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Azeri Economy Grew 1.6% in First Quarter on Energy, Aliyev Says

Azerbaijan's economy expanded an annual 1.6 percent in the first quarter as the third-biggest oil producer among the former Soviet republics benefited from higher energy prices, President Ilham Aliyev said.

Natural-gas output is set to increase from the current 27 billion cubic meters a year after investments made into the BP Plc-led Shah Deniz project and other deposits, Aliyev said in comments published today in state-run newspaper Azarbaycan. Oil production peaked in 2010 at 51 million metric tons a year and will be maintained at that level, Aliyev said.

The U.S. and Europe have been courting Azerbaijan, located on the western Caspian Sea between Russia and Iran, as an alternative crude supplier to Russia and the Middle East. Oil and natural-gas output accounted for 52 percent of gross domestic product, the State Statistics Committee said last month. GDP grew 5 percent last year.

"Our gas output should increase thanks to investments due in coming years," Aliyev said. Even so, "our main goal is to expand the non-oil sector and ease dependence on oil and gas."

The economy's non-oil industries grew an annual 5.6 percent in the first quarter, Aliyev told a cabinet meeting yesterday.

European energy companies are vying for supplies from the $20 billion second phase of Shah Deniz as they plan pipelines via Turkey from the region. Russia has also expressed interest in buying Azeri gas.

The inflation rate reached an annual 9.1 percent in the first quarter, Aliyev said, instructing his government to keep consumer-price growth below 10 percent by year-end. The country's gold and foreign-currency reserves were at $34.2 billion at the end of the quarter, according to Aliyev.

Source: Bloomberg

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