Speech of the Azerbaijan President Heydar Aliyev at the international conference on the theme "East-West Energy Corridor is a Reality" - Washington, February 25, 2003

Dear mister Scowcroft!

Dear mister Steve Mann!

Dear visitors, ladies and gentlemen!

I congratulate all of you on the occasion of the conference that we started its work now here, in the United States of America, in Washington, I welcome you quite sincerely and I wish successes in the work of the conference.

Holding of this conference now in Washington has very great value. The theme of the conference is "East-West Energy Corridor is a Reality" and it was organized jointly by the American-Azerbaijan Chamber of Commerce, the American-Georgian Business Council, American-Turkish Council and, naturally, the government of the United States of America. The State Department was also engaged in this work. The decision was made on necessity of carrying out of such a conference and this conference was realized.

The feature of it consists of that, representatives of the United States of America Turkey, Georgia and Azerbaijan are participating here. And it is natural, as the corridor the East-West covers huge space. But mainly, on the basis of programs and projects implemented by us in the Caspian Sea basin, it covers our region - the Caspian Sea, Azerbaijan, Georgia and Turkey.

The East - West corridor does not consist only this. It covers the biggest territory. But our projects are implemented now between these countries. However the United States of America and their large oil companies play special role in realization of these projects. Some large oil companies of the western countries, especially the company BP of the Great Britain plays a special role in these works from the very beginning.

I believe this issue is known to the public of the United States of America, in particular, to the people participating here, showing interest to this question. But I want to tell some words about history of this project that everything to become even clearer.

After disintegration of the Soviet Union, Azerbaijan has found the independence and started to work on construction of the new, democratic, secular state in the country. Implementation of principles of democracy, secularization, pre-eminence of law and market economy has been taken as basis by Azerbaijan in the state construction. And it goes on this way already more than ten years.

These years have been hard for Azerbaijan. We have passed through some tests, some times some forces had tried to overthrow legitimate authority in Azerbaijan and sometimes they had achieved it. But, beginning from 1993, in 1994 and 1995 we managed to prevent all attempts to coup d`etat in Azerbaijan, to establish stability in our country. Now Azerbaijan is the country which lives in conditions of full internal stability and develops on the basis of democratic principles. The market economy and carrying out of economic reforms are basic directions of Azerbaijan`s economy. We are developing in this direction, and I can tell that we have achieved considerable successes.

On this way first of all Azerbaijan has attached special significance to use of its natural resources. You know Azerbaijan is the ancient oil country. For the first time the oil recovery had been started by industrial way in Azerbaijan 150 years ago. In second half of XIX centuries many western companies came to Azerbaijan which started to be engaged here in the oil extraction. Nobel brothers have played special role in it. During the Soviet authority Azerbaijan probably, was the largest oil region of the USSR. And now many say that if there was no Azerbaijan oil the victory of the USSR together with English-American coalition over German fascism in the Second World War would have been impossible. It is true, at that time 70 percent of oil used in the USSR were taken out from Azerbaijan, extracted in Azerbaijan.

Thus, Azerbaijan was rich oil and gas country. Oilmen, scientists, geologists in Azerbaijan were engaged in prospecting works and oil extraction in the Caspian Sea and in 1949, a half centuries ago for the first time oil was extracted on distance of 100 kilometers from the coast. Therefore, Azerbaijan as the independent state, has declared that it possessed rich oil and gas stocks. Azerbaijan has addressed to the West, that is, to the United States of America, the European countries to use them, naturally, it had no such opportunities to use them itself. And the large oil companies which had arrived from these countries have started development of deposits together with the Azerbaijan state, the State Oil Company in the country. 21 contracts with 32 oil companies from 14 countries of the world have been signed. First of them is connected with oil deposits "Azeri", "Chirag" and "Guneshli". Contracts have been signed with 11 oil companies - both the American companies, the companies of the Great Britain and other countries on development of them. When this contract was signed in 1994 it has been named "the Contract of the century" in the West and in America.

We expected to extract 540 million tons of oil on these deposits. However, the subsequent works have shown that it was possible to extract 740 million tons of oil there. Thus, it was started exploitation of these deposits.

But the main task before us was to export the oil. In 1997 we extracted the first oil on deposit "Chirag". Only one pipeline - Baku-Novorossiysk at that time was functioning. We began to export oil on this route. Then together with the Azerbaijan International Operational Company which is ruled by BP we have laid a special oil pipeline to Georgia`s Supsa port in the Black Sea. Now oil is exported on this pipeline.

However, after the negotiations which have been conducted during signing of the contract and the next years, we came to such conclusion that the big oil pipeline was necessary for export of rich Caspian oil. And it is the Baku-Tbilisi-Ceyhan oil pipeline. The last years we worked over the project of this pipeline. In 1998 Turkey, Azerbaijan, Georgia signed the declaration in Ankara on construction of the Baku-Tbilisi-Ceyhan main export pipeline. The United States Secretary of Energy took part in this ceremony as well. Kazakhstan has also joined this declaration in order to export the Caspian oil on this route in the future.

Then, in November, 1999, in Istanbul, at summit of the OSCE, the agreement was signed between these countries on construction of the Baku-Tbilisi-Ceyhan main export oil pipeline. The agreement was signed by Presidents of Turkey, Azerbaijan and Georgia, and also the President of the United States of America, rendering patronage put his signature. Kazakhstan has again joined the agreement, the President of Kazakhstan signed it too. They will use this pipeline as well. After that project works have received wider scope. At last, in September of the last year presidents of Turkey, Georgia and Azerbaijan together with the oil companies, BP and others, have put in pawn the base of the Baku-Tbilisi-Ceyhan oil pipeline in Baku, constructing works have been started. So the Baku-Tbilisi-Ceyhan big export oil pipeline is a reality. Work was started. Now the pipes, which have been purchased from Japan and other countries for this oil pipeline, are delivered in Georgia and Azerbaijan. Thus, we have already started construction work.

Financing of the given project is also the important question. Because extent of the Baku-Tbilisi-Ceyhan oil pipeline will be 1760 kilometers. On this pipeline it will be annually transported 40 million tons of oil, further this parameter can be increased up to 60 million tons. The 445 kilometers of oil pipeline will pass through Azerbaijan, 245 kilometers through Georgia, 1070 kilometers through Turkey. 2 billion 900 million dollars will be invested in construction of the pipeline. A share of Azerbaijan is 600 million dollars, Georgia - 565 million dollars, Turkey - 1 billion 400 million dollars.

Now the oil companies are dealing with the financing issues. Azerbaijan has already made the decision on financing the first part of its share.

I want to note that in 1994 when we signed the oil contract, it seemed fancy to many people. They have put claims that it was impossible. And some people began to experience feeling of deep anxiety. Because for short time arrival of the largest companies of the world from the United States of America, other western countries for the Caspian Sea and their investing capitals, naturally, caused anxiety in some countries. Even, when our contract was signed, an opportunity of such work in the Caspian Sea, once again I repeat, was considered as fantasy. At the same time we have received such note that, while the littoral countries have not defined a legal status of the Caspian Sea, signing of such contracts was not valid. Despite these protests, we carried out our work and in this process we felt obstacles as well. In particular, various obstacles were put on a choice of the route of the Baku-Tbilisi-Ceyhan oil pipeline. We did not doubt that this pipeline should have passed via Georgia. We did not doubt that this large oil pipeline should have passed via Turkey. The Caspian oil should be delivered in the world market through Turkish port Ceyhan. Others considered that the pipeline might pass through other countries. That is, seeing a reality of an oil recovery in the Azerbaijan sector of the Caspian Sea, some people considered that this oil pipeline might be built to the South, the North or the East. There were various opinions and claims which were gradually intensified. We were flat in our decision. From the very beginning we have declared that the pipeline would pass only on this route. The final agreement on it has been achieved between Azerbaijan, Georgia and Turkey. I want to note that from the very beginning of this project and till now the United States of America showed huge attention, care for its realization, patronized to this issue. If the United States of America did not render such support to the project, we could not realize it.

However, when today everything is already ready, some people offer various routes. But in Azerbaijan they will not achieve it as we are resolute in our decision. It seems to me Turkey remains also resolute about its position. There is no doubt to it in Georgia. However, some organizations in Georgia put forward ecological questions and such judgments, like "why it does not pass through this and that part of Georgia, why does not pass from there". The ecology exists everywhere. Azerbaijan experiences environmental problems too. Turkey experiences ecological problems as well. Georgia also experiences environmental problems. Is there any special ecology in Georgia? No, simply separate forces put obstacles the Georgian state, its President mister Shevardnadze.

I want to tell that the government of Georgia, the Georgian state and the President mister Shevardnadze supported for this route of the pipeline from the very beginning. That is, our opinions coincided, and today we adhere to this opinion. However some forces put obstacles. Imagine, two months ago a group of the American congressmen has addressed about passing of the Baku-Tbilisi-Ceyhan oil pipeline not through the territory of Georgia, but through the territory of Armenia. We have been engaged in this business for 8 years, spent in it huge funds, done such work, and now, two months ago they have written the letter asking the pipeline to pass through Armenia. Unfortunately, we confront with such offers.

These forces did not manage to achieve their intentions, therefore now at the given stage of the project, at this time they try to impede. According to the data of some special services, in some countries even funds have been allocated for taking measures in order to impede the realization of the project. We have such information as well.

But I want to note that this is well thought-out project from the very beginning and up to the end. First, I want to emphasize the Caspian Sea is one of the seas of the world which is the richest with oil and gas deposits. We are proud of what Azerbaijan has opened these opportunities of the Caspian Sea for all world. If in 1994 we only concluded the contract on development of the Azerbaijan sector of the Caspian Sea, today Kazakhstan is also engaged seriously in this business in its sector, and has achieved good results. Second question is a division of the Caspian Sea into sectors. If 5-6 years ago some forces have just tried to put obstacles to us and declared impossibility of our offer, then we were speaking about necessity of division of the Caspian Sea into sectors between the littoral countries. That is, dividing is necessary for use of its bottom and energy resources. Such division in the Caspian Sea was carried out by the Soviet government in 1970. At that time the Caspian Sea belonged only to the Soviet government. Only small part in the south belonged to Iran.

But at that time they disagreed with us. Today as a result of the conducted negotiations Azerbaijan has signed agreements with Russia and Kazakhstan on division of the Caspian Sea into sectors. We have signed both the first documents, and the second agreements concerning definition of coordinates of the given sectors, that is, absolutely exact delimitation. I have personally signed them with the President of Russia mister Putin and with the President of Kazakhstan mister Nazarbayev. The same agreements have been signed between Russia and Kazakhstan. As to Turkmenistan and Iran, we still have not come to the agreement. One of these days experts of the littoral countries on the Caspian Sea will meet again in Baku. We try they to come to the agreement according to norms of International Law, International Law of the Sea on the basis of median line principle.

In this case each Caspian littoral country can carry out any work in its sector. But I want to declare that oil and gas stocks in the Caspian Sea are extremely huge. On tentative estimations only in the Azerbaijan sector it is expected 4 billion tons of oil and 5 billion cubic meter of gas. From the first contract we expect 740-750 thousand tons of oil which will be exported on the pipeline of Baku - Ceyhan. But there are many other deposits having prospects in the Azerbaijan sector. Therefore, you see, total amounts are great - 4 billion tons of oil and 5 billion cubic meter of gas. And it is only in the Azerbaijan sector. So, it is a field which can be used for 50-100 years. Therefore it will bring very big benefit and advantage for Azerbaijan, to develop its economy, improve well-being of our people and for the western countries cooperating with us and their companies.

Declaring these at the conference, we wanted to notify that the work carried out by us was no any more the project, but a reality. For this period the foreign companies have invested the capital for the sum of 7 billion dollars in oil sector of Azerbaijan. As a whole, the sum of the investments put in Azerbaijan since 1994 to this day, makes 9 billion dollars. In the near future the foreign companies will put investments for the sum approximately 10-12 billion dollars in Azerbaijan for implementation of these projects. All this, naturally, will yield its fruits.

The Baku-Tbilisi-Ceyhan main export oil pipeline has not only economic character. At the same time it is one of the basic means for security and stability in the Caucasus, in particular in the Southern Caucasus and in Turkey. Unfortunately, for the present moment it is impossible to speak about full stability in our region. As there are conflicts: the Armenian-Azerbaijan Mountainous Garabagh (Nagorno-Karabakh) conflict, or the Georgian-Abkhazian conflict, or on the north - events occurring in the Chechen Republic. All this has led to very complex political-economical situation in the Caucasus. Therefore we, putting into practice new oil strategy in Azerbaijan, reaching these successes, developing economy, try to strengthen stability in our country, and also to create the certain opportunities for regulation of the conflict.

Unfortunately, settlement of this conflict has become very difficult. It is known that this conflict has been started by Armenia 15 years ago with territorial claims to Azerbaijan in order to capture Mountainous Garabagh (Nagorno-Karabakh) region. It has developed into war and then, especially in 1991, 1992, 1993, there was a fierce war. As a result of war the Armenian armed forces have occupied 20 percent of territory of Azerbaijan for certain reasons. The Mountainous Garabagh (Nagorno-Karabakh) region and 7 administrative districts around it where lived only Azerbaijanis, have been occupied by the Armenian armed forces and are under occupation till now.

About 1 million Azerbaijanis have been expelled from the occupied grounds, ethnic cleaning has been carried out. Majority of them lives in tents till now. They have lost their native lands, homes and birthplaces. The United Nations Organization which has accepted resolutions has been engaging in settlement of the given conflict. It has suggested Armenia unconditionally to withdraw the armed forces from the occupied grounds. The government of Armenia has not executed it. Then OSCE has created the Minsk group. Co-chairmen of the Minsk group - the United States of America, Russia, France - try to solve the problem in the peace way for many years. But, unfortunately, they could achieve nothing. Because Armenia takes the extremely destructive position.

We can never agree with inclusion of any part of Azerbaijan in the structure of Armenia. We wish the resolution of the question on the basis of international law norms, on the basis of principles of the sovereignty protection, ensuring of territorial integrity, inviolability of each country`s borders. Armenia puts forward special principles for itself. We, naturally, cannot agree with it. I would not like to go into details of this question now, as our today`s basic theme concerns other issue. I have simply touched it you to know about a heavy situation in the Caucasus, in particular, in the Southern Caucasus. It is necessary for the United States of America to be closer to this region henceforth. We count that the United States of America, Russia, France as co-chairmen of the Minsk group, should undertake decisive steps for the peace settlement of the given conflict.

We do not want the renewal of war, despite the population in Azerbaijan already loses patience. People cannot bear that 20 percent of the grounds are under occupation for ten years. People cannot bear that the majority of one million Azerbaijan refugees and IDPs lives in tents. Therefore we receive many offers from people, people demand: "we want to wage war: either we will return our grounds, or we shall be killed!" We prevent these, we will prevent it henceforth as well. But such position can not proceed eternally. I suppose that implementation of these projects can help to settlement of conflicts. I wish it were so.

Thus, dear ladies and gentlemen, our main principles are the new oil strategy, the questions put forward by it, economy of Azerbaijan and its future, constant development of the country, as democratic, legal, secular state and its development on a way of market economy. Using the given principles, we develop our country. In these projects we cooperate closely both with the United States of America, and with many European countries and their oil companies. Such cooperation will proceed as well as in the future.

Thank you for attention!