For the first time since signing-up to the EITI, Azerbaijan’s national oil company, SOCAR, discloses who it is selling oil to and how much revenue the government receives from commodity trading.
The recently released EITI report covering 2014 data shows that although the oil sector’s contribution to Azerbaijan’s economy is declining, it still generated 34.6% of GDP and USD 18.1 billion in revenues in 2014, which is more than 60% of the country’s budget. Much of this revenue is collected in-kind: the companies have paid the government with physical volumes of oil, gas and minerals – which the government then sells. The 2014 EITI Report reveals that 88% of the country’s revenues from oil came from oil sales from the Azeri-Chirag-Gunashli and Shah Deniz fields, with Total, Pertamina, Exxon, Eni and Saras being the largest buyers.
More information about SOCAR’s financial contributions
The EITI Report also sheds further light on the financial relationship between the government and SOCAR. In addition to being the largest taxpayer in 2014, the EITI Report also shows that SOCAR invested USD 607 mn in various government projects. According to SOCAR, this included contracting and repairing of recreational, transport, educational and medical infrastructure in Azerbaijan. SOCAR also enabled local consumers to access oil and gas at lower prices than world market prices, at a cost of USD 397 million.
“The quality of the reports is gradually getting better and the new chunk of information on SOCAR proves it, but still there is a lot of further work to be done in in this area. Although the amount of data grows, the publication of reports itself does not bring benefits to citizens and does not lead to a public discussion”, says Gubad Ibadoghlu, the CSO EITI Board member and a member of the EITI NGO Coalition in Azerbaijan.
Opening up the register of active contracts
All oil, gas and mining activities in Azerbaijan are regulated by Product Sharing Agreements (PSA). For the first time, a register showing all PSAs are included in the report, showing 17 active oil and gas PSAs and one active gold PSA.
“Thanks to hard work, patiance and preseverence of the EITI parties we were able to create PSA register in accordance with the EITI Standard and disclose it for citizens. We mark it as an important accomplishment since it indeed made a difference in the sector. Azerbaijan stands ready to take challenges and decisively defend transparency and accountibility in the extractive sectors,” says Farid Farzaliyev, Head of Secretariat in Azerbaijan.
EITI implementation in Azerbaijan
Azerbaijan’s EITI status was changed from ‘compliant’ to ‘candidate’ country by the EITI Board in 14 April 2015, following an early Validation conducted in 2015. The decision to begin Validation under the Standard came after a number of EITI stakeholders had raised concerns over the lack of an enabling environment for civil society to participate in EITI. The government of Azerbaijan is currently working with the local stakeholders to improve the enabling environment for EITI implementation.
Access the Azerbaijan 2014 report.
For more information about the EITI process in Azerbaijan please visit the country page on eiti.org or consult the national EITI website.
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