Trend’s exclusive interview with Azerbaijan’s Minister of Energy Parviz Shahbazov

Question: After almost 30 years of Armenian occupation, victorious Azerbaijani army liberated our lands, which are rich with natural resources and have great economic potential. Which works are planned on these lands?

Answer: Nagorno-Karabakh and surrounding regions are rich of renewables, namely, hydro-energy, solar, wind, bioenergy and geothermal energy. One of the key goals is to ensure the effective use of those resources. To this end, it is planned to build metering and monitoring stations to evaluate the exact potential in the abovementioned spheres and to conduct technical-feasibility study of constructing the stations.

According to preliminary estimates, the region has more than 4,000 megawatts of solar power and up to 500 megawatts of wind energy potential. Initially, we have selected seven perspective areas with favorable conditions to implement solar energy projects in Fizuli, Jabrail, Zangilan, Gubadli, Lachin and Kalbajar districts. Moreover, mountainous areas of Lachin and Kalbajar districts have wide territories where the average annual wind speed reaches 7-8 meters per second at an altitude of 100 meters.

25 percent of Azerbaijan’s domestic water reserves accounts for Karabakh, which means a great hydro-energy potential. The dam construction at Khudaferin and Giz Galasi hydro-junctions on Aras river is nearing completion and we continue cooperation with Iran on constructing power plants. We also carrying out preparatory works to start repairs at some small hydro-power plants in the liberated lands.

We have launched infrastructure projects in some settlements of the liberated lands. One of our important tasks is to ensure electricity and gas supply for the people who will return to the liberated lands. As part of the general restoration work, the issues related to construction of transmission and distribution networks - the construction of power lines of different voltages, as well as substations will soon be resolved. At the same time, practical works will begin to ensure gas supply in the liberated cities and regions.

Q.: The giant Southern Gas Corridor, which will transport Azerbaijani gas to Europe, is almost complete. The Trans Adriatic Pipeline (TAP), the European leg of the project has been completed recently. When will this system start gas supplies?

A.: The Southern Gas Corridor is a giant infrastructure project implemented on the initiative and with active participation of Azerbaijan, marking a new era in the development of Azerbaijan’s and region’s oil and gas industry. The Trans Adriatic Pipeline, the last segment of this project, is ready to start commercial operations. It is planned to start commercial supplies of Azerbaijani gas to Europe at the end of 2020 in accordance with the gas sale contracts. The capacity of the pipeline, which will transport 10 billion cubic meters of gas a year to Europe, could be increased to 20 billion cubic meters a year in the future.

Q.: Which dividends will this project bring to Azerbaijani and European economy?

A.: The Southern Gas Corridor project, which became a reality as a result of the thoughtful and far-sighted policy of the President of the Republic of Azerbaijan Ilham Aliyev, will serve the Azerbaijani people over the coming years and open new opportunities for the country by making an important contribution to economic development. Increasing production will further strengthen Azerbaijan's role as an international gas supplier, resulting in increased revenues from the oil and gas sector.

Southern Gas Corridor will increase Azerbaijan’s importance not only as an energy exporter, but also as a transit country. It will open new opportunities for the region’s countries to bring their energy resources to world markets and will have a significant impact on security and stability in the region. At the same time, Southern Gas Corridor is a diversification project, which is very important for consumers, producers and transit countries.

As for Europe, the project, which has been implemented with Azerbaijan’s efforts, will be an important factor in the energy, transport spheres, and in general, in economic and national security of EU countries.

Q.: How do you assess the current energy security in Azerbaijan and which measures are planned to further strengthen it?

A.: Azerbaijan is one of the few countries to fully ensure its energy security. Significant achievements were made in sustainable and reliable supply of energy resources to the economy and population as a result of implementation of the energy security strategy founded by Azerbaijan’s National Leader Heydar Aliyev. Azerbaijan’s President Ilham Aliyev successfully continued this strategy, turning Azerbaijan into an energy country. Having rich hydrocarbon reserves, developed fuel and energy infrastructure and a fully self-sufficient energy system, Azerbaijan’s role is even more increasing both regionally and in the transnational energy markets. Moreover, consistent measures are underway for the development of Shafag-Asiman, Babek, Absheron, Umid, Karabagh and some other perspective structures in order to increase the oil and gas production in the future.

The work on the infrastructure of the electricity system and the construction of new power plants not only fully meet Azerbaijan’s electricity demand, but also increase the country’s export potential. Over the last 10 years, 23 new power plants of 2055.4 megawatts were put into operation and the electricity generation capacity has reached 7516.5 megawatts. Currently, alongside with 18 thermal power plants with the capacity of 6237.7 megawatts, numerous hydropower plants and other renewable energy plants with total capacity of 1278.8 megawatts operate in the country.

Electricity generation has increased by 39.7 percent over the last 10 years as a result of the economic development and increasing welfare of the population. The increasing demand was covered by creation of new production capacities and the repair program implemented in 2018. This year we laid the foundation of the new Gobu power plant with capacity of 385 megawatts.

Hydropower plant projects jointly implemented in cooperation with Iran, as well as the investment projects to be implemented in solar and wind energy spheres, will enable the country to expand the use of renewables. These projects will also allow to save natural gas resources and to export them. The measures taken so far have ensured efficiency, increasing the quality of generated electricity and reducing losses. Currently, Azerbaijan exports not only hydrocarbon resources, but also electricity.

Q.: Could you please update on the agreements signed with Saudi and UAE companies on construction of solar and wind power plants? When is it planned to start the construction of those plants?

A.: Thanks to the favorable business environment and infrastructure in our country, macroeconomic stability and a fertile ground for attracting foreign investment, foreign investors are interested in investing in many sectors of Azerbaijan’s economy, including the renewable energy sector. In this regard, executive agreements have been signed with Acwa Power of the Kingdom of Saudi Arabia and Masdar of the United Arab Emirates for the implementation of 240-megawatt wind and 200-megawatt solar energy projects.

We have worked out draft agreements on the sale and purchase of electricity, as well as on connection to the electricity network in order to start the construction of those plants with the investments of abovementioned companies. Currently, these agreements are in the consultation phase. It is planned to start the construction of the plants by the companies after signing the final agreements and to put them into operation by 2023.

Q.: What can you say about the ministry’s international cooperation?

A.: The ministry ensures the establishment and development of bilateral and multilateral cooperation with other countries, their relevant bodies and international organizations in fuel and energy, renewables, as well as energy efficiency.

Currently, we co-chair joint intergovernmental commissions with Italy, the United Kingdom of Great Britain and Northern Ireland, Kazakhstan, Ukraine, Vietnam and Greece, and head the technical commissions and working groups established with Albania, Ukraine, Kazakhstan, Hungary and Saudi Arabia.

To date, up to 60 documents have been signed to expand the legal framework of cooperation with other countries in the energy sphere. This year, we have signed agreements and memorandums with relevant state bodies of Ukraine, Italy and Turkey. Moreover, we have completed consultations with China, Indonesia, Czechia and Uzbekistan on cooperation agreements, which we plan to sign in the near future. We are expanding cooperation with neighboring Russia, Turkey, Iran and Georgia in oil and gas, as well as electricity. The ministry is also working towards developing the bilateral energy cooperation with EU.

The ministry has established beneficial cooperation with the World Petroleum Council, the International Energy Charter, the International Renewable Energy Agency, and the Gas Exporting Countries Forum, as well as the United Nations Development Program. We also closely cooperate with the Organization of Petroleum Exporting Countries, the International Energy Agency, the World Energy Council and other influential international organizations, financial institutions such as the World Bank, the European Bank for Reconstruction and Development, the Asian Development Bank, and international development agencies in the United States, Japan, South Korea and other countries. Azerbaijan is chairing the International Energy Charter Conference in 2020.

Q.: How do you assess the effectiveness of the OPEC+ deal in maintaining the market balance?

A.: OPEC+ format was for the first time initiated by Azerbaijan’s President Ilham Aliyev during the Davos Forum in January 2016. Currently, this cooperation format is an important tool in ensuring a balance in the global market and keeping the prices stable.

The OPEC+ deal is of particular importance with increasing likelihood of fluctuations in global markets due to the COVID-19 pandemic. This cooperation not only meets the interest of the participating producers and exporters, but also regulates the global oil market in accordance with the changing situation under the influence of numerous factors and risks.

Azerbaijan closely cooperates with OPEC. Baku hosted the 13th meeting of the Joint Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Ministerial Monitoring Committee (JMMC) in 2019 at the invitation of President Ilham Aliyev. One of the upcoming OPEC meetings is planned to be held in Azerbaijan.

Q.: In June 2020, it was reported that relevant work is underway to determine the legal framework for construction of the Igdir-Nakhchivan gas pipeline. Is there any progress in the implementation of this project?

A.: The cooperation with Turkey in the energy sector is of particular importance alongside with other spheres. Reliable gas supply to Nakhchivan Automous Republic is one of the issues on the bilateral agenda. In this regard, it is planend to transport some volumes of natural gas supplied from Azerbaijan to Turkey to Nakhchivan via the Igdir-Nakhchivan gas pipeline.

During the meeting of Azerbaijan’s President Ilham Aliyev with Turkey’s President Recep Tayyip Erdogan on February 25, 2020, both presidents gave instructions to complete the project’s implementation in a short time.

Necessary measures are being taken jointly with Turkey’s relevant bodies in accordance with the presidents’ instructions. To this end, it is planned to sign a Memorandum of Understanding between Azerbaijan’s Ministry of Energy and Turkey’s Ministry of Energy and Natural Resources on transportation of natural gas from Turkey to Nakhchivan Autonomous Republic soon.

This project will meet the gas demand in Nakhchivan Autonomous Republic and strengthen its energy security.