Azerbaijan has a tremendous lack of the blue fuel, “Zerkalo” newspaper being issued in Baku reads. It is well known that Azerbaijan purchases from Russia about 4 billion cubic meters of gas each year. At present the sides are negotiating to increase the purchase volumes up to 5,5 billion. The “Itera” company demands 5,2 cents for one cubic meter of gas. It means that for the needed volume of purchases the government has to pay around 3 million dollars, a sum twice exceeding the expenses supposed for military sphere.
At the same time during the passed year the State oil company of Azerbaijan managed to produce about 4 billion cubic meters of gas, which is less than the previous year. At the same time the Azerbaijani authorities continue to develop the legend about the enormous resources of fuel existing in their country.
According to official data, gas resources of Azerbaijan total about 3 million cubic meters. At first it was being said that the fuel produced from the “Shahdeniz” mine would be cheaper not only from the Russian but also from the Turkmen gas. Then it appeared that the forecasts were too optimistic. Today the majority of potential investors have started to doubt about the commercial perspective of transportation of the Azerbaijani gas to Erzrum. The price of the project has increased up to 3,5 billion USD which is almost twice more than expected. In Baku they are now trying to forget that the project was supposed to be finished by the end of autumn 2002. In reality only the tenth part of it has been done. Today, while speaking about the terms of the implementation of the project, the deadline is fixed for autumn 2006. At the same time, it is not clear, from where is Azerbaijan going to find the money for financing its 10% share of the foreseen expenses.
Azerbaijan’s contribution is estimated at 320 million USD, which is equal to one third of the state budget. Up to now the government connected all its hopes with the European Bank of Reconstruction and Development, with which negotiations about a credit have started. But the disagreements between the Azerbaijani authorities and the International Monetary Fund have made this perspective less and less realistic. The IMF authorities, angry because of the unwillingness of the country to adopt anti-corruption laws, have started a serious confrontation with the official Baku. The fund has not only refused to provide the approved credits to Azerbaijan, but also threatened to use the available mechanisms not allowing other financial institutions to finance projects in Azerbaijan.
The IMF representative in Baku Michael Mered said recently to journalists that the above mentioned conflict “would affect the relations of Azerbaijan with other institutions and investors, including the World Bank”. So, it can be assumed that the negotiations with the EBRD will not be easy.
Judging from this, it can be assumed that the project of gas transfer from Azerbaijan to Turkey will hardly be implemented. It’s impossible to export something which does not exist…
