Both producing and refining oil are lucrative. Even countries without the ‘black gold’ resources can earn significantly through specializing in oil refining. How about Azerbaijan, who boasts oil reserves? Could we, too, become a strong player in processing and make money from it?

Economist Eldaniz Amirov does not rule it out but admits it could take up to 8-10 years in his interview to AzVision.az. He explains further that refining oil produced in neighbouring countries, including Russia and Kazakhstan, in Azerbaijan does not seem feasible in the near future. The plants in the country are not even yet at the capacity to refine the oil produced locally, which forces Azerbaijan to import many of the oil products from abroad. Importing the AI-95 gasoline comes at a very high currency price for the country.

‘We can talk of processing Russian and Kazakhstani oil only after Azerbaijan can cover its own domestic needs. This is, of course, possible. The ‘Baku-Novorossiysk’ pipeline was built back at the time to transport Russian oil to Azerbaijan for refinery. So, the tradition exists.

But these matters are beyond traditions. This is an economic process. Getting involved in such projects requires acting in complete conformity with the market economy demands. We must avoid being influenced by external subjective factors. If we do meet these criteria, we can maybe start talking of processing the Russian and Kazakhstani oil in some distant future, may be in 8 to 10 years.’

- Can Azerbaijan then export the finished products of such processed foreign oil directly from its own territories to foreign markets?

‘It is certainly possible, as logistical expenses play a big part in the composition of the overall product cost. Shipping the finished products after having processed Russian and Kazakhstani oil back to these countries will boost the cost of such products. Their competitiveness will plummet in international markets. Therefore, these countries will also be unequivocally interested in exporting these products from Azerbaijan. Although Azerbaijan has few refineries, we have logistical infrastructure in place that allows shipping directly to Europe and other destinations.’

- Are there countries that earn from processing oil produced elsewhere?

‘Of course, the economic gain is substantial. Russia earns majorly from the oil products they refine. We see the same practices in the West. We do not only find implementing the same experience possible, but also much needed in Azerbaijan. We should adopt this strategy as our target, which will encourage other countries to transport their oil to Azerbaijan for processing.’

Sahil Isgandarov

AzVision.az

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