Azerbaijan International

Winter 1997 (5.4)
Pages 92-93

Journey into the Future
We're on the Way

by Ilham Aliyev

Ilham Aliyev, VP of SOCARLeft: Ilham Aliyev, VP of SOCAR, at Harvard a few days after his presentation in Washington, D.C., at the Caspian Pipelines conference (November 1997).

Ilham Aliyev, Vice President of the State Oil Company of Azerbaijan (SOCAR), gave the following speech as the keynote luncheon address at the Caspian Pipelines Conference on November 19, 1997, in Washington, D.C. This conference was sponsored by Cambridge Energy Research Associates (CERA), the U.S.-Russian Business Council and the U.S.-Azerbaijan Chamber of Commerce (USACC).

Ladies and gentlemen, even though our conference is still in session, I think that we can already talk about some preliminary results. First of all, I think this conference has been a great success so far, and will contribute to a greater understanding of the issues and problems of the region. Not only have we had the chance to listen to various positions, but I think we have made substantial progress towards regional cooperation in regard to the future pipeline development in the Caspian. Unfortunately, in the past, countries in the region have conducted their activities independently of each other, and this has caused many difficulties.

Regional Principles
If we can manage to unite our efforts, we will definitely achieve greater results in the future. But one thing we should all understand is that regional cooperation must be based on realistic principles.

I want to draw your attention to some aspects that we should keep in mind. For example, one cannot promote regional cooperation and, at the same time, escalate tensions over the so-called "disputed oil fields." In other words, one cannot criticize Azerbaijan's rights to develop its own oil fields, insisting that legal issues of the Caspian Sea have not yet been resolved, while seeking permission at the same time from the Azerbaijan government to participate in developing these same fields.

Secondly, one cannot be regarded as a reliable partner in regional cooperation and, at the same time, continue a policy of military occupation of a significant part of Azerbaijan's territory, leaving 1 million refugees homeless, destroying hundreds of our cities and villages and carrying out a policy of vandalism on our territories. This is not a realistic approach.

Azerbaijan's Train is Moving
Azerbaijan's train has started on its journey into the future. We are with our friends on this train. Some have already missed it which will make it very difficult for them to catch up and join us.

Many ideas and proposals have been initiated in the past in regard to the best route for the pipelines from Azerbaijan. I acknowledge these various proposals set forth, but you must remember, this is Azerbaijan's oil; that is, oil which belongs to the people of Azerbaijan. Therefore, the best transportation route will be the route which is best for Azerbaijan.

It is symbolic that representatives from the Caspian Sea countries have gathered here in the United States, many miles away from our homes. It shows the growing interest of the U.S. in the Caspian region as a whole and in the issue of Caspian pipeline facilities. Of course, the efforts by the U.S. administration to provide peace, security and foster mutually beneficial cooperation in the region will be very much appreciated. We hope that this attitude will continue in the future and bring positive results.

US Law 907 Against Azerbaijan
But there are some issues which concern us. One is Section 907 [of the Freedom Support Act] which forbids the U.S. government from giving any direct assistance to the Azerbaijani government. Every time officials in the White House ban U.S. governmental aid to Azerbaijan, it not only affects Azerbaijan, but it also affects the U.S. companies and investors who are eager to work with us.

Countries are like people, and they can adjust themselves to the situation in which they find themselves. For example, Azerbaijan has been living with Section 907 since 1992, and Azerbaijan can continue to live with restrictions from Section 907 for many more years. We have adjusted ourselves to that possibility. But, repeal of this legislature would make our lives easier, and would symbolize closer cooperation and understanding, not only to the needs of Azerbaijan but to the significance of Azerbaijan to the entire region.

When I spoke at the U.S.-Azerbaijan Chamber of Commerce (USACC) conference here in Washington last February [1997], I mentioned that we would very soon see the first oil flowing from the Chirag-1 platform. That has just happened [November 12, 1997], and Azerbaijan is now waiting for the transportation of its oil to the world market. I am happy to say that these goals are being achieved. I hope that on my next visit, I can confirm other successes which we can celebrate together.

Azerbaijan is a country where many companies from various countries work together with us, especially in oil production. This alone is evidence that Azerbaijan is not only ready for business, but also ready for friendship. We are a newly independent country but with very old and very rich traditions. I invite all of you to visit my country and to get to know, not only our oil experts, but our poets, our musicians, our culture and our people. Thank you.

Question & Answer Session
(Don Stacey, recently retired president of Amoco Eurasia, coordinated the Question & Answer session. While written questions were being gathered from the audience, Stacey initiated the first question.)

Who will make the final decision regarding the main export pipeline route?

You know the answer better than I do (Ilham chuckles).

[Stacey] What Ilham is saying is that the investors are going to be making that decision.

SOCAR has had excellent relations with the two Iranian Companies-National Iranian Oil Company (NIOC) and Oil Industries Engineering and Construction (OIEC)-over the years. How do you see future cooperation between SOCAR and these Iranian companies?

Well, we are working together with Iranian companies on two projects-Shah Daniz and Lankaran-Talysh. Our cooperation has been successful. We are very satisfied with the job they are doing. They have the same rights as other members of their consortiums. They enjoy the same privileges as any other giant corporation or foreign investor, which means they look forward to their revenues. I'm very happy that our relations are based on a business-like approach, with mutual respect and understanding.

In Houston last February [1997], you mentioned that SOCAR was interested in increasing foreign company involvement onshore. Is that still SOCAR's intent? And if so, what steps are being taken to finalize any agreements with foreign companies for onshore projects?

In regard to offshore projects, we don't need more proposals, as we are now in the very fortunate position of choosing among [competing] companies who want to sign contracts with us. That puts us in a very difficult situation because we respect all of these companies and have very good relations with all of them.

But onshore fields are a concern because for many, many years these fields have not always been developed in the most efficient way. There is still very great potential in this area. We want to attract large companies to come work with us onshore. Unfortunately, up until now we have received proposals from only small and middle-sized companies. This past year there has been some movement in that direction, and we have received several proposals from large American oil companies interested in our onshore fields. We are now in the process of negotiation, and I think as soon as we sign our first onshore production agreement, other companies will be eager to join this process.

Yesterday, one of the speakers said that Russia is taking a pro-Azerbaijani position in the Caspian oil business. Do you think this is true? How do you see Russian influence in Azerbaijan?

Well, I should say that I don't know what is meant by a "pro-Azerbaijani position." Azerbaijan's position has always been very clear. When we started developing our oil fields together with our partners, we made it very clear to everybody that we were determined to follow through with it. During the past few years, there have been many changes in attitude towards Azerbaijan by our neighbors and by our partners. I think we have managed to create a very good environment which allows every country interested in developing our oil fields with us to have a chance.

Our relations with Russia are developing very positively, and I'm very happy about this. We have inter-governmental transportation agreements with them. Russian companies are doing a very successful job in Azerbaijan. What is more important is that the Russian companies are conducting themselves and acting just like any other large international oil company in Azerbaijan. They have assumed this role, and there are no signs of strained relations between the countries or between the companies. So I think this development is going in a very positive direction, and we will be very happy if it continues this way.

Can you tell us about the relationship between Azerbaijanis in Azerbaijan and Azerbaijanis in Iran? Is there a strong connection or has history created a division between them?

In the past, we were deprived of the opportunity to see each other because we lived in the Soviet Union, and they lived in Iran. Before the collapse of the Soviet Union, it was basically impossible for us to visit each other. Our relations were virtually nonexistent. There were many families and relatives who had not seen each other for many years until the borders opened. Now, many Azerbaijanis from Iran come and visit us, and our people go there. We speak the same language and have a similar culture.

The most important thing to remember is that no matter how difficult it was for us during the past 70 years to preserve our traditions and culture and for them to preserve their language, we both have managed to do this. We celebrate the same holidays, we speak the same language, we have the same traditions and we share similar jokes. So when we meet, we feel as if we are family, and that, I think, should answer your question.

We'd like to hear how SOCAR or the Azerbaijani government intends to fulfill its role as a regional transportation hub, bearing in mind, political tensions in the region.

I have mentioned that our objective is not only to develop our oil fields but to become a very large transportation center. We are taking the first steps toward this goal. Of course, we know that it won't be easy. But I think the reality of today's world, the situation and the image of Azerbaijan which we have managed to create during these last several years will make our country the best transportation route for oil, especially in terms of a Trans-Caspian pipeline.

This is the way out, not only for us, but for those who do not have sufficient pipeline systems and who are still relying on only one route. It is very important to have alternatives so you can choose what suits you best. Otherwise, you become hostage to one decision and to only one route. In this case, Azerbaijan not only helps itself, but helps its neighbors and our business partners from other countries to utilize this corridor and to have another efficient, more secure route to the world market. Thank you.

Azerbaijan International (5.4) Winter 1997
© Azerbaijan International 1997. All Rights Reserved.

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