Azerbaijan's real gross domestic product (GDP) has greatly increased in recent years, driven by growth in oil and gas production. The hydrocarbon sector accounted for 47.3 % of GDP in 2012, a decline from the 50.2 % recorded in 2011. Earnings from hydrocarbons sales account for around 90% of total export revenue (Source: Azerbaijan 2012 EITI Report).
Major projects such as the Baku-T’bilisi-Ceyhan oil pipeline (BTC) to Turkey, the country’s largest oil field Azeri-Chirag-Guneshli (ACG) and the largest natural gas field Shah Deniz (SD) contribute significantly to government revenues (Source: Azernews). The "southern corridor" pipeline route recently began construction which will take gas from the Shah Deniz 2 field to markets in Turkey. In addition, the governments of Turkey and Azerbaijan intend to build the Trans Anatolian pipeline (TANAP) to deliver Azerbaijani gas to Turkey and to European markets. TANAP will in turn transit gas to the Trans Adriatic Pipeline (TAP), and on to European markets.
The State Oil Fund of the Republic of Azerbaijan (SOFAZ) is one of the central components of the strategy for managing these revenues. Azerbaijan's proven crude oil reserves are estimated at 7 billion barrels and oil production amounts to 870 thousands bbl/day (Source: BP Statistical Review of World Energy 2014). The State Oil Company of Azerbaijan Republic (SOCAR) plays a major role in oil and gas production, and in managing oil and gas imports and exports.
Azerbaijan was downgraded to ‘candidate’ country at the 29th EITI Board meeting in Brazzaville following a Validation report carried out earlier in 2015. The validation does not assess the 2013 EITI report which has not yet been finalised and is due to be published in May 2015. This report will be Azerbajian's first report under the EITI Standard.
Background: The MSG met on 10 June 2014 to approve the TOR for the Independent Administrator and the reporting templates. The revised Memorandum of Understanding was also approved at the meeting. The MSG further met on 3 October to discuss the draft report of the Independent Administrator and challenges in the carrying out of activities of the NGO Coalition. On 9 December 2014, the MSG met to discuss the Validation process.
In response to concerns from stakeholders, in July 2014 the EITI Board agreed that a fact finding mission would investigate civil society participation in the EITI (see minutes). The Board discussed the findings in Myanmar on 14-15 October. The Board concluded that the situation for civil society in Azerbaijan was unacceptable and that EITI implementation could not take place with the current circumstances. The Board agreed several corrective actions, and brought forward the schedule for Azerbaijan’s validation under the EITI Standard. Additional details are available in the Board minutes from Myanmar. EITI Chair Clare Short also commented on the case.