II International Congress
355
BTC Pipeline, BTE natural gas pipeline and
BTK railway projects recently are very important
projects in terms of the regional economic coope-
ration developments between Turkey, Georgia,
and Azerbaijan.
The Significance of BTC, BTE Pipelines
and BTK Railway Project for Turkey
Turkey will be the one of most important
energy terminal and energy transit state trans-
porting crude oil in Caucasus and Central Asia into
World markets
Turkey will be the key-strategic country linking
West with Central Asia and South Caucasus and in
forming West- East Transit Energy Corridor.
BTC will reduce the amount of the
transportation of crude oil through Istanbul and
Canakkale straits connecting the Black Sea and
Mediterranean Sea, which is dangerous in terms of
environment and human health.
With being the operational of BTE (Baku-
Tibilis-Erzurum) gas pipeline will help to decrease
energy prices in Turkey, which will lead to the
rise of new investments and employment.
BTC Pipeline will enable the alternative
energy resources to meet for western countries’ oil
needs by reducing its import dependence on Gulf
oil. This Pipeline also provides economic and
secure access to prospective energy supply
resources for western states. The transportation of
Region energy resources via Turkey through BTC
Pipeline has vital importance for European
Countries’ energy diversification policy.
Turkey is taking significant role in world
energy market and world energy trade as transit
country though it has no sufficient oil reserves in
its own land to supply for western countries
BTC will increase the strategic significant of
Turkey and bolster its political influence in
regional policy and also bring more political and
economical stability for regional countries.
Turkey will receive approximately $200
million per year from BTC transit tariffs in the
initial years of operation, with the possibility to
increase to $290 million per year from year 17 to
year 40
Turkey is also benefiting from an increase in
economic activity in eastern part of Turkey, the
least developed area of the country. The port of
Ceyhan, which has experienced significant
reductions in activity since the 1991 Gulf War, is
entering a time of resurgence.
Economic Situation in Azerbaijan and Oil
Production
According to Energy Information Administra-
tion, Azerbaijan's real gross domestic product
(GDP) grew by an impressive 26 percent to $13
billion in 2005 as foreign investors pushed ahead
with major projects in Azerbaijan. In the next
couple years favorable real GDP growth is
expected, but maintaining low inflation rates as
energy and transit revenues flow into the country
represents a major challenge.
After the demise of the former Soviet Union,
Azerbaijan is facing and challenging a variety of
socio-economic problems because of Nogorno-
Karabahg conflict which has cause a million
people to immigrate to Baku, capital city and the
most developed city of Azerbaijan, of a plenty of
orphans in Sumgayt, second largest city of
Azerbaijan. Azerbaijan also is suffering from
“Dutch disease” resulting from huge revenues
from oil sector production but can not be
transferred in to non-oil sector. The mechanism
should be set by government for transmitting this
income into non-oil sectors to improve social
projects and welfare in Azerbaijan.
Production volumes in Azerbaijan on the basis
of current oil production, which was 317,000
barrels in 2004, and 452,000 barrels in 2005.
When BTC and SCP become fully operational,
Gross National Product of Azerbaijan will
increase significantly in the next few years
because of the huge oil revenues. If we are taking
account of the BTC pipeline will be able to
transport up to a million barrels of crude oil a day,
50 million tons a year, so as SOCAR (State Oil
Company of Azerbaijan) has 25 percent share of
BTC Project, SOCAR will get roughly 6.5-7
billion dollars at current oil prices just through the
BTC Pipeline without calculating SCP and other
project revenues. This amount is almost a half of
current GDP of Azerbaijan. However, the problem
is here that how fairly it will be distributed between
different levels of groups as well as between
different regions in order to help to remove
imbalance in the distribution of income and in order
to improve economic performance in Azerbaijan.
Examining
macroeconomic
performance
particularly in Azerbaijan and Georgia in terms of
GDP,
inflation,
employment,
privatization,
exchange currency, foreign trade, population, etc,
through the oil sector and non-oil sector in
Azerbaijan for the last decade, the further
liberalization of markets might be the good solution
for the socio-economic problems of Azerbaijan in
order to keep the sustainability of economic growth
and development going in Azerbaijan. In the last
decade, regional economies have grown rapidly,
especially Azerbaijan at a rate of 10%, which is one
of the highest among the world economies. It grew
almost 26% in 2005, the highest rate in the world.
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