Azerbaijan expects economy to grow 14 % in 2005 on oil and gas

Dec 20, 2004 01:00 AM

Azerbaijan's economy will expand 14 % in 2005 and at a faster pace in the following two years as the former Soviet republic triples oil and natural-gas production, President Ilham Aliyev said. The nation of 8.1 mm people expects to attract $ 4 bn in direct foreign investment next year, accelerating this year's growth of 10 %, Aliyev said. Azerbaijan's gross domestic product last year was $ 7.1 bn, 102nd in the world, above Honduras and below Botswana, according to the World Bank.
"This mainly reflects the future oil and gas development," Aliyev. "We need to use this opportunity of having vast oil and gas resources to bring investment into other sectors."

Azerbaijan, bordered by Russia and Iran, will benefit from next year's scheduled opening of a $ 3.6 bn pipeline that will carry Caspian Sea oil from the capital, Baku, to Turkey's Ceyhan port. A venture led by London-based BP that includes Irving, Texas-based ExxonMobil and Norway's Statoil is developing fields in the region, home to as muchas 4 % of the world's proven oil and gas reserves.
Azerbaijan, with reserves of at least 7 bn barrels, has stopped auctioning offshore fields and is trying to attract companies to older sites onshore, Aliyev said. Oil production, now at more than 100 mm barrels a year, will at least triple in three years, he said. The country may sell $ 100 mm in bonds in 2005, its first such sale, Aliyev said.
"We may start next year with some small amount to see what benefit it brings to the economy," the president said. "If it's successful, we can continue on a larger scale."

Kazakhstan officials are talks with Azerbaijan to send crude oil through the pipeline from Baku, Aliyev said, without being more specific. The pipeline will ship 1 mm bpd through Georgia, where President Mikhail Saakashvili is trying to assert control over secessionists in South Ossetia and Abkhazia provinces.
"We are sure that the Georgian government will fulfil all its commitments to security over their portion of the pipeline," Aliyev said. A separate pipeline from Baku to Georgia's Supsa port on the Black Sea "has been working for years without any problems," he said.

South Ossetia and Abkhazia, each with a population of about 100,000 people, declared independence in 1992 after the Soviet Union collapsed. Both maintain ties to Russia. Georgian forces clashed with South Ossetian separatists in August.
"Georgia and Azerbaijan have similar problems, which are aggressive separatism," Aliyev said. Azerbaijan since 1993 has had a dispute with neighbouring Armenia over control of the Nagorno-Karabakh region. Georgia in February plans to sign a military and economic treaty with Russia to ease tensions that brought them to the brink of war this year, Saakashvili said on Nov. 22.

Source: Bloomberg
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