On the Rails

How do you expect the recent signing of the Shah Deniz final investment decision to impact the logistics sector and Cross Caspian?

While the impact of this decision on Cross Caspian is hard to assess at this point in time, it comes as great news for the entire sector and for the country in so much as it will open up opportunities to export large volumes of condensate to Black Sea ports. It is also a marked achievement by the key players of the energy sector in Azerbaijan as the sector will continue to develop and attract interest and investments. Further expertise in the energy sector will be developed and, what is more, Azerbaijan will contribute to securing energy stability for international markets in the long run. In that sense, it is a significant achievement for all stakeholders.

The Baku-Tbilisi-Kars (BTK) rail project is shortly to be completed. Are you looking to include it in your network?

In terms of logistics, the greater the diversification, the more opportunities for shipment you can offer. In other words, in any region intending to transport significant volumes of commodities, the development of a hub is crucial so that you can offer inward and outward shipment in numerous directions. This project is therefore a great opportunity to diversify and extend our reach via rail. At the same time, it is possible for us to encourage inward shipments, which could provide much interest and the necessary structures to handle inflows of cargo from Kazakhstan. We are mostly an oil and gas transportation company, but do also look attentively at developments in dry cargo as this is a related market, and the two industries affect each other. Azerbaijan is increasingly becoming a regional leader in terms of its transportation and logistics infrastructure.

How have Cross Caspian’s operations developed in recent years?

We aim for sustainable growth, and therefore pursue gradual expansion. We are now in the process of completing the first phase of a terminal that exports some of the Shah Deniz condensate, a project that began back in 2008. We are working on interconnections with the terminal, and the facility is shaping up well. We are also working to acquire additional private railcars. The corridor itself has around 4,000 rail cars, but we are working on bringing in newer ones. We work in the private sphere; of those 4,000, around 1,500 are private freight stock and we are working to bring in a further 1,000. There is the feeling that in the long run, a modern system should be managed by private companies. In 2013, the capacity of the corridor was at between 12 million and 14 million tons by rail. The cargo overhaul for hydrocarbons was at around 10 million tons for the year. A significant volume of crude oil was shipped via BTC to the BTC entry point, which is understandable given that the BTC is a unique asset and very well placed geographically. It is a high-quality and modern pipeline managed by leading companies. Azerbaijan is an extremely stable and visionary player in the region, which attracts shippers, and ultimately the BTC provides very good returns to those who invest. That is why when considering the transit figures, you should combine the BTC transit figures with those of rail. We have increased our volume significantly, and the total volume of BTC transit exceeded 5 million tons. When you combine figures shipped via rail and through the BTC, overall we note good progress. It was tough work because we were taking on a few things for the first time, such as delivering different grades into the same pipeline at the same delivery point. It is quite an efficient arrangement both technically and commercially.