Caspian Energy Journal Caspian European Club
Monday, 10 October 2016 18:30

In this century Azerbaijan will be of great importance for Italy and Europe, - Ambassador Extraordinary and Plenipotentiary of Italy to Azerbaijan Giampaolo Cutillo Featured

The time to act …

Caspian Energy: Your Excellency, recently Chancellor of Germany Angela Merkel said that the EU is in a critical condition. What is the Italy’s opinion in this regard?

Ambassador Extraordinary and Plenipotentiary of Italy to the Republic of Azerbaijan Giampaolo Cutillo:

In the aftermath of Bratislava’s EU summit, Prime Minister Matteo Renzi has voiced Italy’s dissatisfaction on two key issues: the need for a coordinated European response on migrations and the necessity of a growth-oriented economic policy. The EU will be celebrating its 60th anniversary in March 2017, with a special Council meeting to be held in Rome. A path should be established from now until the Rome meeting and be marked by clear choices: this is definitely the time to re-launch the European project and really face challenges, which are relevant to our continent and the EU as a whole. Italy, as a founding member of the EU, wants Europe to do more and be more active in facing those challenges.


СЕ: What specific measures will the EU take after Brexit? For example, the Visegrad Group (V4) countries said they would block Brexit…

Giampaolo Cutillo: Brexit is a fact. It is a decision of the British people, which we respect. At the same time, Brexit is not the end of the world: on the contrary, Europe may turn it into a new opportunity. Let us not forget, as Europeans, that we owe to European cooperation and integration our peace, freedom and prosperity over the last sixty or seventy years. We must build on this positive, unique and priceless legacy and the time to act is now. We have a lot of challenges: for example, the migration crisis, the stability in the Mediterranean, the overcritical situation in  regions and countries in the immediate vicinity of Europe. We have a duty to act, not to stay out and just look at what is happening around us. The world continues to exist after Brexit, and our task is to relaunch Europe and, certainly, we will not be stopped by Brexit.


СЕ: British Prime Minister Theresa May said a UK-EU deal will be signed after 2017 ...

Giampaolo Cutillo: Technically, this is not an easy matter and implies very complex negotiations, which of course will take some time. It is important, however, to have political clarity and to establish a specific time frame to address the issue and solve the problem as soon as possible.


СЕ: How will this situation in the European Union affect such strategically important exporters as Azerbaijan, the Southern Gas Corridor project?

Giampaolo Cutillo: I do not see any impact on the relations with Azerbaijan and the construction of the Southern Gas Corridor. These are matters which are in no way related to the internal debates across Europe on Brexit and other issues. I believe things remain as they were before. The European Union, Italy, Azerbaijan and the other countries involved in this project are committed to its implementation, and we will continue to work on it.


СЕ: Does Italy as a partner support the expansion of SOCAR's presence in the EU gas market? Does not Italy consider it a sign of monopoly?

Giampaolo Cutillo: These are issues which fall within the competence of the European Commission, because there are certain polices in Europe concerning competition and monopolies. These are very technical issues, and we have given a competence to the EU to monitor such problems. For our part, we hope of course in a solution, which is satisfactory for all partners concerned.


Italian companies have strong positions to come to Azerbaijan or to remain in Azerbaijan…

СЕ: Mr. Cutillo, you have served as the Ambassador to Azerbaijan for more than three years. Which positive aspects of your mission could you highlight especially?

Giampaolo Cutillo: Italy and Azerbaijan have established a strategic partnership in a more than 3 year period. As you know, the President of Azerbaijan Ilham Aliyev has been to Italy twice, in 2014 and 2015. In the course of the visit he met with our President and Prime Minister. It shows that political and bilateral dialogues are on a high level. We call it a strategic partnership, which is a major moment in cooperation. On the other hand, a lot of Italian delegations visited Azerbaijan, including business delegations, governmental delegations, and our ministers paid their visits. There is a quantitative and qualitative increase in all areas of the bilateral relations between Azerbaijan and Italy. It is indeed positive moments, covering also the energy sector due to the importance of Azerbaijan for Italy as a supplier of energy resources. However, the positive dynamics is not limited only to the energy sector, as the countries have established quite a good cooperation, for instance, in the field of culture, trade, export-import operations, and there is still a lot to do in this direction together with Azerbaijan.


СЕ: The trade turnover has decreased slightly over the year. What is the reason for that? What measures do you suggest to boost it?

Giampaolo Cutillo: The trade turnover between Italy and Azerbaijan was growing at a very fast pace over the last 5 years (from 2011 to 2015). 2016 was a special year due to the devaluation in Azerbaijan and economic crisis. The volume of import fell in Azerbaijan and it is normal wherever a country devaluates its currency. Thus, a rapid decline of goods turnover was observed in the first half of this year, it fell about by 50% compared to 2015. But we have grounds to assume that there will be a gradual recovery ahead. First of all, I anticipate a considerable improvement by the end of the year. It is difficult to tell about figures now. But for the next year we feel cautiously optimistic about the bilateral trade because Azerbaijan is now committed to a number of reforms and measures, which will hopefully relaunch the economy. The figures in 2017 will definitely be better than in 2016.


СЕ: Mr. Cutillo, just recently Assistant to the President of Azerbaijan for Economic Reforms Natig Amirov stated about the possibility of privatisation of state companies. How attractive are state-owned companies of Azerbaijan for Italian investors?

Giampaolo Cutillo: Why not? It will depend on what is privatised, what are the terms, and also on the interest of Italian investors in that. More generally, in June Rome hosted the meeting of the Intergovernmental Commission, where the economic reforms and measures conducted by the Government of Azerbaijan were explained and illustrated to the Italian Government and Italian companies. There is a great interest in Italy for what is happening in Azerbaijan. The level of economic cooperation and also the presence of Italian companies interested in the Azerbaijan market are still very high. So, we believe that with the implementation of the reforms, including privatisations, the interest of the Italian private sector will remain high in Azerbaijan.


СЕ: Are there any special projects after the presentation in Rome?

Giampaolo Cutillo: New meetings will be held between the two governments. Basically, the main sectors taken into consideration are those considered as a priority by the Government of Azerbaijan, within the framework of the national economy’s diversification. So, for example, there is certainly an interest in logistics, transportation, agriculture, constructions and infrastructures. In all these sectors Italian companies are well positioned to come to Azerbaijan or to remain in Azerbaijan.


СЕ: Do you mean large investment projects or small and medium-size business?

Giampaolo Cutillo: This is something, which can be of interest for companies of all sizes. We already have some very big Italian companies in Azerbaijan, which are working particularly in the oil and gas sector. However, I believe that there are spaces for smaller companies or medium-sized businesses because they have been actively involved, for example, in exports to Azerbaijan. There are opportunities to attract both small and big private players.


СЕ: Could you please tell about prospects of cooperation in such area as the olive industry?

Giampaolo Cutillo: Agriculture is one of those sectors, where we can do more and more to develop cooperation, including the olive industry. Winemaking is another industry, where we have started cooperation recently. At the same time, Italian companies can offer know-how in the field of mechanization of agriculture, techniques and processes. So, it is also an area for a possible broadening of cooperation.


СЕ: Are there any visits expected in the near future?

Giampaolo Cutillo: The next important visit we are working on is the visit of Italian Foreign Minister Mr. Paolo Gentiloni. He is expected to pay a visit to Azerbaijan in November. We still do not have exact dates. They will be announced in a due time, of course.


Our priority and our interest go to the Southern Gas Corridor

СЕ: Mr. Giampaolo Cutillo, is it possible to expect any problems with the financing of the Southern Gas Corridor given the decline in the global investment activity in the oil and gas sector?

Giampaolo Cutillo: As I have mentioned before it is a huge project. Only in the ideal world everything goes smoothly and without problems. In reality, of course, some problems arise from time to time. They may be related to construction, financing or certain political issues. The most important thing here is to address them all together. So, as of today, we can say that the whole construction process goes according to its original schedule. We have a common goal shared by all stakeholders to have the first gas flowing to Europe at the beginning of 2020 and we remain committed to that.


СЕ: Does Italy plan to buy gas in Azerbaijan?

Giampaolo Cutillo: Gas has already been sold. The long-term gas sales agreement was signed in Baku in late 2013. Some European companies are committed to buying gas, including two big Italian companies, and the signed contract is already in place. Therefore, we are talking about large amounts of gas and money, which will ensure a continued cooperation between Europe and Azerbaijan over the next 30 years. The contract provides for delivery of the first gas to Europe in 2020, and gas has already been sold till 2045. Of course, the contract can be extended, but it is a matter of far future.


СЕ: Italy counts on new gas volumes, does not it?

Giampaolo Cutillo: All experts argue that the potential of Azerbaijan is not limited to the Shah Deniz project. After Shah Deniz there will be new fields, and we will be there. So, I think that at least for a very substantial part of this century there are reasons to believe that Azerbaijan will be of great importance for Italy and Europe.


СЕ: Recently, we hear many statements about a possible involvement of exporters from Iran, Iraq and Turkmenistan in the TANAP project. Is Italy as a main consumer interested in gas supplies from other sources?

Giampaolo Cutillo: Yes, of course. Why not? We welcome any development, which will strengthen the Southern Gas Corridor over time. The Southern Gas Corridor is a pipe, it is the infrastructure. So, it should be filled. Of course, Azerbaijan and the Caspian Sea will be the main source of gas, but nothing will prevent other countries such as Turkmenistan, Iran, Iraq, Eastern Mediterranean countries which also have rich fields, from realizing their potential and willingness to contribute to facilitating new supplies and using the Southern Gas Corridor as an infrastructure. From this perspective, Italy and the European Union welcome any development in this regard.


It is too early to speak about extension of the Turkish Stream to Europe

СЕ: How feasible is it, from Italy’s standpoint, to implement the Turkish Stream?

Giampaolo Cutillo: The Turkish Stream is something we have been hearing about for two or three years. We need to see something more concrete. I believe that Turkey and Russia are working on that. Let us wait and see. We have nothing against the project. What is definitely true is that the Southern Gas Corridor is a concrete project. It is ready for construction and will be completed soon. So, definitely our priority and our interest go to the Southern Gas Corridor.


СЕ: As you know Russia has expressed the intention to include the Turkish Stream in the list of priority projects of the European Commission. Could you please tell about the viewpoint of Italy in particular and the European Union in general about that?

Giampaolo Cutillo: I do not think things are exactly like this. First of all, Russia and Turkey have not yet reached a final agreement. And this is up to them, of course. We have nothing to say about that now. If this gas is intended for increasing supplies to Europe, then, of course, there are certain technical requirements, which must be respected. It lies within the competence of the European Commission to evaluate this. But, again the Commission will be able to make an assessment, if a concrete project is put on the table. At this stage I think it is too early to speak about a possible extension of the Turkish Stream to Europe.


СЕ: Mr. Cutillo, what about the Italy-Greece-Bulgaria Interconnector? How does it fit into the energy policy of Italy?

Giampaolo Cutillo: This is a project, which is just on paper now. We need to see concrete proposals and concrete terms to be able to evaluate them. That is why, when we talk about all these projects, they are not the same. If we talk about the Southern Gas Corridor, we talk about something, which we can really see and touch. It is implemented at a very fast pace. Thousands of people are involved in constructing this pipeline. All other projects are still on paper. We cannot compare them.


СЕ: It is the project in the list of prioritised projects for EU’s funding…

Giampaolo Cutillo: Again, it is still at a very early, preliminary stage. When we talk about political priority, the Italian Government is right now committed to the Southern Gas Corridor.


СЕ: What is the position of Italy on creation of the new transport corridors North-South or Great Silk Road? How interested are Italian companies in this project?

Giampaolo Cutillo: We are very much interested in it, because when we talk about the North-South and East-West corridors we imply a connection between Europe and Asia, China, Japan and other Far East countries, and at the same time India, Pakistan, Afghanistan, etc.

These are key infrastructures for the future of Europe and Asia. And when we talk about infrastructure, the concept includes energy, transportation, railways, roads, trade, everything. So, we definitely support its development.

As far as the Silk Road is concerned, let us just remember that also historically Italy was and still is the receiving end of the Silk Road. Besides, glancing back to the past we remember the fact that the Italian cities like Venice or Genoa have been pushing Italy’s growth thanks to trade over the centuries. Modern Italy is still at the center of the Mediterranean and thus is definitely ideally positioned to be at the end of all this traffic between East and West. So, we definitely support this. As far as Azerbaijan is concerned, one of the points, which we talked about during the latest session of our joint commission in Rome, was exactly transport logistics, development of the port of Baku as a term for expansion of shipping and transportation across the Caspian region. So, we are interested very much in all that.


СЕ: Establishing of free trade zones is well on track in Azerbaijan. How attractive are these projects for Europe and for Italy?

Giampaolo Cutillo: They are attractive because no matter from which viewpoint one considers it, Azerbaijan is a transit point or a key central point. Therefore, it is important to watch the way Azerbaijan will use this advantage. I know this is a priority for the Government. Our companies are certainly interested in making their contribution to this process. In its turn, it will depend on their capability to come to Azerbaijan and establish right contacts. But we, as a Government, are certainly ready to assist in this process and attraction of Italian companies to the industrial zones, for instance, to the one in Sumgayit. We also show interest to the petrochemical sector. A number of big Italian companies are working in Azerbaijan within the framework of very important petrochemical projects.


СЕ: What other new projects, new possibilities do you see within the framework of the ongoing economic reforms?

Giampaolo Cutillo: As I said before we are focusing mainly on transport logistics, agriculture, infrastructure, and civil construction. And, of course, the energy sector remains a pillar of our cooperation. When we talk about energy, it is not just about oil and gas. We are also interested in the chemical and petrochemical industries. There are large opportunities in that sector.

In conclusion I would like to praise the current level of our cooperation with Azerbaijan. We consider Azerbaijan not only as a partner in energy imports. It is a country contributing to stability, to multicultural dialogue. Baku has just hosted the Humanitarian Forum and received a very important visit by the Pope. This is a country which is promoting religious tolerance and interreligious and intercultural dialogue. We believe this is very important and, also from this perspective, we really appreciate Azerbaijan’s contribution.



Thank you for the interview


Interview made by Sabina Mammadova, Olga Nagiyeva


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