OREANDA-NEWS. October 28, 2011. Mr. Abdullayev, recently you paid a visit to Izmir, Turkey. Very important events happened there regarding the expansion of Azerbaijani-Turkish bilateral energy relations, successful implementation of Shah Deniz-2 project, and transportation of Azeri gas to Europe. First of all, I would like to congratulate you personally as well as your team on this occasion. Could you please, provide our viewers with detailed information on the results of your last visit to Turkey?

R. Abdullayev – Thank you very much! I would also like to congratulate all Azerbaijani people on behalf of the SOCAR team. Indeed, the remarkable events have happened in Izmir. First of all, we have to mention a groundbreaking ceremony of Petkim’s Star Refinery, with participation of Azerbaijani President Ilham Aliyev and Turkish Prime Minister Receb Tayyip Erdogan. Petkim is SOCAR’s biggest asset in Turkey. Construction of the Star Refinery with annual processing capacity of 10 million tons will be conducted by SOCAR Turcas Refinery JSC. The Refinery is to be commissioned in 2015. It will allow meeting the petroleum products demand of Turkish petrochemicals sector, particularly of Petkim. The 1.6 million tons naphtha to be produced in the Refinery will meet Petkim’s demand, while the diesel, jet fuel and LPG will be sold in Turkish and adjacent markets. USD 5 bln is planned to be invested in refinery construction. This is the biggest investment into one project in recent years, not just in Turkey but in the whole world.

In Izmir we also attended the groundbreaking ceremony of Vocational Education and Training School named after Heydar Aliyev. We are glad that Mr. Ilham Aliyev, the President of the Republic of Azerbaijan highly appreciated SOCAR’s training projects in his speech.

15 documents, including intergovernmental agreement, an agreement to sell gas to Turkey from the Shah Deniz-2 starting from 2017, and an agreement on transit of gas from Shah Deniz-2 to Turkey via the networks of Turkish Botas Company in 2017-2042, were signed in Izmir.

I would like to mention, that these agreements constitute a complete package of documents for the transportation of Azerbaijani gas to Turkey’s border with Greece and Bulgaria. In fact, all conditions have been created for realization of projects of the Southern Gas Corridor, which will connect the Caspian region to Europe.

ANS – Could you please, describe in details the essence of the agreements mentioned?

R. Abdullayev - We had been working on them for more than five years. The parties had faced the challenge to solve a wide range of issues on creating completely new transit mechanism. This should have been a mechanism meeting the interests of both current users of Turkish gas transportation network, and our country as a gas producer. It’s noteworthy, that never before such complex and large-scale project had been carried out anywhere in the world. Today we can say, all the problems had been solved. As it was planned, now we can continue the selection procedure of the most optimal project for transportation of Azeri gas to Europe.

ANS - What projects are being considered now, and when will the final decision be made?

R. Abdullayev - Now it is clear with the all transit terms. We have the opportunity to estimate several projects regarding the transportation of Azeri gas to Europe. One of them is ITGI (Interconnector Turkey-Greece-Italy) project, which considers transportation of gas to Italy and the Balkan countries through the territory of Greece. Another project – TAP (The Trans Adriatic Pipeline) will go the same route. And of course, here we should mention Nabucco project, which envisages delivering Azerbaijan’s gas via the Balkan countries to the Central Europe. The fourth option proposed by BP is also attractive, which allows gas to flow via Turkey to the Balkan countries. I think the selection procedure will be completed in late 2011 - early 2012.

ANS - Mr. Abdullayev, do you mean the gas transportation to be produced only from Shah Deniz field? As there are fields like Umid, discovered at SOCAR’s own expense, as well as Absheron discovered together with Total and GDF.

R. Abdullayev - This is a very important issue, because SOCAR should complete the solution of transportation issues for all future projects. As you know, large-scale exploratory works are being conducted in Azerbaijan at present. I would like to add gas to be produced from the deep strata of Azeri-Chirag-Gunashli block to the projects you have mentioned. We are carrying on negotiations with the consortium regarding this issue. It is intended to produce 50 billion cubic meters of gas by 2025. Together with Turkey, we have agreed to study the construction of a new gas pipeline that will pass through the territory of Turkey for delivering the considerable part of this volume to the world market. This will be a new pipeline and with the increase in gas production in the region, the pipeline capacity will also be increased. This project will be implemented by two brotherly countries (engaging the foreign countries may also be considered). We intend to complete solution of all issues on this pipeline in 2012, and without delay, start building in order to make it ready by the end of 2017 when the second phase of development of Shah Deniz project is launched. I think, if the National Leader Heydar Aliyev has called the agreement on joint development of Azeri-Chirag-Gunashli fields as the contract of 20th century, then this project is definitely going to be the 21st century’s one and be associated with its initiator – Mr. Ilham Aliyev, the President of the Republic of Azerbaijan.