Caspian Energy Journal Caspian European Club
Thursday, 04 June 2015 17:00

Now, it is time to get the upper hand… - Ambassador Extraordinary and Plenipotentiary of Iran to the Republic of Azerbaijan Mohsen Pak Aein Featured

Caspian Energy (CE): Your Excellency, how would you evaluate the current level and potential of the economic ties between Azerbaijan and Iran?

Mohsen Pak Aein, Ambassador Extraordinary and Plenipotentiary of the Islamic Republic of Iran to the Republic of Azerbaijan:  The value of Tehran-Baku trade ties amounts to 500 million dollars but this figure could be further increased thanks to the diversity of economic potentials in both countries. Considering the firm determination of both countries to further boost macro-economic and trade ties and to use the high potentials of the two sides, I don’t think the current level of relations is satisfactory. The Export Guarantee Fund of Iran (EGFI) has provided 200 million dollars worth of insurance coverage for the trade exchanges between the two sides which could be further raised should the economic relations be expanded. We expect the EGFI’s Azerbaijani counterpart to take similar measures so as to pave the way for closer ties between Iran and Azerbaijan.

CE: Which prospects will Iran enjoy with the lifting the sanctions, which has become a key milestone in the life of Iran?

Mohsen Pak Aein: Oil-producing countries should create space for Iran when we increase our exports after sanctions are lifted. Elsewhere the lifting of sanctions should not be construed as leaving the domestic production unsupported. Of course, it should be welcomed as an opportunity to import modern technologies. Now, it is time to get the upper hand for negotiating with foreign companies which are willing to invest in the Iranian oil sector. Speeding up the development of joint oil and gas fields, benefiting from technical and financial resources of international companies, has been prioritized by Iranian official.

With the lifting the sanctions , closer cooperation in Energy fields (oil & Gas) , banking sector, provision of broader insurance coverage by guarantee and hedge funds, and establishment of joint ventures by the Iranian and Azerbaijani well-known and big private-sector companies make up our top priorities. These steps are prerequisites to further expansion of mutual relations.

CE: Iran is one of the largest oil and gas producing countries. Which measures can Iran offer to prevent critical thresholds of prices for energy resources?

Mohsen Pak Aein: I think nothing can prevent Iran to regain its share of the oil export market,it is not our responsibility to preserve the level of oil price and the share of Iran. I think OPEC is so much sure to understand the situation and take the right action and modify the market situation.

CE: How would you evaluate possibilities to expand swap operations in the Caspian?

Mohsen Pak Aein: Revival of the swap operation is technically possible and will be resumed after lifting of the anti-Iran sanctions. Since purchasers under sanctions have been banned from buying Iranian oil, the trend was naturally facing with some difficulties. Under oil swap agreements, which started in 1997 and were in place for over 12 years, Iran received the crude oil of Azerbaijan, Kazakhstan and Turkmenistan in its northern port of Neka on the Caspian coast. The oil would be used in the country’s northern refineries. Iran would then deliver an equal volume to the clients of the same countries – that themselves have no access to open waters – in its Persian Gulf terminals. Tehran would receive a transit fee from Caspian states over this.

CE: The last Summit of the Heads of State of the Caspian Littoral States in Astrakhan ended in reaching breakthrough agreements. How did the position of Iran change, including in terms of construction of offshore pipelines?

Mohsen Pak Aein: Iran experts are considering the possibility of transporting its gas to Europe via the Trans-Anatolian pipeline (TANAP).Coordination is needed between the Azerbaijani and the Iranian oil and gas companies in order to meet the needs of the European market in the gas. TANAP project envisages transporting gas from the Shah Deniz field through Turkey up to the country's border with Europe. TANAP shareholders laid the pipeline's foundation in 2014 and plan to commission it in 2018, so our Iranian experts have enough times for their researches and considerations. Azerbaijan and Iran has large oil and gas reserves, which indicates the need for increased cooperation between the countries in this area, as well as in the oil and gas industry as a whole. There is the great similarity between the different spheres of the two countries. Furthermore, the expediency of cooperation of companies of the two countries in the development of oil and gas fields in the Caspian Sea is possible.

CE: Which areas of common interest do you see in the field of gas supply to Europe via the Southern Gas Corridor?

Mohsen Pak Aein: Iran holds the second-largest proved natural gas reserves in the world, after Russia. Since 2009, Iran has developed several upstream gas projects, including additional phases of South Pars gas field. Moreover, there are hug gas reserves in the Iranian sector of the Caspian Sea. My country is eager to attract European energy companies into country, which left Iran’s oil and gas sectors . We declared that Iran is ready to ship its natural gas through its territories toward Europe. Iran actually has several options to deliver its gas to Europe: through Turkish soil to Greece via (potential) Iran-Turkey-Europe Pipeline and Interconnector-Turkey-Greece-Italy or via Trans-Anatolian Pipeline and Trans-Adriatic Pipeline (in the expansion capacity), including Greece-Bulgaria Interconnector and Ionian-Adriatic Pipeline; to Bulgaria via former Nabucco-West or existing inter connectors in Southeast Europe. Azerbaijan’s SOCAR has not excluded the participation of Iran in the TANAP project, as well as bringing Iranian gas into the pipeline. These times the European Union seeks alternative sources and routes of natural gas to reduce geo-political risk and dependence on Russian supply. Given the vagueness of Trans-Caspian Pipeline and insufficient amount of Azeri gas for the EU’s long-term energy consumption, Iran’s presence in the SGC project would give greater impact to the project. However, but we want a win-win deal for all parties involved in the energy talks and it is not a short-term process.

CE: Which areas of the bilateral trade should be given special attention, in your opinion?

Mohsen Pak Aein: Promotion of mutual investments is another area where we would like to see more enhanced cooperation between the two sides. This has also been a high-priority topic of discussion at the previous meetings between Iranian and Azerbaijani officials. Effective measures have been adopted by both countries over the past few months in this regard and we hope the Iran-Azerbaijan Joint Investment Committee to hold its first meeting within the next two or three months.

Connecting the two countries railroads, further expanding the connected inland roads and removing entry visa requirements for Iranian citizens and particularly Iranian business people will also help boost Tehran-Baku economic ties.

Customs cooperation and tourism are also of importance to Iran. We need to enhance Tehran-Baku customs cooperation and take necessary measures to make it possible for joint border customs offices to operate round-the-clock and also facilitate the transportation of goods using the two countries’ transit routes. These steps could significantly pave the way for development of macro-economic and trade ties between the two countries. As for the tourism industry, we would like to see more Azerbaijani tourists and pilgrims as well as health tourists visit Iran.

Given the fact that governmental officials play a significant role in providing the private sector with better conditions and improved business environment, we intend to present the problems expressed and faced by the Iranian and Azerbaijani private sectors and try to find solutions to remove these problems. Moreover, there is the likelihood of signing concluding agreements at the end of our meetings in the form of a protocol and also a memorandum of understanding in regard to stock market cooperation.

Moreover there are other steps that could be taken to further strengthen the relations between the two neighbors such as improvement of Tehran-Baku transportation cooperation and construction of an 8-km-long rail road by the Azerbaijani part so as to connect the Rasht-Astara railroad to the railroad grid within Azerbaijan’s territories in line with expansion of North-South Corridor, establishment of sisterhood relationship between Iran's Port of Amirabad and Azerbaijan’s Baku Port, effective use of Azerbaijan’s expertise in production and repairmen of ships and construction of port facilities, provision of direct air routes between the two countries’ big cities and the strategic use of the two countries’ membership in different regional institutions such as ECO.

Thank you for the interview

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