REGIONS OF THE CASPIAN, BLACK AND BALTIC SEAS BECOMING A SINGLE, COMMON REGION FOR US - ILHAM ALIYEV, PRESIDENT, THE REPUBLIC OF AZERBAIJAN

 

On May 11-12 in Krakow, the ancient capital of Poland, five Heads of State - President of Azerbaijan Ilham Aliyev, President of Poland Lech Kaczynski, President of Ukraine Victor Yushchenko, President of Georgia Mikhail Saakashvili, President of Lithuania Valdas Adamkus and the official representative of the President of Kazakhstan brought to the forefront the construction of the new Caspian Region-Black Sea-Europe oil & gas corridor along with the whole range of project-related issues.

The presidents met in the Vavel castle to take part in the first sitting of the Energy Summit. The two plenary sessions to the themes ‘Energy Security' and ‘The strategy on development of national energy sectors and the conception on the Middle Asia-South Caucasus-Central Europe Transport Corridor' were held to discuss issues related to the current state and outlooks of energy cooperation between the five countries.

As a result, all countries backed the initiative to create a new structure that will deal with practical implementation of the project. "The new company has to work on the basis of the market principles. In case the states act as its founders, the company will possess the equity and floating capital. The new company will operate the corridor that is going to run from the Caspian Sea Region through Azerbaijan and Georgia, the Black Sea, Ukraine, Poland and from there to Europe so as to meet various purposes", Natig Aliyev, Minister of Industry & Energy, the Republic of Azerbaijan who took part in the Krakow Summit says in the exclusive interview to Caspian Energy.

Thus, through the Summit the parties agreed to set up a joint venture (JV) to manage the Odessa-Brody oil pipeline. President of Poland Lech Kaczynski said ‘state-run companies will dominate in the JV' and added ‘it is still unknown what countries will be able to join' the project and ‘what nature it will have. The delegations of the six countries consented to form an intergovernmental working group on energy issues on the level of concerned ministers. The working group will have to identify the core criteria of the company's establishment for drawing up common energy projects.

The Energy Summit ended with signing the official communiqué on energy cooperation.

The six states did much "to ensure progressing of the contemporary extractive industry, transit infrastructure and development of the regional cooperation on the intergovernmental level", the communiqué runs.

"Their efforts aim at energy resources delivery from the Caspian region to Europe. This aim will be achieved through diversification of energy sources and transport routes that unite the basins of the Caspian and Black Seas with the Baltic region, in particular, via the Odessa-Brody-Plotsk-Gdansk route, as well as due to projecting of new gas supply routes".

The top-rank officials agreed to stir up cooperation and thus launch work on the intergovernmental agreement that will regulate participation of governments and companies in the project of a corridor for transportation of Caspian oil to the European and global markets (Odessa-Brody-Plotsk-Gdansk pipeline). The delegations backed the decision to create an intergovernmental workgroup at the level of concerned ministers to deal with energy challenges.

In addition, they endorsed the idea to set up a company to draw up joint energy projects. The intergovernmental workgroup will identify major criteria for the company's establishment.

The participants stressed the Krakow Summit would get a follow-up this October in Vilnius. Its organizers promise to inviter "the major players of the Western and Eastern energy markets".

 

Lech Kaczynski expressed his willing to see Turkmenistan in the conference to be held in Lithuania. The representatives from other countries of the European Union are expected to take part in the work of the Vilnius summit.

At the press briefing the President of Poland stressed the issues fixed in the joint declaration would enable countries represented at the summit to implement concrete projects.

"The summit has yielded much more fruitful results vs. expected", the Head of Poland said. According to him, though the President of Kazakhstan could not join the work of the summit, he is interested in implementation of joint projects. That is why he has sent his official representative to Krakow.

"Our activity has turned to be efficient", Lech Kaczynski summed up the results of the forum. Speaking about the Odessa-Brody-Gdansk oil pipeline project, the President of Poland said "the project might be implemented by 2012". According to Lech Kaczynski, the countries represented at the summit have become closer politically, and that is very important".

 

President of Azerbaijan Ilham ­Aliyev called the summit an important international event. As per him, "the cooperation that rests on partnership between our countries is very important". President Ilham Aliyev told about the participation of Azerbaijan in global energy processes, rapid economic progress of the country, its growing role in the region. He said that Azerbaijan, with its growing economic potential, was the initiator and the direct participant of the global energy projects. The Head of State stressed Azerbaijan as a supplier to Europe had a great potential. In future the country's possibilities in this field appear to enhance much more.

At the press briefing President of Azerbaijan Ilham Aliyev laid emphasis on the great potential available for the regional cooperation. According to him, energy security is the challenge number one for Europe now. Azerbaijan is blessed with the huge energy potential and will make incredible contribution to the regional cooperation.

"Energy resources and supplies are the top issues in the political agenda of Europe and the globe as well.  I believe that the efficiency and success of our cooperation will give a start to wider collaboration between our regions", the President of Azerbaijan stressed. "Azerbaijan is the country with huge oil and gas resources. They are enough to meet domestic needs for the next 100 years. But nowadays, our role in the energy security of the region is more important. For instance, next year Azerbaijan is going to produce 1 million bbl of oil per day. We have discovered large gas deposits. Azerbaijan has already started exporting gas to the neighbouring markets. In future these markets might be used for gas supplies to the European markets", he went on.    

According to him, billion dollars are required to construct various oil and gas pipelines. Azerbaijan already has different pipelines supplying oil and gas to the European and global markets. "It means diversified supplies. We do understand the consumers' willing to diversity supply routes. Here we have managed to balance the interests of exporting, transiting and consuming states", said the President of Azerbaijan.

"To date we have worked on the concrete projects to enhance the level of diversification. This is just the start. The joint official declaration precisely fixes our plans, achievements and the agenda of the day. I am sure due to the joint cooperation we will achieve the set targets. The workgroup is about to launch its work in the near future. I believe we will coordinate a preliminary outline of major steps at the Vilnius summit", Ilham Aliyev went on.

"The cooperation with the partners is of high priority for Azerbaijan. The regions of the Caspian, Black and Baltic Seas are becoming a single, common region for us. In view of the Memorandum of Understanding on Strategic Energy Partnership recently signed with the European Union, these documents give additional impulse to our plans", Ilham Aliyev stressed.

In response to the questions of journalists President Ilham Aliyev said Azerbaijan was willing to supply its oil and gas to the global markets. There are no problems in this regard. Having reminded that Azeri oil was exported to the world markets through the Baku-Tbilisi-Ceyhan pipeline, the Head of State stressed Azerbaijan stood for diversified routes for transportation of local energy resources.

According to Reuters, at the energy summit President of Azerbaijan Ilham Aliyev stated the readiness of his country to join the Odessa-Brody oil pipeline project that will enable to transport Caspian oil via Ukraine and Poland to Western Europe. "We render very strong political backup to the project", President Aliyev said. "We are willing to keep on contributing much to ensuring energy security of Europe. Our country has huge oil resources, which can be used for many years", President Aliyev added. At the same time, according to him, it is necessary to make a technical study of the project before coming to a decision how much oil Azerbaijan will be able to supply.

"If to take into consideration that the daily transportation of 1 million bbl of oil is not a limit, and our plans to ramp up the production, it is possible to say we will surely have surplus volumes to carry out transportation in various directions. Of course, the Baku-Tbilisi-Ceyhan pipeline might be extended at the cost of additional technical measures. To a certain extent we are able to enhance the throughput capacity of the pipeline. At the same time, diversification of supplies is very important for us. Within a too short period we managed to construct three pipelines. The first pipeline delivers oil to the Black Sea, the second one supplies oil to the Mediterranean Sea, whereas the third one transports gas to the European markets and clearly reflects our today's agenda. Therefore, I am sure oil produced in Azerbaijan will be the asset to our cooperation", Ilham Aliyev stressed.

At the same time today, probably, it is too early to speak of guaranteed supplies, Ilham Aliyev believes. "We have watched a very interesting presentation and listed to the information about the Odessa-Brody-Plotsk-Gdansk pipeline. Upon consideration over all criteria and commercial grounds of the project, we surely will discuss our plans in details. In particular, we are going to dwell on when and how much oil we will produce", he continued.

In addition, we do understand that in case our partners from the eastern coast of the Caspian Sea display interest, oil produced there might become an additional supply source for this pipeline", said the Head of Azerbaijan.

 

Ukraine also takes interest in creating a single energy space in the region and is willing to make an appropriate contribution to this business, said President of Ukraine Victor Yushchenko in Krakow when speaking at the first summit session dedicated to the "Strategy on development of the national energy sectors".

 "The high level of the summit, thinks the Head of Ukraine, proves how important and urgent the issues regarding energy policy, energy security and energy saving are for all European nations", the press release of the press service of the Ukraine's President runs.

"There is a strong possibility to work out a common vision and approaches of our countries", the press service quotes Yushchenko as saying.

"It is very important today to find the most acceptable unification of opportunities of each of the countries that would give a strong incentive to the development of the European Energy Charter", the President of Ukraine said. As per him, the Ukraine's strategy on energy development is based on the principles of "energy efficiency and full utilization of the transit potential".

The matter also concerns encouragement of entrepreneurs and local authorities to draw up energy-saving projects as, according to the assessment of experts, Ukraine may reduce its energy charges twice, the release runs.

According to Yushchenko, the energy priorities of Ukraine are to diversify energy supply sources and enhance production of local energy resources, including coal reserves, explored oil and gas reserves in the shelf of the Black Sea.

"In our Energy Charter we assign high importance to the development of power industry. In future Ukraine is going to keep on being a serious player at the European electrical energy markets", stressed the President.

When speaking about the near-term outlooks Yushchenko laid emphasis on the high urgency of Ukraine to fully join the European power grid UCTE along with gradual enhancement of electrical energy export to the European countries.

The Head of State highly appreciated the potential of Ukraine in the field of nuclear power. He, in particular, noted by 2030 electrical power generation at the nuclear power plants would grow almost two times.

Yushchenko believes that the utilization of the transmit potential is a common component of energy strategies of the states represented at the summit.

"I do not doubt that only united efforts of all concerned partners will allow using our advantages in the best way, for the welfare of all European states", he said. He believes that is the best way to ensure reliability, security and development of the energy resources transit.

"At the moment we are taking the first and very necessary step. I hope each follow-up step will yield concrete and practical results", Yushchenko said.

President of Ukraine Victor Yushchenko highly appreciates the decisions on the Odessa-Brody-Plotsk-Gdansk oil pipeline project approved at the informal energy summit in Krakow. He stated this at the common press conference, reports the press service of the Ukraine's President. "The dialogue around the Odessa-Brody-Plotsk-Gdansk project has been carried on for many years but lacked for a deep and responsible political decision. The today's core achievement is that such a decision has been already made. The politicians have done their business", President Yushchenko said.

As per Yushchenko, today there is no state that enjoys an "all-sufficient energy policy". Respectively, it is very important to coordinate the efforts of the countries, which produce energy resources and ensure their transportation, and draw up "a general conception" that, first of all, could have brought benefits to the national interests of each country.

 

President of Georgia Mikhail ­Saakashvili highly appreciated the energy position of Azerbaijan and brought the cooperation between the two countries as an example of regional collaboration. He showed the interest of his country to transport Caspian oil to Europe through the Georgia-Ukraine-Poland route. As per the President of Georgia, energy issues are brought to the forefront nowadays. He backed the positions of Azerbaijan that concern ensuring energy security in the neighbouring countries.

The President of Georgia believes that the implementation of the project, which is going to come to €500 million, needs the European Union's support. Therefore, each of the summit participants must do his best to convince the Western European politicians to join the financing of the Oil Pipeline Extension Project. On words the EU supports the project. Up to date it has appropriated €2 million on drawing up the business-plan, but now refrains from further financing.

 

President of Lithuania Valdas ­Adamkus said the joint declaration, first of all, had fixed the issues on development of the transport infrastructure, oil & gas transportation to the European and global markets, cooperation between the countries of the Baltic and Caspian regions and integration into Europe.

"In the 21 century the energy cooperation is one of the key factors, which has a fundamental significance for ensuing a stable progress", runs the document Valdas Adamkus read at the joint press conference.

When commenting on the Lithuania's aspiration for integration of the country's power industry into the European Union President of Lithuania Valdas Adamkus said a new nuclear power plant and electrical bridges that were going to connect Lithuania with Sweden and Poland would contribute much to achieve this goal.

The President of Lithuania appreciated the Odessa-Brody-Plotsk-Gdansk project represented at the summit as a feasible technical solution, which may turn to be a strong incentive that will bring the regions of the Caspian, Black and Baltic Seas together.

"It is high time to launch serious search of alternatives to oil and gas supplies to Europe from the East that depend upon the political will", said the Head of Lithuania.

As per Valdas Adamkus, the incident with oil supplies to Ukraine and other countries forces to intensify the search of solutions.

"We have to understand that various suppliers of energy resources and routes enhance energy security", the Head of State said.

The summit participants unanimously spoke for the necessity to expand this format as open discussions promote better understanding and the search of new solutions.

Upon his return from Poland President of Lithuania Valdas Adamkus said to the national television about the possibility he has to block the talks on singing a new cooperation agreement between Russia and the European Union to be held in Samara. According to the Head of Lithuania, such a possibility is linked to the problem of recommenced supplies to Lithuania-based Mazeikiai oil refinery, the only petroleum refinery in Baltics that processes Russian crude, via Druzhba pipeline. As is known, last year Poland vetoed the start of the negotiation process and motivated this ban by the Russia's embargo on meat import from this country.

 

In his speech the representative of Kazakhstan stressed his country had the right to supply oil to the global markets in various directions. Lazzat Kiinov also said: "Kazakhstan is ready to join the creation of such a corridor and we are waiting for offers".

 

Being the outcome of the Krakow Energy Summit the final Joint Declaration fixed the creation of the energy alliance of states united by the common strategy on implementation of their energy policy. The member-states of this alliance are going to arrange regular meetings and the next one is scheduled for October 2007, Vilnius.