissioning Baku-Supsa oil pipeline connecting Caspian and Black seas in 1990 was an important issue in transportation and diversification of energy resources. Then, in 2006 Baku-Tbilisi-Ceyhan pipeline was put into operation. It was a historical event. The implementation of this huge project let the companies to invest more and extract more oil. We increased the export to the possible extent, and now we transport oil to other countries by Baku-Tbilisi-Ceyhan”.

President Ilham Aliyev named Azerbaijan as a significant oil transit country and emphasized the increase of the role of Azerbaijan in the region.  “In 2007, Baku-Tbilisi-Erzurum gas pipeline was launched, and for the first time, Azerbaijan became a natural gas supplier to international markets. The matter is that before we were actually importing natural gas. Thus, we have continuously moved forward to the main energy project – Southern Gas Corridor, and today its implementation has become real”. 

Head of state mentioned the period of signing TANAP and TAP agreements considered as the starting point of the Southern Gas Corridor. He stated that close cooperation between partners and work in a united team made it possible to reach all the achievements. Speaking about the official opening of the Southern Gas Corridor and TANAP in 2018, President told: “These events played important role in the development of “Shahdeniz” field and implementation of the Southern Gas Corridor. Today, we get closer to the completion of this huge energy project. Three of the four elements of the project are finished and already in operation. We are glad that 1 billion cubic meters of gas have been exported to the Turkish market since the launch of TANAP Project. Big progress is also observed in the construction of the Trans-Adriatic Pipeline. Last year during my speech at the Council, I mentioned that 67 percent of TAP had been completed. And now, according to the latest figures, this number raised to 87 percent. It means that we have made great progress in one year.”

Furthermore, President pointed out that the Southern Gas Corridor is an energy diversification project. The diversification of energy resources is significant for producers, consumers and transit countries. “I consider that we were able to find a good balance. I mean the balance between Azerbaijan as a producer and consuming and transiting countries. The balance of interests stipulates the success of the project since we try to understand the needs and concerns of one another. We have always tried to support each other, and I think we have succeeded in this work. This kind of meetings are of great importance because we review the work done within a year. At the same time, we plan our future steps and during a year conduct bilateral or multilateral meetings, consultations and conferences for advancing our work. I want to reiterate that the Southern Gas Corridor is the energy diversification project since it also diversifies transport routes and sources. Azerbaijan is a new source of energy supply to Europe. And it is obvious that by constructing new pipelines we diversify energy routes. Therefore, it demonstrates full diversification. In fact, it changes the energy map of Europe and thus, the importance of the Southern Gas Corridor is increasing.”

President Ilham Aliyev also named the Southern Gas Corridor as “the energy security project”. “We clearly understand that it is complicated to ensure national security without energy security. Energy security is an integral part of national security. The countries depending on exported energy need to be sure that the energy route is sustainable and long-term. Therefore, they should plan their future and industrial development. At the same time, producing countries rich in natural resources cannot reach their aim without reliable markets. Thus, this project is of energy security, energy diversification, and broad international cooperation”.

During his speech, President Ilham Aliyev stated that the amount of proven gas reserves is 2,6 trillion cubic meters, and along with “Shahdeniz” gas reservoir, other fields are also being exploited. According to his words, the head of state hopes that gas will soon be extracted from “Absheron”, “Umid” and “Babek” big gas reservoirs. “That is why I am sure that “Shahdeniz” will not be the only resource for Southern Gas Corridor. The more gas we produce from our fields, the more potential will be to supply our partners and diversify the given supply network”.  

Speaking about the role of energy cooperation projects in the partnership in other areas, especially transportation, President noted that Azerbaijan has become the transport center of Eurasia. “East-West and North-South transportation corridors cross our countries. We invested largely in modern transportation infrastructure. Baku Sea Port, Baku-Tbilisi-Kars railroad connecting Europe and Asia, highways, Caspian Sea shipping, and airports became real due to the revenues we gained from oil and gas sales. Thus, we redirected the revenues to the sectors which will generate extra income and serve the overall business. In fact, both transportation and energy projects unite countries. Countries become interconnected, interdependent and everybody gets the benefit”.

President also stated that successful energy development demonstrates Azerbaijan to the world as a reliable country, trustworthy partner, and a country protecting foreign investments for 100 percents. All the agreements with energy companies enter into force after being ratified by the Parliament.  As a result, the trust of investors to the country increases what in its turn attract billions of investments to other sectors.  

President mentioned that the half of almost 250 billion dollars invested in Azerbaijan are foreign investments which provided the opportunity to diversify the country economy, implement successful reforms and create a positive business climate. As President stated, according to the last “Doing Business” report of the World Bank, Azerbaijan holds 25th position and is rated as one of the top 10 countries implementing a record number of reforms. It was also emphasized that the correct use of energy resources and revenues resulted in large investments in the infrastructure and increase of the living standards of the population.

Pointing out the importance of the “Southern Gas Corridor” Project for all, President Ilham Aliyev invited participants to speak about plans. 

Minister of Energy of Azerbaijan Parviz Shahbazov expressed his gratitude to the head of state for his participation at the Advisory Council and delivery of a detailed and content-rich speech. Minister emphasized that constant participation of the President at Advisory Council meetings and continuous support had a great impact on the work of the organization. Stating that important issues regarding the Southern Gas Corridor would be discussed during the meeting, Minister of Energy Parviz Shahbazov gave the floor to European Commissioner for Budget and Human Resources Gunther Oettinger.     

EU Commissioner and acting co-chair of Advisory Council Gunther Oettinger expressed his gratitude to the President of Azerbaijan Ilham Aliyev for his role in founding the Council and spectacular hospitability of Azerbaijan hosting the event annually. Gunter Ottinger said that 2019 would be a significant year in terms of financing the remaining parts of the Southern Gas Corridor project. Expressing his hope that Azerbaijani gas will reach the European Union next year, the Commissioner noted that the European Union is closely cooperating with the member states to complete the Southern Gas Corridor project. “This corridor is of strategic importance since it will provide an opportunity to diversify not only supply routes, but also supply sources. Saying supply sources I mean “North Stream 2” or “Turkish Stream” and new sources are implied to the Southern Gas Corridor – Azerbaijan and European Union. Both elements are equally important to substantially improve the safety of the supply level in the future.”

Naming Azerbaijan as the key strategic partner, Gunther Oettinger added that the Southern Gas Corridor is of special importance not only for energy diversification of Europe. It has also initiated dynamic processes and partnership of countries located along the corridor and beyond their borders. “Today’s success has also been possible due to the companies participating at the project and providing funds for its construction, as well as the professionalism of financial institutes – European Investment Bank, European Bank for Reconstruction and Development and others. Soon, we will be able to say that the construction of 3500 kilometers-long pipeline crossing various countries was completed in record time below initial cost estimates. There are not many infrastructure projects that can make the same claim. It is a historical project”.

Saying that the Southern Gas Corridor Project substantially strengthened the energy security of European Union, Gunther Oettinger emphasized that Azerbaijan having an advantageous geopolitical location is an important gas producing and exporting country, and the European Union benefits from Azerbaijan’s rich energy experience.

Speaking about the importance of the European Union's regulatory framework in the context of a new partnership agreement, the Commissioner noted that the approach to the discussions on a new agreement between European Union and Azerbaijan is similar to the one regarding the Southern Gas Corridor Project. He added that the discussions are conducted in the spirit of cooperation and mutual trust.

“Azerbaijan opens a significant path for the European Union to access Central Asia and China”, the Commissioner said, expressing support of the European Union to Azerbaijan's energy diversification plans. He said that important geopolitical position and location of Azerbaijan provides it with the opportunity to be not only an international energy hub but also a major transport hub.

Referring to the issue of adoption of clean energy sources for Europe, the Commissioner stated that the whole European Union contributes to achieving energy and climate targets until 2030 and demonstrates leadership in the transition to clean energy, as well as works on preparing changes on the operation of new energy systems. “In the context of transition to clean energy, gas will remain a significant transitional energy source for years and decades to come. In the European Union, we anticipate that our constant demand in gas will remain in medium and long term perspective since our local resources run faster than we expect”. He also noted that more traditional energy sources are converted to hydrogen, green gas, and new energy sources what in its turn can create an opportunity to continue relying on existing energy infrastructure.

In addition, Gunter Oettinger said that the European Union is ready to be a reliable energy partner and continue the cooperation in this direction. 

After, the Fifth Ministerial Meeting of the Southern Gas Corridor Advisory Council continued its work with three plenary sessions.

Minister of Energy of Azerbaijan Parviz Shahbazov thanked countries participating in and supporting the Southern Gas Corridor Project. He also mentioned discussion held regarding the issues of gained achievements and development of “Shahdeniz-2” field. “At the moment, we witness the increase in natural gas demand. The reason is that less carbon dioxide is released to the air due to the use of gas. We live in such time when energy security plays an important role in the development of relations between producing, consuming and transit countries. From this point, the Southern Gas Corridor is a monumental work. Currently, in Europe it is the first mega project covering all components of energy security. Our achievements are the result of joint work. Being a united team, we try to transport gas extracted from the Caspian Sea to Europe through the safest export route. Today, we are working on the formation of European gas market where competitive ability, diversification of sources and routes are implied.”

Furthermore, the Minister stated that the Southern Gas Corridor serves the interests of all stakeholders and contributes to the sustainability of energy security in the broader geography. “It is of the greatest importance that almost every year we see new parties in the list of countries joining the Advisory Council meeting. And all of them note the significance of the project. It demonstrates the potential benefit of the project.”  

Deputy Minister for Economic Development of Italy Andrea Cioffi declared that Italy participated at all meetings, which he considered as a good opportunity for sharing opinions. Mentioning the necessity in increasing efficiency of cooperation between producing and consuming countries for enhancing energy security, Andrea Cioffi said that in the contemporary world the energy security issue remains an integral part of energy policy. Italian government official emphasized regional importance of the Southern Gas Corridor, as well as the role of TAP project in creating the opportunity to develop the entire pipeline network of Balkan region and assist in advancing gas transportation networks and gas sales in Southeastern Europe.  He noted that not only Albania would benefit from TAP project but also Croatia and Montenegro, which are connected to TAP by Ionian-Adriatic Pipeline. Thus, Western Balkan countries such as Bulgaria interested in joining from Greece through Greece-Bulgaria interconnector will also take advantage of the project.

In his speech, Andrea Cioffi stated that being one of the key countries in enhancing gas supply security in Europe, Italy is interested in diversification of the Southern Gas Corridor Project.  

US Deputy Assistant Secretary for Energy Diplomacy, Sandra Oudkirk stressed that for the first time the huge amount of gas extracted in Azerbaijan will reach the European markets through the Southern Gas Corridor in a short period. “If the work is implemented as planned, by 2020 first gas will be transported through TAP to Italy and Greece. The completion of Trans-Adriatic pipeline and Greece-Bulgaria interconnector construction will be a historical moment for political and economic relations between Azerbaijan and Europe, as well as for European energy security.”

Emphasizing the important role of the United States of America in efforts of Azerbaijan and Europe to diversify the energy supply of the project, Sandra Oudkirk stated that they would further ensure broader economic integration in the Caspian Sea region. She added that the USA provided strong support to the Southern Gas Corridor offered within the project ten years ago. As Ms. Oudkirk mentioned, President Donald Trump underlined the significance of the project, and in his letter sent to the President Ilham Aliyev in 2018 he named the Southern Gas Corridor as an incredible achievement and evaluated it as the initiative providing Europe with energy security. “The Southern Gas Corridor was built in order to expand. Taking this into account, I should say that the Corridor is beneficial for region countries due to the delivery of gas in a large amount from the eastern part of the Mediterranean Sea, Central Asia and the Caucasus to European consumers and gas extraction in peaceful condition. ”US Government will provide strong support to the efforts you have made for achieving this aim. In upcoming years, upon exploring the opportunities for realizing the resource potential of the region and making it accessible to the world’s largest energy market, we will work together with you.”

Speaking about the increasing strategic importance of Azerbaijan as a key global energy participant, UK Prime Minister's Trade Envoy to Azerbaijan Baroness Emma Nicholson stated that the Southern Gas Corridor is not only one of the largest infrastructure projects, it also has particular importance for all participants promoting overall security and environmental goals. “Azerbaijan has played the main role in bringing the Caspian Sea resources, which serves to all parties represented here, out to the world. In 2006, as a result of launching the Baku-Tbilisi-Ceyhan pipeline, Azerbaijan’s oil passing through Georgia and Turkey was delivered to the European market. At the moment, the Southern Gas Corridor is a similar reliable route for exporting gas. Caspian gas will assist us in gas supply diversification. New interconnectors will provide our energy companies with access to new markets and facilitate gas transportation through a new route for ensuring consumers’ demand.” 

According to her words, diversified oil and gas resources provide a reliable supply and economic development. She has also emphasized the importance of safe and ensured energy supply for an energy-competitive and accessible economy. In addition, Emma Nicholson stated that the United Kingdom attaches great importance to global energy security issues and highly values close relations with Azerbaijan in the oil and gas sector. 

During his speech, Advisor to the President of Turkmenistan Yagshygeldi Kakayev named the Southern Gas Corridor as a priority energy project for the European Union and highly evaluated the achievements gained within its implementation. He declared that Turkmenistan is also capable to organize necessary natural gas supply to the West for providing markets of European countries. One of the significant infrastructure projects, which can contribute to the energy security of Eastern European countries, is the Trans-Caspian gas pipeline. The first discussions on the technical and legal aspects regarding the project implementation were launched in trilateral format between Turkmenistan, Azerbaijan and the European Union in 2011. After, Turkey and Georgia got involved, and the negotiations continued between five parties at the level of deputy ministers. Turkmenistan is ready to restore and continue talks on the possibility of delivering Turkmen gas to Europe

In his turn, Turkish Minister of Energy and Natural Resources Fatih Donmez said that the Southern Gas Corridor Project reflects the decision of region countries to work together.  Mentioning the receipt of the first gas through TANAP in Turkey last year in June and finishing of infrastructure works within section up to the Greek border in short period, Fatih Donmez expressed his hope regarding the completion of the TAP Project in the near future. 

Speaking about Turkey and Azerbaijan brotherhood, Minister stated that the union between two states crossed the boundaries and reached new countries and heights.  “TANAP emerged thanks to the great will of Presidents Erdogan and Aliyev – far-seeing leaders of neighboring countries. Due to the strong energy vision of Azerbaijan and Turkey, we have carried out the work together and continue its implementation.  The strong relationships, unbreakable brotherhood and deep love are the greatest heritage we can offer to our humanity.”

Naming TANAP as a win-win historical project, Turkish Minister stated that this project would strengthen the role of Turkey as a key state in the energy sector. “Being a supplier country, Azerbaijan will enter new markets. Europe will increase diversification of resource countries and routes. Along with contributing to the energy security of Europe, TANAP will be completing and supportive factor from the point of Turkish policy. This project is of the greatest importance for our energy security which we disclose in national energy and mining policy.”

Providing information on enhancing “Shahdeniz-2” and Southern Gas Corridor, Regional President for Azerbaijan, Georgia and Turkey, Gary Jones said to be proud that BP participates at such historical project. He stated that the Southern Gas Corridor Project - one of the largest and most complicated initiatives in the global oil and gas industry, has been successfully implemented with the personal attention and support of President Ilham Aliyev. Gary Jones noted that it is the largest project ever implemented in the country out of the military sector and told about difficulties of technical, engineering, commercial and geopolitical character. At the end of his speech, he emphasized that the project was realized not only by one country or one company but as a result of support, joint work and cooperation of seven countries and governments, the European Union and other appropriate international organizations, four buyer countries, construction companies, and other interested parties. 

Delivering their speeches, TANAP General Director Saltuk Duzyol, TAP Executive Director Luca Schieppati, and SNAM Vice President Gianluca Zonta discussed the importance of the Southern Gas Corridor, enlargement perspectives, and the role of Azerbaijan in energy security of the region and Europe. 

Bulgarian Minister of Energy Temenujka Petkova, Deputy Minister of Economy and Sustainable Development of Georgia Natela Turnava, Secretary General of the Ministry of Energy and Mineral Resources of Greece Mihalis Veriopoulos, Deputy Minister of Infrastructure and Energy of Albania Artan Shkreli, Croatian Minister of Environment and Energy Tomislav Ćorić, Deputy Minister of Foreign Trade and Economic Relations Mato Franjičević, State Secretary of  Romanian Ministry of Energy Julian-Robert Tudorache, Director General of Directorate for Energy Efficiency at the Ministry of Economy of Montenegro Marco Radulovic, Deputy Minister of Mining and Energy of Serbia Mirjana Filipovic also delivered speeches during sessions.

In the end, the participants of the Fifth Ministerial Meeting of the Southern Gas Corridor Advisory Council signed the Joint Declaration.