Speech of the Azerbaijan President Heydar Aliyev at the meeting with the representatives of business circles of Kazakhstan - June 11, 1997

Dear ladies and gentlemen, dear friends!

My official visit to Kazakhstan comes to an end and it is my final meeting.

Yesterday and today we conducted the fruitful work connected with development of cooperation between Kazakhstan and Azerbaijan, strengthening of friendship between our peoples and countries.

Soon I will leave Kazakhstan and taking this opportunity, I want to say again that I am extremely satisfied with the visit, its maintenance, results and the documents signed. I consider that this visit, as the first official state visit of the President of the Republic of Kazakhstan Noursultan Nazarbayev to Azerbaijan on September 16-17 last year, turns a new page, a new stage in the relations between Kazakhstan and Azerbaijan.

Put all together 30 intergovernmental, interstate documents have been signed in September last year in Baku and yesterday here, in Almaty. These documents have exclusively great value. They have put in pawn a basis for intensive cooperation of two independent states - Kazakhstan and Azerbaijan, they are good normative-legal basis and developed program of our cooperation. I think that on the basis of these documents, there will be taken corresponding practical measures for realization of all, which have been fixed in agreements, documents, memorandums, both in Kazakhstan and Azerbaijan.

Yesterday we signed very important document on the further deepening and development of cooperation between Kazakhstan and Azerbaijan. This document has deep sense, maintenance and determines partnership character of our relations, character of strategic partnership of Kazakhstan and Azerbaijan.

We concluded the memorandum on extraction of oil in Kazakhstan and Azerbaijan and transportation of oil and gas to the international markets using the Caspian Sea. This document lays very good basis for the further cooperation between Kazakhstan and Azerbaijan both in the Caspian Sea basin and in the field of oil and gas industry.

It is known that there are big reserves of mineral resources, including huge stocks of oil and gas in Kazakhstan. The Caspian pool has extremely big stocks of hydrocarbon raw materials. There are big stocks of oil and gas in Azerbaijan, including the Azerbaijan sector of the Caspian Sea.

You know that in September, 1994, Azerbaijan signed the first large-scale contract with eleven world transnational oil companies on joint development of three deposits in the Azerbaijan sector of the Caspian Sea - "Azeri", "Chirag" and a deep-water part of "Guneshli". I can say that this contract is practically realized. In the autumn of the current year, we expect receiving oil from the first operational well and thus we are already at a stage of practical realization of the contract. Drilling works show that there is much more oil stocks on these deposits than it was supposed.

After that, four more contracts have been signed with the transnational oil companies and they are also at a stage of practical implementation. There are some more contracts in our plans. In particular, as I already said, representatives of American company "Shevron" are here. I consider that this company now plays very important role as a link between Kazakhstan and Azerbaijan by means of the Caspian Sea. This and other companies have addressed with proposals concerning oil contracts.

According to the first contract, we have already constructed an oil pipeline in our territory for transportation of oil via the territory of Russia to Novorossiysk port in the Black Sea. Due to the program, a construction of the second oil pipeline for export of the first oil is intended. This oil pipeline will be conducted to Supsa port of the Black Sea via territory of Georgia. As I already said, the first oil pipeline in our territory has been constructed. There is a similar oil-pipeline in the territory of Russia as well, but certain reconstruction and updating were required for it, and they were engaged in this matter. However, at the present moment, Russia is not ready to accept oil from Azerbaijan in the middle of the year as they promised. Several months ago, we carried on negotiations with "Transneft" and the government of Russia, they promised they would be ready to export oil by this pipeline to Black Sea in October.

However, a construction of the big pipeline is intended too. It is included in the projects and the program of a consortium which signed the first contract in September, 1994. On this oil pipeline, it is planned to transport oil extracted by the Azerbaijan Oil Company and the companies entering a consortium, to the international markets, and according to our plans, to Turkish port Ceyhan in the Mediterranean. Now the company "Shevron-Tengiz" cooperates with the Azerbaijan oil company. They have applied to help us to transport oil through the Caspian Sea, Azerbaijan to the Black Sea port and we have agreed. Yesterday, it was announced here that we have already received 200 thousand tons of oil from Tengiz on our terminal and sent it to the Black Sea port through territory of Georgia. So the first channel has been created for transportation of the Kazakh oil to the Black Sea, in territories of Azerbaijan, Georgia through the Caspian Sea.

Yesterday, we the presidents of Kazakhstan and Azerbaijan, signed the memorandum on construction of a special oil pipeline for transportation of the Kazakh oil to the Caspian Sea, through territories of Azerbaijan, Georgia and further to Turkey - the Mediterranean port - to the world markets. I consider it very important step and it is necessary to start the realization of this document as soon as possible. As I learned yesterday about prospects of an oil recovery on Tengiz there will be started oil extraction by 2005, and possibly it a bit earlier. Therefore, very intense situation concerning oil exportation to the international markets may arise. Oil pipeline which you use - it seems you call it North-Caucasian pipeline - will certainly, serve you in the future too. But as I learned from the information by representatives of a Kazakhstan petroleum industry yesterday, it is not capable any more to transport all oil which is expected. Therefore, construction of a new oil pipeline, I think, becomes a question of vital importance. On our part, we are ready for this business with our opportunities, terminals, vehicles, we help and cooperate and we will cooperate henceforth as well.

I think that as a whole, cooperation between Kazakhstan and Azerbaijan in the Caspian pool and around it has great prospect, and we have unanimous opinion with the president Noursultan Nazarbayev that we should work well on this prospect.

We have many onshore deposits having big reserves and prospects. Some companies already work on old onshore deposits, other companies address to us connected with this issue. We conduct and we will conduct this work and I think that this sphere has also a great prospect.

As to other branches of economy, you know that Azerbaijan`s economy is multilateral and diversified. Now we are at a stage of privatization. In connection some situations inside our republic in the past years and also as you know, Azerbaijan`s being subjected to military aggression by Armenia since 1988 and undergoing operations till 1994, occupation of 20 percent of Azerbaijan`s territory by the Armenian armed forces, driving out more than one million of our citizens, from these occupied areas who live in various regions of Azerbaijan in heavy conditions and the majority of them live in tents. All that have detained the process of carrying out the reforms a little in our country in previous years. However, these reforms are now actively implemented and I should say, it yields its results. As for instance, beginning from 1989, the level of production has fallen, and recession in economy has taken place in Azerbaijan. In 1996, we managed to stop this falling in production and achieve positive changes and some growth there. Last year, we had some growth in the gross domestic product. We have achieved to prevent falling manufacture of industrial production and having prevented falling a level of production in agriculture, we have provided growth for 3 percent.

In the last months of the current year, these parameters became still higher, that is, we have already significant growth in the gross domestic product, industrial and agricultural production. Last year, the volume of the foreign trade turnover increased 30 percent. Many measures have been taken, many reforms have been carried out on liberalization of foreign trade activities. We actively deal with financial issues of the republic. For example, in 1994, the rate of inflation reached 1700 percent within a year. We could manage to decrease it and reduced to a minimum last year. The last months of this year, in fact we did not have inflation. The exchange rate of our national currency of the manat is stable. This stabilization is being kept in the last two years. For the last year, the cost of the manat in comparison with dollar has grown approximately for 10 percent. There are freedoms for financial, bank activities, exchange, freedom for business and freedom for foreign investments in our country.

Certainly, our republic does not have as wide scale as Kazakhstan and our country does not have so many resources as your country does. Nevertheless, for example, in Azerbaijan such leading countries of the West as the USA, Great Britain, Norway, France, Germany, have nearly 50-70 offices. Not only the companies, which are directly engaged in a petroleum industry, but also many others are involved in a process of realization of the contract on oil and gas recovery in our country. They are involved in construction of oil pipelines, and in other spheres. Therefore, foreign investments are directed to Azerbaijan, but, maybe, it is not as much as we want. Privatization in our republic is underway. Certainly, it is not at such a stage as in Kazakhstan, however, it is successfully being realized.

We take basic measures in the sphere of agriculture and we have passed the law on land reform. The law provides the transfer of all lands, which are meant for planting, to a private property with the right of sale, transfer and purchase. Now there is an active realization of this law, and I should say that the peasants perceive this law and its practical realization with great enthusiasm and satisfaction. I think the privatization will come to an end in 1999 in our country, however the main work in this process, will probably, occur in 1997 and 1998.

We also suggest foreign investors to take our enterprises under their management. In this respect, Kazakhstan has developed very much and as I learned from the conversation with President Noursultan Nazarbayev, it has already gained great results. We have also such examples, though they are not in such a wide scale, as in Kazakhstan.

Our republic is open for foreign investments, for business as a whole, including the activities of foreign businessmen. We implement the full program of market economy according to all the market laws. Our laws allow carrying out market reforms, attracting foreign investments. In some places, where laws do not suffice - we now have an active legislation in this sphere - they will be adopted within this year.

We carry out reforms in sphere of pension, as well as in a social sphere. For example, we have abolished all privileges, though there are also complications for us here, because more than one million our inhabitants are refugees, who have no habitation, live in tents, the majority of them are jobless. Nevertheless, we have given our consent take these measures in order to implement the microeconomic processes completely and to obtain full development of reforms.

In general, its all what I wanted to say. Certainly, I cherish great hope for the information you are going to give me, as you have considerably much more experience than we have in Azerbaijan. You have already done much, I think, you have good results. You can also speak about the existing mistakes and defects - if you have, so that we can prevent them. In short, I am waiting for more information from this meeting, proposals and rational recommendations for us, for Azerbaijan, and mainly, for the proposals directed on the further development and expansion of economic cooperation between Azerbaijan and Kazakhstan. I mean that it is a question of a private sector in principal.

Thank you for your attention.