The Caspian is an enclosed sea: the oil and gas under its bed do not reach the world market by themselves. The Contract of the Century of 1994 secured production (see «Building a law-based democratic state: the 1995 Constitution and reforms (1993–2003)»), but one question remained: by which route should the oil be exported? The answer was the pipelines laid in the 2000s, and they belong to the era of the new president, Ilham Aliyev. This lesson covers 2003–2020.
The new leader: the path before the presidency
Ilham Aliyev was born in Baku on 24 December 1961. He graduated from the Moscow State Institute of International Relations in 1982 and later became a candidate of historical sciences. His career before the presidency rested on three fields: oil diplomacy (SOCAR), parliament and international contacts (Milli Majlis, PACE) and sport (the National Olympic Committee). In 2003 Heydar Aliyev’s health failed; on 4 August Ilham Aliyev was appointed Prime Minister and in the election of 15 October he won roughly 77 per cent of the votes and became President. On 12 December 2003 Heydar Aliyev died. Textbooks call the new era “New millennium — New leader”; its main line was to continue the oil strategy and the course of state-building.
| Date | Activity |
|---|---|
| 1982 | graduates from the Moscow State Institute of International Relations |
| 1994 | vice-president of SOCAR |
| 1995 | member of the Milli Majlis |
| 1997 | president of the National Olympic Committee (after his father Heydar Aliyev) |
| 2001 | head of the Azerbaijani delegation to PACE (Azerbaijan joined the Council of Europe that year) |
| 4 August 2003 | Prime Minister of Azerbaijan |
| 15 October 2003 | elected President of the Republic of Azerbaijan |
A new stage of the oil and gas strategy
The first step was to bring oil to the world market by a reliable route. In the 1990s the early oil was carried by the Baku–Novorossiysk and Baku–Supsa pipelines. The foundation of the Baku–Tbilisi–Ceyhan (BTC) pipeline was laid on 18 September 2002; on 25 May 2005 oil began to be pumped into it at the Sangachal terminal, and the official opening took place in Ceyhan on 13 July 2006. The 1,768-kilometre line crosses Azerbaijan, Georgia and Turkey, bypasses Russian territory and can carry about 50 million tonnes of oil a year.
The main gas field was Shah Deniz (discovered in 1999). Its gas began to reach Georgia and Turkey through the Baku–Tbilisi–Erzurum pipeline in 2006–2007; Azerbaijan turned from a gas importer into a gas exporter. The next stage is the Southern Gas Corridor: the Shah Deniz-2 field, the expanded South Caucasus pipeline, TANAP across Turkey and TAP through Greece, Albania and Italy. The Corridor’s opening ceremony was held in Baku on 29 May 2018 and TANAP was inaugurated in Eskişehir on 12 June; at the end of 2020 gas reached Europe through TAP.
The revenue is collected in the State Oil Fund (SOFAZ), set up in 1999, and part of it goes to infrastructure and social projects. Oil output reached its record level in 2010 — more than 50 million tonnes a year.
| Pipeline | Carries | Route | Opened |
|---|---|---|---|
| Baku–Tbilisi–Ceyhan (BTC) | oil | Sangachal – Tbilisi – Ceyhan (1,768 km) | 13 July 2006 |
| Baku–Tbilisi–Erzurum | gas (Shah Deniz) | Sangachal – Tbilisi – Erzurum | 2006–2007 |
| TANAP | gas | from the Georgian–Turkish border to the Turkish–Greek border | 12 June 2018 |
| TAP | gas | Greece – Albania – the Adriatic – Italy | 2020 |
Interactive
- 1994
Ilham Aliyev becomes vice-president of SOCAR
- 1997
Ilham Aliyev is elected president of the National Olympic Committee
- 2001
Ilham Aliyev heads the Azerbaijani delegation to PACE
- 4 August 2003
Ilham Aliyev is appointed Prime Minister
- 15 October 2003
Ilham Aliyev is elected President
- 2004
The first State Programme for the regions
- 1 January 2006
Redenomination of the manat
- 13 July 2006
Opening of the Baku–Tbilisi–Ceyhan pipeline at Ceyhan
- 18 March 2009
Referendum on amendments to the Constitution
- 2013
The Azerspace-1 satellite is put into orbit
- 26 September 2016
Referendum extending the term to seven years and creating the vice-presidency
- 21 February 2017
Mehriban Aliyeva is appointed first vice-president
- 30 October 2017
Opening of the Baku–Tbilisi–Kars railway
- 2018
Opening of the Southern Gas Corridor (29 May, Baku) and TANAP (12 June)
- 2020
Gas reaches Europe through TAP
The non-oil sector and social policy
Oil and gas revenue creates a risk of dependence: if prices fall, the budget and the manat are hit. So developing the non-oil sector became a goal of state policy. In 2004 the first State Programme for the socio-economic development of the regions (2004–2008) was adopted, followed by three more: 2009–2013, 2014–2018 and 2019–2023. Roads, gas, electricity and water supply improved and new jobs appeared in the provinces.
Agriculture received state support; tourism and information and communication technology (ICT) grew. In 2013 the first telecommunications satellite, Azerspace-1, was put into orbit, in 2014 the Earth-observation satellite Azersky, and in 2018 Azerspace-2. In transport, the Baku–Tbilisi–Kars railway (30 October 2017) and the port of Alat (2018) strengthened the country’s transit role. The first European Games, held in Baku in 2015, boosted tourism (see «Culture, science and sport in independent Azerbaijan»).
In the social field the main directions were poverty-reduction programmes (the first in 2003–2005), higher pensions and wages and new settlements for internally displaced people. On 1 January 2006 a redenomination was carried out: 5,000 old manats became 1 new manat. In 2014–2015 oil prices fell sharply and in 2015 the manat was devalued twice; this showed once more the need to reduce dependence on oil.
| Cause | Result |
|---|---|
| the Caspian is enclosed; exports depended on the Russian route | BTC (2006) and the Baku–Tbilisi–Erzurum pipeline |
| Europe’s interest in an alternative source of gas | the Southern Gas Corridor (2018–2020) |
| growing oil revenue | a stronger SOFAZ, infrastructure and social projects |
| differences in development between regions | State Programmes for the regions (from 2004) |
| the fall in oil prices (2014–2015) | two devaluations of the manat in 2015; more attention to the non-oil sector |
Political reforms: elections and referendums
Ilham Aliyev was re-elected President in 2008, 2013 and 2018 (the 2018 election was held early, on 11 April). The referendum of 18 March 2009 abolished the Constitution’s limit on being elected President more than twice in a row. The referendum of 26 September 2016 extended the President’s term from five to seven years, created the posts of vice-president and made it possible to hold an early presidential election. On 21 February 2017 Mehriban Aliyeva was appointed first vice-president. Opinions on these changes differ: the official position sees them as strengthening the state’s stability, while the opposition and some international bodies criticise them.
| Date | Referendum | Main content |
|---|---|---|
| 12 November 1995 | adoption of a new Constitution | the present Constitution of Azerbaijan |
| 18 March 2009 | amendments to the Constitution | the limit on consecutive presidential terms was abolished |
| 26 September 2016 | amendments to the Constitution | term from 5 to 7 years; vice-presidents; early presidential election |
During these years tension on the Karabakh front grew: see «The ceasefire period and the April battles (2016)». The successes of foreign policy are in «The foreign policy of the Republic of Azerbaijan».
Working with a source
More than a year earlier, oil had begun to be pumped into the pipe from a terminal on the Caspian shore. Now the oil has reached a port on the Mediterranean and a ceremony is under way. The line, which crosses three countries, is more than seventeen hundred kilometres long. The idea of the project was simple: to bring Caspian oil to the world market without depending on the territory of another country. The speeches stressed that this route mattered politically as well as economically: countries were drawing closer around a joint project. Tankers were already lining up in the port.
Source tasks
Problem
1) Name the project (not named in the text), the port where it ends and the year of its opening.
2) Explain one political and one economic reason for carrying out the project.
3) Give two consequences that are NOT stated in the text.
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Solution
2) Political: to reduce dependence of exports on the Russian route and strengthen co-operation with the West. Economic: to bring oil from the enclosed Caspian to the world market in large volumes and earn revenue. Marks: both — 1; one — ½.
3) For example: the revenue of the State Oil Fund and economic growth rose; Georgia and Turkey received transit income; the line later served as experience for projects such as the Southern Gas Corridor. Marks: two consequences — 1; one — ½; «countries drew closer» is in the text and earns nothing.
Exam task: chronology
Problem
Put the events in chronological order:
1. Azerspace-1 is put into orbit
2. The opening of TANAP
3. Ilham Aliyev is elected President
4. The referendum creating the vice-presidency
5. The opening of the BTC pipeline at Ceyhan
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Solution
Step 2: The satellite — 2013 (1), the referendum — 2016 (4).
Step 3: TANAP comes last — 2018 (2).
Answer: 3, 5, 1, 4, 2.
Exam task: «similar, different»
Problem
The referendum of 2016 was similar to that of 2009 and different from that of 1995. What is this feature?
1. Amending the existing Constitution
2. Extending the President’s term to 7 years
3. Adopting a new Constitution
4. Creating the post of vice-president
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Solution
Step 2: Feature 3 belongs to 1995 only: that referendum adopted a new Constitution.
Step 3: In 2009 and 2016 the Constitution was amended, but not in 1995.
Answer: only 1.
Remember
- Ilham Aliyev worked at SOCAR from 1994, in the Milli Majlis from 1995 and at the National Olympic Committee from 1997; he became Prime Minister on 4 August 2003 and President on 15 October 2003.
- The BTC oil pipeline (Sangachal–Tbilisi–Ceyhan, 1,768 km) was opened on 13 July 2006.
- The gas line: Shah Deniz → Baku–Tbilisi–Erzurum (2006–2007) → the Southern Gas Corridor (Shah Deniz-2, TANAP 2018, TAP 2020).
- The non-oil sector: State Programmes for the regions (2004–2008, 2009–2013, 2014–2018, 2019–2023), satellites (2013, 2014, 2018), the Baku–Tbilisi–Kars railway (2017).
- The 2009 referendum abolished the limit on consecutive presidential terms; the 2016 referendum extended the term to seven years and created the vice-presidency (Mehriban Aliyeva — 2017).