Caspian Energy (CE): Azerbaijan has favorable natural conditions and geographical position for developing the utilization of its various energy sources. Currently, when the world is taking serious steps towards moving to a low-carbon energy system, what are plans in Azerbaijan regarding this area?
Parviz Shahbazov, Minister of Energy of the Republic of Azerbaijan: Endowed with rich oil and gas reserves both onshore and offshore, as well as with a high potential for renewable energy, Azerbaijan is one of the few countries in the world which has ensured its energy security in a fully sustainable manner. The implementation of the energy security strategy set by the National Leader Heydar Aliyev and which is still ongoing successfully under the leadership of President Ilham Aliyev, has resulted in significant achievements regarding the reliable supply of the country’s economy and population with energy resources. In the meantime, the role and importance of Azerbaijan in contributing to the regional and European energy security is growing day by day.
Energy diversification and environmental requirements in energy supply are considered as the major principles of energy security. Expanded use of renewable energy sources in our country has been set as a priority by the President of the Republic of Azerbaijan Mr. Ilham Aliyev, and the target is to increase the share of renewable energy in the installed power generation capacity to 30% by 2030. At the same time, the Order of the President of the Republic of Azerbaijan “Azerbaijan 2030: National Priorities for Socio-Economic Development”, has set clean environment and green growth as one of the five national priorities in the socio-economic development of Azerbaijan. This proves that one of the main goals of the energy security policy implemented in our country is the enhanced use of renewables.
The potential of renewable energy sources of Azerbaijan is high enough to reach the established target. The potential of economically viable and technically feasible renewable energy sources in the country is estimated at 27,000 MW, including 3,000 MW for wind energy and 23,000 MW for solar. Because of this, despite the fact that Azerbaijan is rich in traditional energy resources and is a net exporter of such resources, the use of renewables in Azerbaijan is under the constant spotlight.
One of the key points for the development of renewable energy is the adoption of a relevant law. Currently, the draft law “On the use of renewable energy sources in electricity production” is under consideration as the first full-fledged legal document on the regulation of the renewables in our country.
Another important factor is the attraction of private investment into this sector. Currently, relevant agreements have been signed with ACWA Power (the Kingdom of Saudi Arabia) for the construction of a 240 MW wind power plant and negotiations are underway on the construction of a 230 MW solar power plant with Masdar (the United Arab Emirates). The implementation of these pilot projects is an important step towards attracting private investment, which serves to diversify our country’s energy sources and improve the efficiency of the power system.
CE: What will be other benefits of these private investment projects for Azerbaijan?
Parviz Shahbazov: The signing of these agreements and the attraction of foreign direct investment-based-projects is a manifestation of the confidence of foreign investors in our business environment and marks the beginning of a new stage in the development of “green energy” in our country.
The relevant agreements on the construction of a 240 MW wind power plant were signed with ACWA Power at the end of the last year. The implementation of this project, which involves $300 million worth of private investments, will make it possible to generate about 1 billion kWh of electricity, save 220 million cubic meters of natural gas annually and prevent more than 400,000 tons of CO2 emissions into the atmosphere.
The negotiation process over the relevant contracts on the construction of a 230 MW solar power plant is ongoing with Masdar, and agreements are expected to be signed in the near future.
In addition to meeting our electricity needs, these projects will contribute to the diversification of Azerbaijan’s energy sector, as well as promote the creation of new production and service sectors, new jobs and the attraction of additional local and foreign private investors into this area.
СЕ: What types of energy are expected to be used to meet the energy needs of the liberated territories of Azerbaijan?
Parviz Shahbazov: According to preliminary estimates, the potential of renewable energy sources in the liberated Karabakh is quite high. Operations are underway to calculate the exact potential, install measurement and observation stations for this purpose, and evaluate the technical feasibility and economic efficiency. First of all, areas possessing high solar energy potential were identitfied in Gubadly, Zengilan, Jabrayil and Fizuli districts.
The total solar energy potential in these areas is estimated at more than 4,000 megawatts. Wind energy resources of Kelbajar and Lachin districts have been assessed. In general, the potential of wind energy in the mountainous regions of Karabakh is estimated at more than 500 megawatts. Given that about 25% of Azerbaijan’s local water resources are formed in Karabakh, the prospects of using large rivers such as the Terter, Bazarchay, Khekeri and their tributaries for electricity generation are being considered.
There used to be small hydroelectric power stations in these places, but most of them were destroyed and looted by the enemy. 8-megawatt Gulabird hydroelectric power station located on the Khekeri River has been recently commissioned in Lachin district with the participation of President Ilham Aliyev. The total installed capacity of the stations to be restored in Kelbajar and Lachin districts will be at 120 megawatts.
Apart from this, hydropower plants are planned to be built at Khudaferin and Giz Galasi hydrojunctions of Jabrayil district, which will contribute to the reliance on green energy in the energy supply to this area.
The work on establishment of a green energy zone in our liberated territories is underway by the order of President of the Republic of Azerbaijan Mr.Ilham Aliyev.
СЕ: The 7th ministerial meeting of the Southern Gas Corridor Advisory Council has been held. Special emphasis has been placed on the commissioning of the Southern Gas Corridor. What are the advantages of this project for Azerbaijan?
Parviz Shahbazov: The Southern Gas Corridor project became a reality as the result of the wise and far-sighted policy of the President of the Republic of Azerbaijan, Mr. Ilham Aliyev. By implementing one of the largest infrastructure projects in the world, Azerbaijan has gained access to the European market, which is a very important historical achievement.
It is noteworthy that the diversification of the export portfolio strengthens the energy security of Azerbaijan. Because the diversification of export routes and target markets is one of the most important elements of the energy security of exporting countries. This year, Azerbaijan plans to export about 1 bcm (billion cubic meters) of natural gas to Georgia, at least 8 bcm to Turkey and more than 5 bcm to Europe. Meanwhile, in the future, Azerbaijan could earn profit from gas transportation through the Southern Gas Corridor by third parties.
It is worth noting that despite the fact that the project cost was initially estimated at $44.6 billion, this figure fell to $33 billion as a result of effective management and proper planning. Azerbaijan has made significant financial contribution to the project in the amount of $10 billion. The project also attracted a large amount of foreign direct investment to our country, which, in turn, is important for the country’s sustainable economic development and ensuring hard currency inflow.
The Southern Gas Corridor is also a great example of an international cooperation. This project is a result of a successful cooperation between producer, transit and consumer countries, as well as international financial institutions and other organizations. And this opens up broad prospects for further deepening of our country’s cooperation with all participants.
СЕ: Azerbaijan is also called the cradle of the oil industry. In this regard, we would like to ask how you assess our country’s cooperation within the framework of OPEC+?
Parviz Shahbazov: As is well known, the initiative to establish the OPEC+ format was first put forward by the President of the Republic of Azerbaijan Mr. Ilham Aliyev at the Davos Forum in January 2016. A new stage in OPEC’s history began with the signing of the “Declaration of Cooperation” by OPEC and non-OPEC countries in December of the same year.
The main goal of OPEC+ cooperation is to set a balance between supply and demand in the global oil market. In March and April last year, oil prices plummeted as a result of the economic downturn caused by the COVID-19 pandemic and the direct impact of strict quarantine measures on the global economy. At the 10th meeting of OPEC+ Ministers held in April 12, 2020, it was decided to reduce oil production to stop these negative processes and balance the oil supply and demand.
It should be recalled that the consequences of the current pandemic caused the oil prices fall below $20 in April last year. As a result of the easing of pandemic related lockdowns and relevant efforts by OPEC+ countries to regulate crude production, the price reaches $70. This shows that OPEC+ remains to be the most effective factor in regulating the sharp fluctuations in the global oil markets.
Thank you for the interview
