INTERVIEW – Iulian Iancu: Azerbaijan is a chance for Romania to diversify gas supply


Azerbaijan is a chance for Romania to increase the security of energy supply and diversify the gas supply, but also an alternative to expensive Russian gas, Iulian Iancu, Chairman of the Committee for Services and Industries of the Chamber of Deputies, stated in an interview granted to Agerpres. He spoke about the conclusions of the visit made in Azerbaijan, during March 13th – 16th, by a delegation consisting of representatives of the Parliament, Government and the business environment, but also about the Romanian authorities’ intention to establish similar contacts with Kazakhstan and Turkmenistan.

[cleeng_content id=”310667444″ description=”Buy this translation today. This article has 8558 characters with spaces. ” price=”12.99″ t=”article”]Agerpres: During the meeting with the Azerbaijani authorities were there decisions made regarding the two energy projects, Nabucco and AGRI?

Iulian Iancu: Steps were defined, with PM Artur Rasizade and the Economy Minister, respectively the Industry and Energy Minister, to make up an action plan, respectively the two key projects of major interest, which so far have been either postponed or frozen. Now the president announced the participation with 80% of Azerbaijan in the natural gas pipeline from Azerbaijan to Romania, respectively on Turkey’s territory it undertakes 80% of the costs for Nabucco West.

Agerpres: How about AGRI?

Iulian Iancu: For AGRI they stated throughout this visit that they guarantee the amounts of gas, meaning that they make available eight billions of cubic meters of gas per year and that they also undertake the majority stake in terms of funding the project. They are expecting and asked the Romanian side to speed up the completion of the feasibility study, postponed several times by the company hired to execute it. In other words, we can currently say that Azerbaijan is the chance for Romania, one of the few chances for increasing the security of energy supply and diversifying the gas supply. Secondly, Azerbaijan is forced, due to circumstances and its geographical location, to look for a partner able to consumer in a large market the amounts they wish to sell. They are surrounded by Iran and Russia, which together make 60% of the world’s gas production. They cannot sell gas to them. Going under the Caspian Sea is much too costly and uninteresting, so the safest way for them is left and suddenly the version left was to sell gas to Turkey, Greece, Bulgaria, Romania, Hungary, Western Europe.

Agerpres: So Romania is not the only one interested to complete these two projects?

Iulian Iancu: European Commission President Jose Manuel Barosso visited Azerbaijan offering a complex project called the Southern Corridor. This project could include, besides Azerbaijan, Kazakhstan and Turkmenistan for the completion of new hydrocarbon transmission routes, to Western Europe. TAP – Trans Adriatic Pipeline – has been recently signed – so Greece, Albania, Italy have already signed an agreement. They are far behind Nabucco in terms of procedures, but they have become a competitor. Russia, with South Stream, is, if you will, a new gas transmission motorway, but not additional volumes, because Russia has the same amounts and currently is building different ways to transport them. Additional amounts can only come from this part of the world, from Azerbaijan, which has tripled its GDP in recent years and is in a development program, especially of the industrial activity, which does not necessarily have as target the development of hydrocarbon production. Their industrial development pace related to the oil and gas industry has recently been between 9% and 9.2%. They wish a development in a package that is part of a master plan to develop the country and which targets the industry, agriculture, tourism, the financial and banking area, IT. As proof, just before our visit they launched a telecommunication satellite and are preparing to launch the second. In other words, it’s about the need to ensure a development pace that is based on selling natural gas in particular, and oil. They already have in their country the largest companies in the world, starting with BP to a Japanese company. The advantage is that the exploitation is made with the latest technology, at the highest efficiency in reserves recovery. Azerbaijan is currently in a development program based on this efficient exploitation of own resources. The financial resources rely heavily on the consumer market. In the producer – consumer equation, for them it’s very important under these conditions a predictable consumer, which for decades will be able to consume large amounts and pay on time.  For us, for Romania, this is a cheap alternative. Gas from Azerbaijan is cheaper than from Russia and, under these circumstances, we will make a pressure on the Russian natural gas prices. For Romania it’s crucial to complete the two projects, absolutely crucial. Why is it crucial? On the one hand, because our production fell this year again by 1.6%. Every year we have a decline, unfortunately an accelerated decline of the domestic natural gas and crude oil production and we need to replace these amounts. On the other hand, although I have fought as much as I could not to export natural gas, conditions imposed by the treaty with the European Union force Romania to export gas.

Agerpres: What is the stage of our preparations for gas export?

Iulian Iancu: Currently the commercial operator and the National Energy Regulatory Authority are preparing a gas trading mechanism from Romania, not necessarily physically, but 80% of the capacity of Arad-Szeged interconnection pipeline is already booked by large operators to make transactions in both ways with the gas amounts. It means that export is unavoidable. This export removes a part of the country’s gas basket and this amount for the industry and the Romanian consumer must be brought from imports. But today import, the version offered, is three times more expensive than the domestic production and then the competitiveness of the Romanian industry is hit directly. We are in a continuous loss of competitiveness because we record a continuous increase of the most important cost, the energy cost. Then, in Romania the main measure must be effective, because we lose 30% on the entire chain of the energy system; the main measure is to find an alternative to this cost, to reduce this cost. This perfect balance has been created between Azerbaijan’s desire to find a consumer market and our desire, as consumer, to find an alternative to expensive Russian gas. From now on it’s only a matter of ability of the foreign diplomacy, of the Government, Parliament, because through this visit we gave another signal. It’s for the first time when the Parliament of Romania, through the parliamentary groups, did not come in a friendly visit, for establishing contacts. It’s a direct involvement of the Parliament and of the parliamentarians in what is defined as a strategic line of the country, respectively as strategic projects of Romania. It means: is for Romania the energy industry a priority strategic area? Well, then we should look for the countries that can help us reach this objective, and Azerbaijan is a key country for this strategic objective.

Agerpres: I understood that such an action will follow in Kazakhstan. Do you consider other countries in the region?

Iulian Iancu: We will make a visit to Kazakhstan and Turkmenistan, because both countries are currently in contracts and commitments to complete joint pipelines for both gas and oil transmission. In other words, improving our relations with these states increases our chance to offer, on the one hand, an additional support in attracting the gas and oil amounts to our country and, on the other hand, to offer a possibility for the Romanian industry to create partnerships in these countries where investments of billions of dollars are being made which are not supported directly from the state budget, which in Romania is no longer possible. The state cannot involve to support investment projects. We will have to make them by attracting investors and for that we will have to be extremely predictable in the manner in which we are building laws and are able to determine the investors to come to our country.

Agerpres: What other economic results have you obtained from this visit?

Iulian Iancu: The most important achievement is the institutionalization through a Chamber of Commerce Azerbaijan – Romania, through a dedicated space, in which we already have about 40 founding members, Romanian companies which after this visit have a direct access on the Azerbaijani market, within the strategic partnership. The support of this Chamber of Commerce is made directly from the level of President Ilham Alyev, who during this visit made two essential statements. One that Romania is the best friend of Azerbaijan and the second that the strategic partnership will have a direct support in actions of this type for the business community in Romania, which is why these offices are made available by them through the Ministry of Economy and offered for six months without costs to the Romanian businessmen. So we have the institutional platform and a direct support at the highest level, of the president. [/cleeng_content]

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