Title: Azerbaijan : oil and new economic development trend
1- Azerbaijan oil and new economic development
trend
- by Elman Abdullayev
- The Fourteenth Annual CIS Central-Eastern
Europe Business Forum
- Tucson, Arizona
- November 2, 2007
2Geography
- Geographic coordinates 40 30 North, 47 30 East
- Area 86.600 sq km
- Sea Line 800 km
- Population 8.4 mln
- Language Azerbaijani
- Border CountriesIran in the south - 765
kmArmenia in the west 1.007 kmGeorgia in the
north-west - 480 km Russia in the north - 390
kmTurkey in the south-west - 15 km The
territory includes Azerbaijani sector of the
Caspian Sea 456 km
3History and economic milestones
- May 28 , 1918 Democratic Republic of
Azerbaijan
- October 18, 1991 Declaration of Independence
after the collapse of Soviet Union
- March, 1992 Azerbaijan was admitted to the
United Nations within internationally
recognized territorial borders
-
- September 1994 First business contract
(described as The Deal of the Century) is
signed between the State Oil Company of the
Azerbaijan Republic (SOCAR) and the Western
oil companies. The contract will develop
Azeri, Chirag and deep water part of Guneshli
oil fields. - September 1998 Azerbaijan hosts Silk Road
Summit (revival of the ancient Silk Road) of
32 countries. Baku Declaration on
development of the transport corridor for
Europe-Caucasus-Asia (TRACECA) is signed.
4- October 1998 The Presidents of Azerbaijan,
Georgia, Kazakhstan, Turkey, Uzbekistan and
U.S. Secretary of Energy signed The Ankara
Declaration endorsing the Baku -Tbilisi- Ceyhan
pipeline as the main route for transportation of
Caspian oil to the world markets - November 1999 Historic Agreements on the
Baku-Tbilisi -Ceyhan Main Oil Pipeline and
the Trans-Caspian Gas Pipeline signed during
the OSCE Summit in Istanbul - February, 2000 Discovery of significant gas
reserves in the Shah-Deniz offshore field
makes Azerbaijan a major perspective gas
exporter in the region - January 25, 2001 Azerbaijan became member of
Council of Europe
- June, 2006 Inauguration of Baku-Tbilisi-Ceyhan
Oil Pipeline in Azerbaijan
- End of 2006 Baku Tbilisi Erzerum Gas
Pipeline
5Azerbaijans energy production
- 17 billion invested into Azerbaijans oil and
gas sectors since 1994
- Azerbaijans oil production has reached 600,000
barrels per day in 2006 and will be doubled by
2010 (1 million barrel per day in 2007)
- Gas production was 6.1 billion cubic meters in
2006 and will be doubled by 2010
- Oil and gas production growth for the rest of the
decade will be driven by the success of two
offshore projects in the Caspian Azeri, Chirag,
Guneshli oil fields and Shah Deniz gas field. - Main routes for the export of oil and gas are BTC
and SCP (BTE).
6 Baku Tbilisi Ceyhan oil pipeline
Companies shares in BTC MEP,
7- PARENT COMPANIES PERCENTAGE
- SHARES IN AZERI-CHIRAQ-GUNASHLI,
8PARENT COMPANIES PERCENTAGESHARES IN SHAH-DANIZ
,
9How successful was oil strategy
- With the GDP growth of 34 Azerbaijans economy
became fastest growing in the world in 2006. 35
expected in 2007
- The state budget in 4 years increased more than 4
times
- Government managed to significantly decrease
unemployment and poverty
- The 36.8 per cent increase of population income
and savings in financial institutions are direct
indicators of the livelihood improvement.
- In 2007 level of investments from all financial
sources has registered 10.6 per cent growth
- Azerbaijan contributes to global energy security
-
10- Beside oil exporting capacity Azerbaijan becomes
an important hub for the transportation of oil
from Caspian
- Azerbaijan promotes regional cooperation
- New regional projects were developed
- Azerbaijan becomes reliable and stable partner
for Western countries
11Regional Integration
- Baku Tbilisi - Ceyhan
- South Caspian Pipeline (Baku-Tbilisi-Erzurum)
- Baku-Akhalkalaki-Kars (TRACECA)
- European Neighborhood Policy Action Plan
- GUAM
12Azerbaijans new economic priorities
- Communications and Information Technologies
(Turning Black Gold into Human Gold)
- Agriculture
- Banking
- Construction and real estates
- Light and Heavy industries
13The ICT Sector Over the Long Term Even more
Opportunities than Oil!
14Azerbaijans Government Supporting the ICT
Sectors Growth
- State support for developing non-oil sectors
profits from oil gas allocated to the next
priority sector ICT
- Strategy in place to reshape the economy towards
high-tech knowledge
- Plans in place to leverage Azerbaijans strategic
location as a crossroad of international
transport corridors
- State policy to develop the national
transportation network
- Special State policies and priorities
- Develop human resources
- Reduce poverty
- Allocation of investment risks
15 16Agriculture
- Azerbaijan auspicious agricultural market
- 52.3 - lands good for agriculture, 12 -
forests, 1.6 - water basin, 34.1 - other lands
- Azerbaijan has 9 out of 11 climatic zones
- increase in the production of agricultural
products were as follows production of
vegetable products - 35
- fruits and berries 13.1
- meat and meat products 23.6
- milk and dairy products 13.3
- eggs 23.6
- wool 11.0
- Azerbaijan fully satisfies domestic demand for
most of the agricultural products
-
17States support to Agriculture
- In 1998, the farms were freed from all taxes
except the land tax
- Open Joint Stock Society Agroleasing was
created in 2004
- Government of Azerbaijan intends to invest 16.8
billion into different spheres including
Agriculture
-
18Overview of Banking Sector
19Overview of Banking Sector
20Main macroeconomic indicators
- In 2006 GDP increased by 34 and reached 20.1
bln.
- GDP per capita equaled 2400
- Within independence period overall foreign
investments exceeded 20 bln. and according to
UNCTAD Report in 2005 Azerbaijan is the most
attractive country for the investments (ratio of
GDP per capita to FDI per capita) - Foreign trade reached 8.5 bln. and the year
ended with a small trade surplus. Major trade
commodities are oil and oil products
- The share of the private sector in GDP reached
76 in 2006 (30 in 1995)
21Trade
- Imports 7752.5 mlyn (2006 est.)
- Imports machinery and
- equipment, oil products, metals, food,
- chemicals
-
- Azerbaijan is developing trade
relations with more than 100 partners.
Exports 12.51 billion Exports oil and gas 90
, machinery, cotton, food Oil and oil produc
ts remain the major export from Azerbaijan
22Established Development Institutions
- State Oil Fund of Azerbaijan Republic (2001)
- National Fund for Entrepreneurship Support
(2001)
- Investment and Export Promotion Agency AZPROMO
(2003)
- State Mortgage Development Fund (Corporation)
(2005)
- Azerbaijan Investment Company (2006)
23Useful links about Azerbaijan
- www.mfa.gov.az
- www.economy.gov.az
- www.oilfund.az
- www.azpromo.org
- www.usacc.org
- www.amchamaz.org
- www.mincom.gov.az
24