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Kestutis Kudzmanas - the Ambassador Extraordinary and Plenipotentiary of Republic of Lithuania to the Republic of Azerbaijan. From 1996-2001 he worked as the Director of the Foreign Relations department as well as the Vice President of Confederation of Lithuanian Industrialists. Later he was the Head of the Economic department of the Lithuanian embassy in Russia.

 Before his appointment as the Ambassador in Azerbaijan he was the Ambassador at Large of the Lithuanian Eastern Europe and Middle Asia department for special matters.
At this point in history the eyes of politicians and businessmen turn to a country surrounded by Russia, Georgia, Armenia, Iran, Turkey, Turkmenia, Uzbekistan and Kazakhstan. Azerbaijan experienced an incredible oil boom. At the beginning of the 20th century it supplied almost half of the world’s oil resources. The country is currently experiencing a revival.
Azerbaijan has always been at the crossroads of the most important trade routes, such as the Silk Road. It has successfully joined the routes of oil and gas as well. The newly appointed Ambassador Extraordinary and Plenipotentiary of the Republic of Lithuania to the Republic of Azerbaijan Kestutis Kudzmanas says “that it is natural for Lithuania to open the embassy in this country as part of the special relations with South Caucasia as well as the diplomatic priorities of the Foreign affairs department to develop relationships in the East.” The new ambassador refers to Azerbaijan’s fast entry into the world’s business market as well as to its relationship with Lithuania.

From China to Europe – by shuttle train

Azerbaijan has earned the status of the most quickly developing Caspian region due to new oil routes through Georgia into Turkey, transport routes through the country North to South, as well as TRACECA (Europe-Caucasia-Asia).The GDP of Azerbaijan as of last year has grown 32,5%. – the biggest growth in the world. In the last few years the country is paying extra attention to TRACECA transport route development. At the end of April of 2006 the new shuttle train Poti (Georgia) – Baku (Azerbaijan) – Aktau (Kazakhstan) – Almaty (Kazakhstan) started to operate and was accepted with great interest from China. There are plans to launch another shuttle train from Kars (Turkey) to Akhalkalaki (Georgia) to Tbilisi (Georgia) to Baku (Azerbaijan) that would be a connection to Europe. Once this shuttle starts operating the time of transporting goods from China to Europe is expected to be shorter and make the transportation twice as inexpensive. 20 million tons of cargo are expected to be transported via this route.
In September of 1994 Azerbaijan signed the ‘contract of the century’ with the foreign oil companies about the exploitation of three oil pools in Caspian Sea. Since then the western companies have invested millions into oil and gas resources.
China has expressed a huge interest in the project of Kars-Akhalkalaki-Baku train right from the very beginning. After signing the contracts about the exploitation of the profitable Caspian offshore oil pools with western companies like BP, Exxon, Chevron and Statoil, the Azerbaijan government has merely offered to fix the older sites of oil pools to Chinese companies, and even that turned out well. A few Chinese companies received a permission from Azerbaijan’s governmental oil company (SOCAR) to work in the country—for example, the Chinese company Shengi started operating in Gerachukhur oil pool.

Europe finally has an alternative oil route

Recently the eyes of businessmen have turned to Azerbaijan where the geopolitical and business interests mix. The extraction of oil and gas will increase dramatically in the next year. The oil from the ACG (Azeri-Chirag-Guneshli) pool will fill the oil pipeline Baku-Tbilisi-Dzheichan, which opened in 2005, that will supply sorely needed resources to the western countries. Even now it has been suggested that this project is the second oil boom in Azerbaijan.
During the opening ceremony of Baku-Tbilisi-Dzheichan oil pipeline, Ilham Aliyev, the president of Azerbaijan, said the following: “It is been 10 years since the ‘contract of the century’ was signed, but the growth of Azerbaijan still surprises the world. By exploiting the oil resources correctly we have created a diversified economy in the country, by paying extra attention to areas unrelated to oil.
The abundant resources of oil from Caspian oil pools do not automatically guarantee a successful problem-solving decision. Oil has to be transported. Due to the geographical location of Azerbaijan there is no direct access to the markets, therefore it is necessary to have pipelines to reach them. Azerbaijan has a multi-pipeline strategy for supplying oil. Two of them are already operating: they are Baku-Novorossiysk and Baku-Supsa. The newly opened oil pipeline is the biggest and most significant energy-related project in the world.”

Competitive advantage – high prices

One of the most important declared goals of the foreign relations of Azerbaijan is closer cooperation with the European Union. In 2004 Azerbaijan was invited to join the European Neighborhood Policy of the EU. This country is also seeking to be accepted into the World Trade Organization and currently holds the status of observer.
The country’s economy is also developing quickly; therefore, the country is open to direct foreign investment. President Aliyev emphasizes every time that oil helps not only strengthen the economy, but also develops positive relationships with the neighboring countries.
Lithuania sees an excellent opportunity to develop relationships with Azerbaijan in areas like politics, economics, trade and IT.
We received sustained interest from businessmen as soon as we opened the embassy. Nowadays Azarbaijan witnesses intensive construction, various infrastructural projects, as well as investment in high tech.
It seems paradoxical, but one of the main competitive advantages could be high prices in Azerbaijan. Since the transportation of goods can be rather inconvenient and costly, those businessmen who will be able to offer the most effective and inexpensive logistical solution will win a share of the market.
Azerbaijan – facts only:
In 1917 March 20th Azerbaijan, Armenia and Georgia united into Transcaucasia Federation.
In 1918 May 28th anti-Soviet national council of Azerbaijan declared the Democratic Republic of Azerbaijan. A geographical term rarely used before, ‘Azerbaijan’ became the name of the country.
In 1922 Azerbaijan, Armenia and Georgia joined the Socialistic Federal Republic of Transcaucasia and became part of the Soviet Union.
In 1991 August 30th the independence of Azerbaijan was declared.
In 1993 September 24th Azerbaijan joined the Commonwealth of Independent States (CIS).
In 1994 September the ‘contract of the century’ was signed.
In 1996 February 16th the treaty/contract was signed about the transportation route Baku-Novorosiysk (Russia) from Azeri oil pool. In 1997 the actual oil started being supplied.
In 1996 March 8th the contract was signed about the opening of Baku-Sapsa (Georgia) pipeline. The actual oil started being supplied through it from “Azeri” pool on the 17th of April in 1999.
In 1999 November 18th the contract was signed about the opening of Baku-Tbilisi (Georgia)-Dzheichan (Turkey) oil pipeline. In 2005 May 25th oil started being supplied through it.
In 1999 December 19th the national oil/petroleum fund of Republic of Azerbaijan was started.
In 2003 October 15th Ilhamas Aliyev was elected the president of Republic of Azerbaijan (he was the son of the previous president H. Aliyev).
In 2004 Azerbaijan was accepted into European Neighbourhood Policy of ES.
In 2006 the export from Lithuania to Azerbaijan was 24,1 million Litas (6,97 mln. EUR). In comparison with the 2005, it went up by 6,4%.

Milda Manomaityte