Caspian Energy (CE): Mr. Valiyev, a year has passed since our previous meeting. What success has been achieved throughout this period?
Rauf Valiyev, Chairman of the Azerbaijan Caspian Shipping Closed Joint-Stock Company (ACSC): Since its founding, ACSC has been highly prioritising the development of corporate governance, formation of a strong team and involvement of young professionals.
To improve the corporate governance, ACSC has implemented the international management system, international financial system SAP and started preparation of financial statements in accordance with the International Financial Reporting Standards.
Today ACSC has established an effective and optimal management over the fleet, got synergy from centralized management of the two fleets which makes the fleet capable of fulfilling the assigned tasks quickly and at the highest level.
One of the important goals for ACSC after its formation was to obtain international certificates and organize its activities in accordance with the requirements of these standards. To achieve this goal, ACSC started cooperation with the American Bureau of Shipping (USA) and at the beginning of this year the Azerbaijan Caspian Shipping CJSC received the certificates of conformity and application of the ISO management standards. It took us a year to get this laborious task done. It should be noted that the Integrated Quality and Safety Management System (IQSMS) has been developed at the ACSC in such areas as quality, health, occupational safety, labour protection, environmental protection and energy efficiency and applied at vessels according to the requirements of the international standards ISO 9001-2008 (Quality Management), ISO 14001-2004 (Environmental Management), ISO 50001-2011 (Energy Efficiesncy Management) and OHSAS 18001-2007 (Occupational Health & Safety Management).
To continue corporate governance improvement and to train personnel to new standards, ACSC invited business academies of the American Bureau of Shipping and EY (Ernst & Young) to conduct trainings for the management staff on such topics as the integrated quality and safety management system, energy efficiency standards, internal audit of the safety management system, the Maritime Labour Convention, effective management solutions, effective communications and productivity management.
At the same time the contract has been signed with the international rating agency, Fitch Ratings, to acquire a credit rating for ACSC. For the second year in a row international audit company EY conducts the audit of ACSC’s financial reports prepared under IFRS. Sustainable Development Report is currently being prepared by ACSC which will provide respective information to shareholders and stakeholders. This is an important document to assess the commitment of our company to the principles of sustainable development. The audit of this report will also be conducted by EY.
Increase in effectiveness of international transportation, expansion of business relations with potential partners in the basin of the Caspian Sea and beyond it have been one of the priority tasks of the company. Therefore, an opening ceremony of the office of the Caspian Shipping Company LLC took place in Astrakhan (Russia) in November of the last year. The new structure will promote implementation of the strategy of efficient entry of the Azerbaijan Caspian Shipping Company to international markets and finally increase the volume of cargo transportation.
CE: One of the major preconditions for the development of shipping is increase and renewal of vessels and expanding the geography of operations. Which projects does ACSC implement in this area?
Rauf Valiyev: Along with keeping the leading positions in the Caspian Sea, ACSC today addresses such strategic tasks as re-establishing operations outside of the Caspian and fleet renewal. To this end, measures are taken on a regular basis. In 2015, three vessels of our transport fleet ‘Garadagh’, ‘Teymur Ahmadov’ and ‘Maestro Niyazi’ were sent to the Black Sea-Mediterranean basin.
Most recently, the Azerbaijan Caspian Shipping CJSC has purchased 6 more vessels to increase cargo transportation outside the Caspian Sea in the basins of the Black Sea and Mediterranean Sea. These vessels received the names of our outstanding people: ‘Rasul Rza’, ‘Shair Vagif’, ‘Shair Sabir’, ‘Huseyn Javid’, ‘General Aslanov’ and ‘Gafur Mammadov’. On May 10 Turkey hosted the ceremony of raising the national flag of Azerbaijan on the general cargo vessel ‘Rasul Rza’. Thus, the number of our vessels operating outside of the Caspian Sea will reach 11.
Additional work is being performed to construct new passenger vessels to deliver oilmen to oil platforms. On April 22, President Ilham Aliyev attended the ceremony of commissioning the passenger vessels ‘Üfüq’, ‘Zəfər’ and ‘Turan’ constructed at the Baku Shipyard for ACSC.
Currently, the negotiations are underway to construct different special purpose vessels for ACSC. These include tankers, general cargo vessels, container ship, crane vessels, firefighting vessels, supply and tug vessels.
CE: How prioritized are transit operations via Azerbaijan?
Rauf Valiyev: President Ilham Aliyev gives special attention to the development of the sea transport, improvement of the shipping infrastructure and performs significant reforms. The Azerbaijan Caspian Shipping CJSC’s different special purpose vessels are holding important role in transit cargo transportation and strengthening Azerbaijan’s position as a transit country for cargo transportation between Asia and Europe.
Currently, transit cargo transportation segment is a strategically important area in the non-oil sector of the country’s economy. ACSC is contributing to the development of the Azerbaijan’s strategy to become a regional transportation logistics hub.
In February 2014, the Coordinating Committee of the Trans-Caspian International Transport Route (TITR) was created. The Azerbaijan Caspian Shipping CJSC is the important member of this committee. Currently, Trans-Caspian International Transport Route starts at the Kazakhstan-Chinese border and passes through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and then through Turkey and Ukraine reaches Europe. In May 2016 Ukraine and Romania also joined the Committee. At the moment, the process of joining Turkey to the Trans-Caspian route is being carried out. It has been introduced single tariff for cargo transportation through the whole route and implemented “single window” principle for cargo owners.
In August 2015 the first demonstration container train successfully completed its China-Europe journey to the final destination. TITR is the shortest route connecting Asia and Europe. On May 17, in Tbilisi in the scheduled meeting of the Coordinating Committee for TITR, committee members approved the new competitive discounted tariffs for transportation of universal containers and to attract additional container flows to the route.
It should be noted that cargo transportation between Asia and Europe via this route is performed 3 times faster compared to the traditional route via the ocean.
Once commissioned at the end of 2016 as scheduled, the Baku-Tbilisi-Kars railway is expected to increase the volume of traffic passing through TITR, particularly containers, railways wagons and other types of cargo from Asia to Europe.
CE: Which services does the ACSC offer today to the oil industry?
Rauf Valiyev: ACSC currently offers a wide range of offshore services to oil and gas industry on the Caspian shelf, including construction of offshore platforms and piers, performing geological and geographical researches, laying oil and gas pipelines, their repair during operation, fire protection of offshore oil facilities, delivery of oilmen to working sites, as well as transportation of different types of goods, including petroleum products and lubricants, drinking water, methanol, various goods and materials, equipment, steel structures, etc.
The specialized offshore fleet is involved in large-scale oil and gas projects in the Caspian Sea, such as Shah Deniz, Azeri-Chyrag-Gunashli and Bahar-Gum-Daniz.
ACSC’s vessels also carry out operations outside the Azerbaijan sector of the Caspian Sea. During the past period ACSC’s vessels towed off twice to Turkmenistan the semisubmersible drilling rig weighing 12,000 tonnes and 130 meters high belonging to the Singapore oil company.
CE: What kind of work is performed to boost a further development of the company, improve financial sustainability and quality of management?
Rauf Valiyev: In recent years, the government has been highly prioritizing the development of the shipping industry in Azerbaijan. The Decree of the Head of State dated March 9, 2016 envisages development of ACSC’s activities, adoption of additional measures to improve the financial and economic activity of the company, increase in the equity capital, preparation of the ‘State Program on Development of Shipping in the Republic of Azerbaijan for 2016-2020’, disposal of non-core assets and directing these funds to improvement of the maritime infrastructure.
The work on the State Program is currently underway. This program envisages renewal of the transport and specialized offshore fleet, modernization of ship repair yards, continuation of the reforms launched earlier, expansion of activities outside the Caspian Sea, improvement of the academic base of marine education and other important aspects.
Thank you for the interview
Interview made by Jeyhun Bayramov and Olga Nagiyeva