Speech by President Ilham Aliyev at the opening ceremony of the 17th Caspian International Oil and Gas Exhibition and Conference

Dear ladies and gentlemen!

Distinguished guests!

Let me warmly welcome and congratulate you on the opening of the Caspian Oil and Gas Exhibition and Conference.

This traditional show, which represents tremendous importance for Azerbaijan, is held at a new exhibition hall this year. Today we are also marking the opening of this exhibition center. I think it is quite remarkable that the Caspian oil and gas show has become the first exhibition to be conducted here because it holds a very special place among all other shows conducted in Azerbaijan. It was first held in 1994. There weren’t too many companies interested in attending such shows in Azerbaijan at the time because Azerbaijan had just become an independent state. There were different opinions about Azerbaijan’s future, therefore, the 1994 exhibition, which coincided with the start of Azerbaijan’s oil strategy, became a remarkable event. I think it is quite fair that the Caspian oil and gas show has become the first exhibition to be held in this magnificent Baku Expo center.

In 1994, Azerbaijan was at the start of major work. National economy encountered serious difficulties. Steps were taken to establish stability in the country. However, there was no unequivocal opinion about the future of Azerbaijan in 1994. How will Azerbaijan develop? What will help the Azerbaijani economy be competitive? What should be Azerbaijan’s strategic development course? All these questions were facing Azerbaijan. The strategic choice made in those years preconditioned the present successful development of Azerbaijan because it was the start of a new oil strategy, Azerbaijan’s successful integration into the world, economic reforms and major foreign investment that facilitated the present development. Today Azerbaijan is a country successfully developing on a global scale.

We all know too well that if Heydar Aliyev hadn’t taken resolute steps in 1994 and the Contract of the Century hadn’t been signed, Azerbaijan’s development could have been completely different. By signing the Contract of the Century, Azerbaijan not only opened immense resources of the Caspian basin to foreign companies, but also ensured its own long-term and successful development.

In 1994, we had great plans. We knew our goal. But we also knew that the road ahead would not be very smooth. And it wasn’t. Azerbaijan has passed major ordeals with dignity and successfully resolved its problems. The attraction of investment, successful and mutually beneficial cooperation with foreign companies, increased production, economic development, oil pipeline construction projects and transportation of natural resources to world and European markets through these pipelines reflect the present-day realities of Azerbaijan.

Today we can proudly say that the Azerbaijani economy doesn’t depend on the oil factor as much as it did, even though the oil and gas factor will be securing Azerbaijan’s economic interests and strengthening our positions in the world for many more years. In general, this factor will be playing a role in improving the well-being of the Azerbaijani people. At the same time, Azerbaijan’s non-oil sector is also developing rapidly. It was the oil policy, the oil strategy that gave an impetus to that.

The successful implementation of the oil strategy proved Azerbaijan to be a reliable partner. We have successfully cooperated with foreign companies for 16 years. This cooperation is based on mutual interests and has fetched great profits to both foreign partners and Azerbaijan. Every effort has been made from the beginning to implement these plans. I do hope that Azerbaijan’s further development will be as successful.

The signing of the Contract of the Century in 1994 was followed by the deal on the Shah Deniz gas field in 1996. The gas factor did not play a particularly important part in the global oil and energy policy in those years. The attraction of investment and loans to the project was certainly not an easy task. But I can say that this approach has undergone profound change and today the gas factor is highly important. Not only does it secure economic interests, in some cases it has a very important impact on issues of energy security.

Azerbaijan is a country possessing significant oil and gas resources. Azerbaijan is known to be an ancient country of oil. It was here that the world’s first oil was produced using industrial methods. Azerbaijan also pioneered oil production offshore. While marking the 65th anniversary of victory over fascism recently and looking back at those years, we could see that if it hadn’t been for Azerbaijani oil and the hard work of Azerbaijani oil-workers, the results of that war could have been different. Azerbaijan has long asserted itself in the world as a country of oil.

We wanted to assert ourselves as an independent country, as independent Azerbaijan, and we have coped with this task successfully. Our oil policy is open, clear and sincere. All our commitments are being fulfilled. As a reliable partner, we are successfully cooperating with the world’s energy companies. Today, the State Oil Company of the Azerbaijan Republic (SOCAR) is among the world’s leading companies, and the successful cooperation with foreign companies has given us this new and modern experience. Today Azerbaijani companies are already investing in other countries. Azerbaijani companies are already investing billions, and this process will be continued.

In the mid-1990s, we were facing different tasks: to start production, embark on the development of the Azeri-Chirag-Guneshli fields, build oil and then gas pipelines. All these tasks have been fulfilled. Today oil and gas production in Azerbaijan is not only sufficient to meet our domestic needs but also to create extensive export resources. This year oil production in Azerbaijan is expected to reach 52 million tons. Gas production will be around 30 billion cubic meters, three times more than Azerbaijan needs.

Of course, Azerbaijan exports its energy resources through oil and gas pipelines in different directions. Our exports geography expands by the year and I am absolutely sure that we will soon access new markets because they need Azerbaijan’s natural resources. We are interested in realizing our oil and gas potential to the maximum extent possible. The current production rate is increasing our export capacities. But we must ensure that production matches domestic needs and export capacities. Of course, to do that we need new markets or we need to expand the existing ones. Azerbaijan is conducting a thought-out, elaborate and targeted policy in both directions. It is thanks to this policy that Azerbaijan is one of a handful of countries today which do not depend only on one route. We have three oil and four gas pipelines. They fully ensure energy diversification, and we can increase our energy exports in any direction. The technical work being done today on the basis of the instructions being issued will significantly increase our gas export capacity. We are investing a lot in this, and it is paying off because this will ensure Azerbaijan’s successful development for many years, for decades.

As for investment, Azerbaijan is a very favorable and attractive country for investment. Since 1995, a total of $82 billion has been invested in our economy. Almost half of this investment was made in the oil and gas sector. Of course, in the first years of our oil strategy investments were mainly channeled in the oil and gas sector, which is why many experts were concerned that this could lead to the Dutch disease and that our economy would become lop-sided.

However, our prudent policy and specific steps have proved that the path Azerbaijan has chosen is correct. Today Azerbaijani economy is diverse. If half of the total investment portfolio is made in the non-oil economy, this means that this sector is also attractive. Both foreign and domestic investment made in the non-oil sector, the resources allocated from the state budget and the private sector have brought about a new situation. Today Azerbaijan is less dependent on the energy sector, i.e. oil and gas, and this dependence will gradually reduce further. This is confirmed by the statistics of our economic achievements. If we look at the figures for 2009, we can see the example of the work done in Azerbaijan in recent years.

In 2009, the oil price dropped three to four times, the financial and economic downturn adversely affected almost all countries. Despite that, the Azerbaijani economy grew by more than 9 per cent last year. The sharp decline in the oil price has not affected Azerbaijan’s development. We have implemented all social programs and infrastructure projects. Even more business opportunities were mobilized, and we successfully found a way out of this difficult situation. Our economy is developing fast in 2010 as well.

In addition to a thought-out economic policy, these successes are based on our oil strategy. Let me return to the period of 15 years ago. If resolute, purposeful and future-oriented steps hadn’t been taken then, Azerbaijan’s present situation could be completely different. The economic and political situation could be totally different. It is no secret that where economic opportunities are limited, it is difficult to put forward any political initiatives, protect national interests and conduct a principled and independent policy. Today our economic independence, major currency reserves and successful economic development are making us stronger. They give us the strength we need because we are still a newly-independent state. Our economy has already completed a period of transition. We are no longer a transitional economy. We are a developing economy, which is confirmed by authoritative international financial institutions. The fact that Azerbaijan’s credit rating rose in the year of crisis is an indicator in itself.

We must take advantage of these opportunities, look ahead and plan on our future steps today. And we do that. We have a long-term strategy, plans, a package of specific steps on energy, oil and gas and the non-oil sectors. We are building our policies on the basis of programs. Therefore, Azerbaijan has come out of the crisis with minimum losses. From the standpoint of political stability, the situation in Azerbaijan is also positive. This overall stability facilitates investment inflow. Investment is made not only in the oil sector, but also in tourism, infrastructure, hotels, social facilities, nice exhibition centers such as this. This center is beautiful and multi-functional. We are conducting this event in this magnificent hall. The investments made in the Azerbaijani economy serve the people of Azerbaijan. The more investment, the more our economy will grow, the more jobs and the higher the well-being of our people.

We will continue to develop our policies the way we have done. Further measures will be taken towards maximum diversification of our economic potential. As for the oil and gas sector, we have met all our goals in this sphere to date: oil and gas pipelines, production, investment, new markets. Today we expect even greater investment. A new major project has recently been launched at the Chirag field. I do hope that we can soon start the Shah Deniz-2 project. I think we have all the opportunities to do that now. If we succeed, at least $20 billion will be invested in Azerbaijan’s oil and gas sector under this project alone. This investment is likely to lead to the investment of a similar amount in the non-oil economy as well.

Dear friends, let me congratulate you again on this wonderful occasion – the opening of the traditional exhibition and conference. I want to express my gratitude to the organizers of the conference for conducting such a wonderful international activity in Azerbaijan for many years. I am sure that this wonderful tradition will be continued. I wish the exhibition and conference success. Thank you.