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Books on Azerbaijan
REPUBLICAN REFERENCE
Area (sq.km)
86,600
Population
7,868,385
Principal ethnic
groups
Azeri 90%
Russian 2.5%
Armenian 2%
Dagestani 3.2%
other 2.3
Capital
Baku
Currency
Azeri Manat
President
Ilham Aliyev
President
Ilham Aliyev
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Update No: 289- (27/01/05)
Since the fall of the Soviet Union in 1991, Azerbaijan's
living standards have plummeted and its putative stability has come at the cost
of stagnation. Azerbaijan's Communist-era leader, Heidar Aliev, served until
2003, when he died after appointing his son, Ilham, prime minister; the son
continues the father's policies. A long-running war with Armenia over
Nagorno-Karabakh, an ethnically Armenian enclave within Azerbaijan's borders,
remains unresolved despite a near-settlement in 2000.
Azerbaijan anchors a Kazakhstan-Turkey oil pipeline (which bypasses Russia and
Iran), scheduled to start production in 2005, despite worrying military clashes
over the Caspian's resources in 2001. The windfall from that and from the United
States, which approved aid to Azerbaijan for the first time in 2003 (despite its
popularity among Chechen militants), could make Ilham's transition smoother. But
he sounds belligerent over Nagorno-Karabakh, and in distributing the oil bonanza
must confront his country's pervasive corruption, in which his own clan have
been perhaps the largest beneficiaries.
Seven oppositionists sent to prison
The regime is nothing if not ruthlessly authoritarian, with a thinnest veneer of
democracy. No proper opposition is allowed. Elections in October were a farce
all the power of the state deployed, including police brutally and mass arrests,
to disable and physically destroy the opposition.
More recently, the regime has sent seven oppositionists to prison. Among the
defendants were three deputy chairmen of the Musavat (Liberty) party: Rauf
Arifoglu, Arif Hacili, and Ibrahim Ibrahimli. Musavat is the main opposition
force.
The other four were Azerbaijan's Democratic Party Secretary-General Serdar
Jalaloglu; Umid (Hope) party Chairman Iqbal Agazade; Halq (People's) party
leader and former Prime Minister Panah Huseynov; and Etimad Asadov, the chairman
of the Karabakh War Veterans Association.
Hacili and Arifoglu, who is also editor in chief of the "Yeni Musavat"
newspaper, received the heaviest sentences. Jalaloglu and Huseynov were
sentenced to four-and-a-half years each; Ibrahimli and Agazade to three years;
and Asadov to two-and-a-half years. All of them are convicted of criminal
offenses in connection with violent street protests after last year's disputed
presidential elections.
Although State Prosecutor Nazir Bayramov had demanded heavier sentences, the
defendants' lawyers said they would appeal against the ruling. Attorney
Mirismail Hadi, who has defended Huseynov and Hacili throughout the nearly six
month-long trial, told reporters the verdict was a foregone conclusion:
"This trial was unfair. As we had said earlier, we didn't expect a fair
verdict. Those legal violations that became obvious from the onset of the trial
today found their logical conclusion. Once again the court confirmed that the
whole case had been falsified [from the very beginning]. All this indicates that
the verdict was imposed upon orders from above."
The seven defendants were among hundreds of opposition activists detained in the
wake of the violent street protests that took place the day after the
presidential election on 15 October 2003.
Over US$4bn invested in Azerbaijan's economy
However little the broad masses benefit from economic growth, there really is a
boom under way in Azerbaijan. The republic is a magnet for foreign investment.
A total of 21.4 trillion manats (US$4.35bn) was invested in the country's
economy in January-November, 36.3% over the corresponding period of 2003. Most
of the investments were made in industry, transport, construction of apartments
and communications, the State Statistics Committee told AssA-Irada.
75.1% of the total investments were made with foreign capital. 91.9% of the
investments occurred on the private sector and the rest on the public sector. In
2003, a total of 17.8 trillion manats (US$3.6bn) was invested in the country's
economy. 80.5% of the investments were made with foreign capital.
Azerbaijan economy to grow 14% in 2005 on oil, President says
All this augurs well for future growth. Azerbaijan's economy will expand 14
percent in 2005 and at a faster pace in the following two years as the former
Soviet republic triples oil and natural-gas production, President Ilkham Aliyev
said on December 20th.
The nation of 8.1 million people expects to attract US$4 billion in direct
foreign investment in the year 2005, accelerating last year's growth of 10
percent, Aliyev said. Azerbaijan's gross domestic product in 2003 was US$7.1
billion, 102nd in the world, above Honduras and below Botswana, according to the
World Bank.
''This mainly reflects the future oil and gas development,'' Aliyev, who turned
43 on Dec. 24, said in an interview in London. ''We need to use this opportunity
of having vast oil and gas resources to bring investment into other sectors.''
Azerbaijan, bordered by Georgia and Iran, will benefit from this year's
scheduled opening of a US$3.6 billion pipeline that will carry Caspian Sea oil
from the capital, Baku, to Turkey's Ceyhan port. A venture led by London-based
BP Plc that includes Irving, Texas-based Exxon Mobil Corp. and Norway's Statoil
ASA is developing fields in the region, home to as much as 4 percent of the
world's proven oil and gas reserves.
Azerbaijan, with reserves of at least 7 billion barrels, has stopped auctioning
offshore fields and is trying to attract companies to older sites onshore,
Aliyev said. Oil production, now at more than 100 million barrels a year, will
at least triple in three years, he said.
The country may sell US$100 million in bonds in 2005, its first such sale,
Aliyev said. ''We may start next year (ie 2005) with some small amount to see
what benefit it brings to the economy,'' the president said in December. ''If
it's successful, we can continue on a larger scale.''
Georgian Security
Kazakhstan officials are in talks with Azerbaijan to send crude oil through
the pipeline from Baku, Aliyev said, without being more specific. The pipeline
will ship 1 million barrels a day through Georgia, where President Mikhail
Saakashvili is trying to assert control over secessionists in South Ossetia and
Abkhazia provinces.
''We are sure that the Georgian government will fulfil all its commitments to
security over their portion of the pipeline,'' Aliyev said. A separate pipeline
from Baku to Georgia's Supsa port on the Black Sea ''has been working for years
without any problems,'' he said.
South Ossetia and Abkhazia, each with a population of about 100,000 people,
declared independence in 1992 after the Soviet Union collapsed. Both maintain
ties to Russia. Georgian forces clashed with South Ossetian separatists in
August.
''Georgia and Azerbaijan have similar problems, which are aggressive
separatism,'' Aliyev said. Azerbaijan since 1993 has had a dispute with
neighbouring Armenia over control of the Nagorno- Karabakh region.
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ENERGY
Azeri state oil company increases output by over 2 per cent in 2004
As compared to 2003, the State Oil Company of the Azerbaijani Republic (SOCAR)
increased oil production by 0.6 per cent (52,000t) in 2004, a source at the
company's press service said, Assa-Irada News Agency reported.
While the oil production plan for 2004 was 8,750,000t, SOCAR extracted
8,976,000t, which is 226,000t or 2.6 per cent more than planned. A total of
8,050,000t of oil was produced by oil and gas extracting departments, while
926,000t was produced by joint ventures and operating companies.
ExxonMobil chooses Caspian Sea for export channel
US oil major ExxonMobil on December 22nd declared that it had signed a five-year
contract for export of 10m tonnes of oil from the Caspian Sea by rail, skirting
the costly €3.3bn Baku-Tbilisi-Ceyhan pipeline (BTC) that is expected to come
into force by 2005.
The project is being led by British oil giant BP, with backing from the US
government. ExxonMobil's spokeswoman in Azerbaijan, Leyla Rzakuliyeva, said,
"Exxon and (Azerbaijan-based) AzPetrol signed an agreement in November to
pump its first volumes of oil by rail from Baku to the Georgian port of Batumi."
The decision will probably irritate Azeri authorities, who have already seen
Russia's oil giant LUKoil drop out of the ambitious project due to its high
cost, Interfax reported. ExxonMobil holds a stake in Azerbaijan's so-called
"deal of the century" - a massive oil contract signed in the early
1990s to develop Caspian Sea oil by the state oil company SOCAR, Statoil, LUKoil,
ExxonMobil, Unocal, TPAO, Itochu Devon and Delta Hess. But ExxonMobil will not
pump its oil through the BTC pipeline which is a separate project created to
transport oil for participants in the deal because of a disagreement over
transport tariffs.
"I'm for Exxon joining BTC, but there has been friction," said SOCAR
President Natik Aliyev. "This is a consequence of Exxon not having been
able to come to a consensus with BTC concerning tariffs," Aliyev said,
adding that he hoped the negotiations would be successful.
Azeri shahdeniz field rich in gas resources
The first batch of gas from the Shahdeniz field in the Azeri sector of the
Caspian Sea is expected to be produced in mid-2006. The credit agreement on
Shahdeniz field development was signed on December 14th last year in London,
Azertaj reported.
The first phase of the project implies extraction of 178m cubic metres of gas
per year and 34m tonnes of condensate. Further, it is scheduled to increase this
volume up to 8-16bn cubic metres of gas and 2bn tons of condensate. BP and
Statoil hold a 25% stake in the Shahdeniz project, SOCAR, joint Russia-Italy
LUKAgip company, OIES of Iran and French company Total - 10 per cent each.
Currently exploratory drilling works are successfully going on. First results
confirm experts' estimations on gas-condensate reserves.
BP and TNK-BP discuss Baku-Tbilisi-Ceyhan pipeline
British Petroleum and TNK-BP are discussing the possibility of transporting TNK-BP
oil through the Baku-Tbilisi-Ceyhan pipeline, BP Azerbaijan President, David
Woodward said recently, Interfax News Agency reported.
He said they have not yet reached the stage of discussing volumes and transport
schedules and that they are only discussing transport options and possibilities.
According to Woodard, one potential option for transporting Russian oil through
the Baku-Tbilisi-Ceyhan pipeline may be to reverse the Baku-Novorossiisk
pipeline to Baku. He also said that it is possible to supply oil by sea from
Astrakhan to Baku, for further transportation through the Baku-Tbilisi-Ceyhan
pipeline. Meanwhile, the board of directors at BTC Co, operator of the
Baku-Tbilisi-Ceyhan pipeline project, confirmed a 10% increase in the project's
originally planned cost, Mike Townshend, the president of BTC Co said at a press
conference.
Townshend said new loans would not be sought to finance the additional costs. He
said shareholders had considered the increase and had agreed to finance the new
costs. The overall cost of the BTC project is US$3.6bn, of which the
shareholders will provide US$1bn and US$2.6bn will be borrowed. Construction
costs are US$2.95bn. The costs also include the purchase of 10m barrels to fill
the pipeline and costs on financing and debt servicing negotiations. Townshend
said it was currently difficult to say precisely what the project would cost
overall because the purchase of oil to fill the pipeline would account for a
significant portion of those costs.
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FOREIGN LOANS
Azeri financial system to benefit from World Bank loan
The board of directors of the World Bank has endorsed the allocation of a
US$12.26m loan to Azerbaijan for the implementation of the project to develop
the financial service system. The project envisages restructuring the Azarpoct [Azeri
post] state enterprise and improving its services, ANS Radio reported.
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