Industry and Energy

Baku. Habil Suleymanov – APA-Economics. UK minister of state for the department of energy and climate changes Charles Hendry’s interview to PA-Economics on the eve of his visit to Baku

- British companies are lead investors in Azerbaijan and play a vital role as partners in the development of Azerbaijan’s natural resources. How do you find currently this cooperation and perspectives?

- The UK is the largest foreign investor in Azerbaijan accounting for more than half of all Foreign Direct Investment, and has consistently been in the top five countries exporting goods to Azerbaijan. This is a relationship we hope to continue in the future. With new gas fields being discovered in Azerbaijan there are opportunities not just in the exploitation of hydrocarbon resources, but also in supply chain, supportive industries, and the development of low carbon industries where the UK has considerable experience and technology know-how. Supporting UK business opportunities in traditional and low carbon industries, and drawing on the synergies between global energy security and our low carbon goals, also brings wider development opportunities for Azerbaijan as it provides a means to advance wider Government policies such as development. BP has recognised the opportunities that are available in Azerbaijan and has already invested in excess of $20 billion in the Shah Deniz development alone, with a further $20 billion of investment to come, a project that has been a real driver of the Azeri economy. BP are also the operator and a major shareholder in the BTC oil pipeline. BP is not the only one however, 150 British businesses operate in Azerbaijan and I have been accompanied by a small business delegation including the Shaw Group, Evans Randall and Invesco, reflecting industries from energy to financial services, all interested in the tremendous opportunities Azerbaijan has to offer.

- The Southern Corridor is a key plank in the diversification of European Energy supplies. Why it matters for the UK? What should be done to make the Southern Corridor a reality?

- The proposed southern gas corridor is a key pillar of our energy security strategy and would bring gas from the Caspian region directly to Europe. Despite the rise of unconventional sources and the gradual move towards decarbonisation, the Southern Corridor remains important in enhancing European energy security through the diversification of gas sources and transit routes. It is also important in enabling exploitation of the region’s hydrocarbon reserves. While oil also forms an important part of the southern corridor, our focus is primarily on gas as this requires the construction of fixed pipelines. Initially the Southern Corridor will bring gas from the Shah Deniz II field offshore in Azerbaijan to the EU. There are a number of potential pipeline projects under consideration by the companies who own the gas reserves to bring the gas to the heart of Europe, including Nabucco, ITGI and TAP. However, it is not for the UK government to choose one potential project over another. There is the urgent need for Azerbaijan and Turkey to agree a key gas transit agreement which will enable the Shah Deniz Consortium to make their next significant tranche of investment and enable to delivery of the first gas in 2017.


- UK and Azerbaijan have been strong partners in oil sector for many decades. But what’s about possible cooperation in the field of alternative and renewable energy sources?

- Azerbaijan has a large potential for renewable energy power generation in the areas of wind, hydro and biomass. Some analysts have estimated total wind power potential is estimated to be 1,500 MW. Biomass and hydro also have substantial potential for power production. As an island nation we have outstanding wind resources, the best in Europe, and wind energy is an indigenous source of energy which is needed to meet our renewable energy and climate change goals. The wind industry can be a key player in creating the investment, exports and jobs we need to bring back economic prosperity. The Government is committed to the development of wind energy in the UK. The UK leads the world in terms of installed offshore wind, with over 1.5GW of installed capacity. The UK renewables market is the most attractive in the world for offshore wind investment, out of 30 countries considered in Ernst & Young’s Renewables Attractiveness Index 2011. The UK has a binding target for 15% of its energy, across the electricity, heat and transport sectors, to come from renewable sources by 2020. There are no targets for individual renewables technologies as we take a market-based approach to energy generation. The actual amount of generation from any technology will depend on a range of factors including market uptake, the relative cost compared to other options and the availability of other technologies to deliver. Our commitment to renewables means we have much to share about our experience with partners in addition to what we can learn from others.

- The tragic Gulf of Mexico incident last year was a shock to us all – a tragic human and environmental disaster. How do you think, what lessons we can draw in terms of Caspian operations in order to avoid here a next environmental disaster?

- The Macondo tragedy in the Gulf of Mexico presented a challenge to the entire industry across the world. We are confident that we have world-leading environmental and safety regimes. Since 1974, industry has drilled some 315 deepwater wells in UK waters with no case of a blow-out or drilling-related oil spill. However, we are committed to learning what we can from last year’s tragic accident and, where appropriate, applying that learning to what we do. We are already increasing offshore environmental inspections from 60 to 150 annually and have strengthened our Oil Pollution Emergency Plans. We are also undertaking a comprehensive review into the UK’s oil & gas offshore regime in the light of the US investigations. This is being independently chaired, and will report later this year. We are also fully supporting the industry’s initiative – through the Oil Spill Prevention and Response Advisory Group (OSPRAG) – to identify and address cross industry issues related to well control and oil spill response. A capping device is being developed under OSPRAG auspices, to provide a new level of assurance of prompt intervention in the event of any blow-out, and hence to minimize the risks of oil pollution.

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