Rational and efficient management of natural resources has laid a firm foundation for successful development of Azerbaijan economy. Revenues gained from realization of energy resources at world markets are spent not only on future development of the oil and gas industry but also on restructuring of other sectors, which gradually starting to play more important role in country’s GDP. The fact that oil and gas sector stops playing an exceptional role in economic development of the country does not mean that Azerbaijan is going to give up dividends it gains as an active player in the world energy market. Huge gas reserves discovered in the Azeri sector of the Caspian Sea enabled to focus investors’ attention on gas industry, to initiate big gas transportation projects envisaging an access to the European market. Many countries already consider Azerbaijan to be an important strategic partner ensuring their energy security.
The State Oil Company of the Republic of Azerbaijan (SOCAR) plays the role of driver of the country’s oil and gas strategy laid by Nationwide Leader Heydar Aliyev and successfully being implemented by Ilham Aliyev, the President of the Republic of Azerbaijan.
The obligations on natural gas export have been assigned to SOCAR’s Gas Export Department. Currently there are 2,891 people employed for the department, which is mainly engaged in performance of technical, technological, metrological and commercial operations in accordance with appropriate standards so that to ensure efficient delivery of gas along the transportation systems of SOCAR and sales of its natural gas volumes in the domestic market and abroad.
SOCAR is currently exporting natural gas to Russia, Georgia, Turkey and Iran (exchange operations – swap). The Department headed by me is responsible for the administration of the Sales and Purchase Agreement of natural gas between SOCAR and Gazprom Export signed in October 14th, 2009. The agreement foresees annual gas supply of 3 billion cubic meters to Russia until the end of 2015 (parties have a right to prolong the contract by mutual agreement). Totally about 1,5 billion cubic meters and 1,55 billion cubic meters was supplied to the Russian Federation in 2011 and 2012, respectively.
Gas Export Department also fulfills contract obligations on gas supply within the framework of agreements signed with three Georgian companies (Georgian Oil and Gas Corporation, SOCAR Georgia Gas and SOCAR Gas Export- Import). SOCAR has supplied to Georgia roughly 775 million cubic meters of natural gas in 2011 and 993 million cubic meters in the year of 2012. It is forecasted that this figure will escalate up to 1 billion cubic meters in 2013.
Execution of the contract on natural gas swap signed between the National Iranian Gas Export Company and Azerigaz CJSC in 2004 for meeting natural gas needs of Nakhchivan is another important line of the department’s activity. According to the Order of the President of the Republic of Azerbaijan dated July 1, 2009 envisaging improvement of management mechanisms in oil and gas industry, the state-run Azerigaz CJSC was transferred within the structure of SOCAR. Consequently, Azerigaz CJSC’s obligations under the contracts that were in force at that period, including Natural Gas Swap Contract, were also transferred to SOCAR. Thus, to satisfy domestic needs of the Nakhchivan Autonomous Republic about 416 million cubic meters of gas was supplied to Iran in 2012 and the Nakhchivan Autonomous Republic in its turn received 353 million cubic meters of natural gas. Since 2010 the department employees have been involved together with the Shah Deniz consortium representatives in marketing of Shah Deniz Stage II gas, including gas sale to Turkey and transit delivery of blue fuel to Europe through the territory of Turkey. In this regard, the negotiation group arranges meetings with representatives of gas transportation systems, potential gas customers as well as with regulation bodies of transit, consumer countries and the European Commission.
According to the results of 2012, Gas Export Department exported 2.540 billion cubic meters whereas 4.746 billion cubic meters of gas was submitted to cover the needs of the energy system of the Republic.
According to the order of President of Azerbaijan Ilham Aliyev, SOCAR is undertaking a package of measures for gasification of the country regions. Certain success has been gained in this direction. Fulfillment of tasks envisaged in the State Program for social-economic development of regions of Azerbaijan (2009-2013) improved social wellbeing of the population.
Meeting obligations on gas supply to consumers depends mainly on condition of the gas transportation system of the Republic; thus, main pipelines of 182.7 km length and 13 gas distribution stations were commissioned during 2009-2012. Besides, main gas pipelines to the length of 141.6 km and 39 gas distribution stations were fully repaired and commissioned. The main advantage of Azerbaijan’s gas transportation system is that it is a single technological system connected to oil and gas fields. From the scientific and technical standpoints, effective location of compressor stations (on borderland with the Russian Federation, Iran and Georgia, as well as in the center of the country) enables to ensure stable gas supply in all directions.
Gas Export Department is currently operating gas pipelines to the length of 3.4 thousand km and 177 gas distribution stations. In particular, Mozdok-Gazimahammad trunk pipeline meets gas needs of the population living in northern regions of Azerbaijan as well as exports gas to Russia. Annual carrying capacity of this gas pipeline comprises about 13 billion cubic meters of gas. Meeting gas needs of the southern regions of the Republic, as well as gas supply to Iran is performed by means of the trunk gas pipeline Astara-Gazimahammad and 5 compressor stations.
Underground gas storages are also among the major advantages of the gas transportation system of the Republic. These strategic facilities regulate gas supply process that is very important for gas consumption in different seasons of the year. 2.2 billion cubic meters of gas was injected into Galmaz and Garadagh gas storages in 2012. Up to 3.3 billion cubic meters of active gas volumes were accumulated by the beginning of the winter season.
The compliance of the Department activity to international standards of management, quality of work and preparation of technical documentation has been acknowledged by international certificates TS EN ISO 9001 (quality management system), TS EN ISO 14001 (environmental management system) and TS 18001/OHSAS (Health and Safety Management System).
Rovnag Abdullayev, the President of SOCAR, assigned the Department extremely responsible tasks including efficient exploitation of already operating as well as construction of new trunk gas pipelines and gas distribution stations, introduction of new technologies in the gas transportation system of the Republic, uninterruptible and safe gas supply both to the domestic market consumers and external markets.
Big importance has been attached to active work of the Department employees within the framework of international organizations so that to strengthen gas related contacts. Since 2011 SOCAR has been a member of the Gas Center under the European Economic Commission of UN. Gas Center is mainly engaged in exchange of gas market information and provision of platforms for discussions of gas industry participants. Within the frames of the Gas Center of the European Economic Commission of UN, participant companies discuss the issues concerning introduction of particular features and elements of the open market in countries with transitional economies. They also share information and consider such problems as provision of stable supplies so that to bring interests of importing and producing countries together, exchange data about the present situation in the gas market, prospects and tendencies of the gas sector development.
Apart from this, SOCAR has become a member of the International Gas Union since 2012. This world scale international professional association, which brings together representatives of the world gas industry, was established in 1931. The International Gas Union consists of more than 100 members (74 charter and 35 associate members): national gas industry workers association as well as large companies representing gas industry. EU countries, Turkey, Russia, Kazakhstan and other states are also represented in this union. Working groups engaged in different issues starting from production right up to gas marketing (including LNG) operations within the union. Gas Export Department representatives take an active part in arranged meetings and events.
Therefore, Gas Export Department is mainly engaged in implementation of SOCAR’s policy aiming at diversification of export routes, expansion of gas sale markets, growth of sale efficiency, provision of stable gas supply both to the domestic and foreign markets, and growth of Azerbaijan’s role in the international energy market.
