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AZERBAIJAN


  
  

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 7,124 6,090 5,600 102
         
GNI per capita
 US $ 810 710 650 146
Ranking is given out of 208 nations - (data from the World Bank)

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
 


Update No: 311- (28/11/06)

Colossal oil boom
Azerbaijan is doing very well out of an oil boom, but is still bogged down by the intractable dispute with Armenia, which occupies 20% of its territory by its own reckoning.
Gross Domestic Product in Azerbaijan reached 14,8 billion manats in January-October this year, up 34,3% on the same period last year, which must be a world record.
According to the State Stats Committee, production of goods constituted 10,2 billion manats or 69.4% of GDP, services 3.5 billion manats (24%), while taxes on production and imports made up 976,8 million manats (6,6%).
The energy sector is due to rise by a phenomenal 45% next year, leading the way for a 26.3 % rise in GDP in 2007. A rate of growth of the economy of this magnitude is likely to give leaders ideas. So it is in Azerbaijan. 

Aliyev Says Karabakh Talks 'Hopeless' 
Azeri President Ilham Aliyev has often described the efforts of international mediators to resolve Azerbaijan's dispute with Armenia over Nagorno-Karabakh as "hopeless," RFE/RL's Azerbaijan Service reported. 
Significantly, Aliyev made the comment in June during a graduation ceremony of cadets in Baku at Azerbaijan's supreme military academy. He said Azerbaijan was ready only to negotiate the restoration of its sovereignty over the disputed Armenian-majority enclave. 
The failure of international mediation, the Azerbaijani leader said, was forcing him to change policy. He said Azerbaijan would retake Nagorno-Karabakh by whatever means it takes. Aliyev warned Armenia that he would use Azerbaijan's rapidly expanding oil wealth to strengthen the armed forces.

War impending?
It would be tragic if it squandered its oil wealth on another war, which it would be unlikely to win. Aliyev loves to point out that Azerbaijan' military budget alone is freater than the entire budget of Armenia. True, but it is not bigger than Russia's military budget and the Russians would help Armenia like last time.
The Armenians are good fighters and believe in their cause. There would be terrible carnage to no avail. It is to be hoped that the international community can prevail here with pacific counsels. 
The dispute overshadows everything in Azerbaijan and means that the oil boom's revenues are already being squandered on military spending. There is no chance of Armenia yielding anything while hardliner President Robert Kocharian is in power. His likeliest successor in 2008 is no more tractable either, Defence Minister Sarkisian, the number two man in Armenia. The situation looks dire in the extreme. 

Aliyev named person of the year in Ukraine 
The Supreme Academic Council of the Ukrainian National Program "Person of the Year" on November 9th named President of Azerbaijan Ilham Aliyev Person of 2006 for his successful social and political activities, AzerTAc correspondent reports from Kiev. 
According to him, President of the National Program Arkadiy Raitsyn and Member of the Supreme Academic Council Mikhail Reznik presented the award certificate to Ambassador of Azerbaijan to Ukraine Talat Aliyev at the Embassy on November 14th. Mr. Raitsyn described President Ilham Aliyev as a brilliant political figure on an international scale, and Mr. Reznik, who is the Ukraine's former Ambassador to U.S., China and Korea, said in these countries, he was an eyewitness of the enhancing prestige of Azerbaijan as a result of the President Ilham Aliyev's foreign policy. 
They especially emphasized that by strengthening the traditional and indissoluble ties of friendship between Ukraine and Azerbaijan, the President Ilham Aliyev is continuing a successful domestic and foreign policy, whose foundation was laid by the national leader of Azerbaijan, Heydar Aliyev, who 'happened to be' his father. It also 'happens to be' the case that Ukraine badly needs Azeri energy come the winter. Azerbaijan is a more reliable energy supplier than fickle Russia and looks like its coming to the rescue. 

Aliyev meets with Moscow Mayor Yuri Luzhkov 
Aliyev is being courted by the Americans and Europeans for much the same reasons. He is not above courtship himself when the interlocutor is important enough. It is worth cultivating certain Russians, for instance, outside the Kremlin.
Aliyev on November 10th met in Moscow with its Mayor Yuri Luzhkov, whom he towered over, being about a foot taller. But there is no cannier operator on the Russian scene, unless it be another small maestro, Putin himself.
Welcoming the Azerbaijani leader, Mr. Luzhkov said: "I am very pleased that you have found time to meet with us Muscovites. We have a profound respect for you personally, and the memory of your father Heydar Aliyevich with whom we had closely interacted. And I think that today's stage of our cooperation, our relationship, can be characterized as normal. 
"Of course, your visit and today's meeting will promote intensification of this interaction in various fields. Growth in trade [between Baku and Moscow] and other indicators is quite high and even exceeds the trade between Azerbaijan and Russia. I think we are able to use all contemporary possibilities to expand the cooperation between Baku and Moscow to make it powerful, civilized and in keeping with the high level of relationship between Russia and Azerbaijan." 

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CHEMICALS

BASF invests 5m Euro in plant in Azerbaijan 

Germany's BASF has built a chemical plant in Azerbaijan for the construction sector, Khayal Mamedkhanly, general manager of Turquoise, the official distributor of BASF in Azerbaijan was cited by Interfax News Agency as saying. 
He said total investment in the BASF Caspian YKS plant was five million Euro. The plant has already begun producing chemical re-agents for the construction industry, Mamedkhanly said. The plant will produce 10-15 kinds of these products in the first phase; the range will expand afterwards. "We expect to see sales of approximately 600,000 Euro for the remaining three months of 2006. But total sales of our products are already forecast at two million Euro in 2007," Mamedkhanly said. "The BASF decision to build a plant in Azerbaijan was approved based on the growing amount of construction in the country. Azerbaijani companies imported 700,000 Euro-worth of BASF products last year," he said. Turquoise has a 20-percent-stake in the project and BASF controls the other 80 percent.

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ENERGY

SOCAR, Russneft sign Govsany-Zykh contract 

Azeri state oil company SOCAR and Russian oil company RussNeft plan to sign a contract for the development of the Govsany-Zykh block of fields at the start of November this year, a source in SOCAR said, Interfax News Agency reported.
"The negotiations are progressing very quickly, and the borders of the contract zone have already been set. They are smaller than in the contract with LUKoil," the source said.
SOCAR President Rovnag Abdullaev on October 25 confirmed the deadline for signing the contract to journalists. "The development of offshore fields with foreign companies will be carried out only on condition that ecological problems are resolved," he said.
Earlier RussNeft announced its readiness to resolve ecological problems when signing the contract.
The fields are in the southern part of the Apsheron Peninsula. According to preliminary results, residual reserves at the block amount to 20 million tonnes of oil.
LUKoil earlier signed a contract to develop the Govsany-Zykh block, but this was torn up in December 2004 due to the fact that ecological issues had not been resolved.

Azerbaijan oil reserves estimated at 30bn barrels 

Oil reserves in Azerbaijan are estimated at 30 billion barrels, and gas - at five trillion cubic metres, AzBTC Co. Executive Director, Ilkham Nasirov, said at an oil and gas conference in Baku, New Europe reported. 
"Hydrocarbon reserves in the Caspian region are estimated at 210 billion barrels, which is sufficient to satisfy world demand for eight years. Reserves in Azerbaijan alone are estimated at five trillion cubic metres of gas and 30 billion barrels of oil," Nasirov said. He said that total world demand for oil in 2010 would increase to 87 million barrels per day, and in 2030 - to 110 million barrels per day. According to the executive director, by 2020 the main volume of oil being transported through the Baku-Tbilisi-Ceyhan pipeline will be Kazak oil. "From 2012 oil production is expected to drop at the Azeri-Chirag-Gunashli fields and by 2020-2023 transportation of oil from this block through the Baku-Tbilisi-Ceyhan pipeline will be insignificant," he said. Nasirov said that Kazak oil would be supplied to Baku through the Kazakstan Caspian Transportation System (KCTS). "Work has already been started on the development of onshore infrastructure in Kazakstan and Azerbaijan. At the initial stage, in 2010, 500,000 barrels of oil will be transported through the KCTS per day, and later this may increase to 750,000-800,000 barrels," Nasirov said. He said that in the future the capacity of the Baku-Tbilisi-Ceyhan pipeline might be doubled to two million barrels per day.

Azeri oil revenue to amount to US$200bn over 20 years 

Total oil revenue in Azerbaijan over the next 20 years is expected to amount to US$200 billion, State Oil Fund of Azerbaijan (SOFAR) Executive Director, Shakhmar Movsumov, said at a recent meeting of the Caspian Integration Business Club, Interfax News Agency reported. 
"Over the next 20 years, revenue in the Azeri economy is expected to amount to US$200 billion. On one hand, this is a stimulus for development, but it will also create problems with inflation and the ability to absorb these funds," he said, adding that the SOFAR was set up to sterilise oil revenue and to manage it.
"Since it began, SOFAR has received a total of US$ three billion, of which US$1.4 billion has been spent and the remaining US$1.6 billion has been placed abroad," Movsumov said. He said that in total, SOFAR has spent over US$300 million on financing Azerbaijan's share in the Baku-Tbilisi-Ceyhan pipeline, and US$170 million on improving socio-economic conditions for refugees. In addition, up to US$140 million of the fund's money will be spent by the end of this year on two large water projects - the construction of the Oguz-Gabala-Baku canal and the reconstruction of the Samur-Apsheron canal. Also, of the 90 million manat earmarked to set up the charter capital of Azerbaijan Investment Company, 40 million manat has already been paid into its account, the SOFAR chief said. The remaining expenditure was in transfers to the state budget, he said. SOFAR, which was set up in December 1991, is an off-budget state institution controlled by the head of state. The fund is used to accumulate revenue from oil contracts, particularly from the sale of the state's profitable oil.

Baku, EBRD sign loan deal to refurbish AZGRES 

Azerbaijan and the European Bank for Reconstruction and Development (EBRD) have signed a loan agreement to finance upgrades at Azerbaijan State District Power Plant (GRES) in Minchegaur, a source at Azerenerzhi said, Interfax News Agency reported.
"A loan agreement was signed by Azerenerzhi President Etibar Pirverdiev on behalf of the Azerbaijani government for US$115 million and an agreement on a state guarantee was signed by Finance Minister Samir Sharifov. Raymond Conway, the head of the EBRD's office in Baku, signed the agreement on behalf of the EBRD," the source said.
The loan is being provided at a rate of Libor + one per cent for 12 years. The project costs are estimated at US$150-152 million. Azerenerzhi will provide the remaining resources.
The resources will be used to improve the reliability and effectiveness of work at the plant, improve safety at the plant and lower greenhouse gas emissions.

EU and Azerbaijan agree to set up energy partnership 

The European Union and Azerbaijan agreed on November 7th to establish a partnership to strengthen EU energy security and giving Azerbaijan more access to the bloc's energy market, New Europe reported. 
"Close relations with Azerbaijan as a key energy supplier as well as an important transit country to the EU contribute to enhancing our energy security," said EU Energy Commissioner, Andris Piebalgs. 
The agreement was signed by EU Commission President, Jose Manuel Barroso, and Azerbaijan President, Ilham Aliyev. "This is the start for a new era in our relationship," Aliyev told reporters after the meeting. 
By strengthening ties with the EU, Azerbaijan was not only seeking to strengthen its economical development but also to build a democratic society, Aliyev said. "We are sharing the same convictions and principles," he added. 
In 2004, Azerbaijan and the EU agreed on building a closer relationship focusing on economic ties and political cooperation. 
The new energy deal includes a gradual harmonization of Azerbaijani legislation with EU rules in the energy field. It also aims at making energy supplies and transit systems from Azerbaijan and the Caspian basin to the EU more safe and secure. 
In addition, Azerbaijan and the EU agreed to develop a common energy demand policy and exchange energy expertise.
British energy giant BP announced in September that it would start production at the end of the month on the massive Caspian Sea gas field Shah Deniz, which will provide Europe with an extra source of fuel. 
The Shah Deniz field in Azerbaijan, whose major shareholders are Britain's BP, Norway's Statoil and the Azerbaijani state oil company SOCAR, will feed a new South Caucasus Pipeline crossing Azerbaijan and Georgia before terminating in the Turkish city of Erzerum, where it will link up with European networks to Greece and Italy.
The pipeline, which is being built to supply energy-hungry Europe, will have the added effect of loosening Russia's grip on energy markets in Azerbaijan and Georgia.
Aliyev also said Azerbaijan is interested in the realisation of another project set to boost Europe's energy security: the Odessa-Brody-Plock pipeline. Aliyev reminded that this question was discussed with the Ukrainian President Viktor Yushchenko. In addition, an Azerbaijani-Ukrainian working group was created to study the possibilities of Azerbaijan participating in the project. 
"We also discussed that Azerbaijan's participation in this project should not be limited to oil delivery for the pipeline, since Azerbaijan also intends to participate in the refinery and realisation of oil products," he said. Mentioning the interest of the European Union towards the project, Aliyev said that this factor creates a favourable condition to resolve this problem. In addition, Aliyev said that in the future Azerbaijan intends to produce large volumes of oil. "The alternative ways of delivering oil to the European markets are very important to us," Aliyev added.

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EXTERNAL DEBT

Azerbaijan's external debt reaches US$1.8bn 

The external debt of Azerbaijan stood at US$1.8 billion and per capita foreign debt equalled US$215, Ziyad Samadzade, chairman of economic policy standing commission of parliament said, APA reported. 
Samadzade said the ratio of external debt to GDP is 9.2 per cent. "This ratio is 50-60 percent in some CIS states. It is risky. We should use credits efficiently to balance debt policy. The increase of external debt is not problematic," he said. Samadzade thinks the external debt of Azerbaijan will not exceed the current limit. And, Azerbaijan is expected to turn to a creditor in near future, it was reported. 

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TRANSPORT

Turkish companies to build Baku highway for US$51m 

Azerbaijan's Transport Ministry has signed a contract with Turkish companies, MacYol and Kopri BM, to build the first ring highway around Baku, Dzhavid Gurbanov, head of the ministry's highway and transport service department, said, Interfax News Agency reported. 
"We have signed a document and have set a date for construction to begin. MacYol and Kopri BM have agreed to do the work for US$51 million. Construction will start in the middle of November," Gurbanov said, adding that the necessary technology and equipment is being prepared now.
The Kuwait Fund for Arab Economic Development will provide US$14.6 million and the Abu Dhabi Fund for Development will provide US$10 million. The Azerbaijani government will provide the remaining funds.
The Baku Ring Highway will be 21.5 kilometres long and join the two main highways the run from Baku to various regions in the country.

Kars-Tbilisi-Baku: the railway link that will connect Europe with Asia 

The idea of connecting the rail networks of Azerbaijan, Georgia and Turkey was first discussed during the Joint Transport Commission meeting in July 1993. The initiative was later integrated into the Master Plan on the Trans-European Railway (TER) networks sponsored by the United Nations Economic Commission for Europe (UNECE), New Europe reported.
In July 2002, the Ministers of Transport of Azerbaijan, Georgia and Turkey signed a protocol confirming the route and at a February 28, 2005 meeting the parties agreed to conduct a feasibility study. UNECE lists this route among Priority 1 projects that could be funded and implemented rapidly by 2010. The realisation of this project depends on the construction of a 98 kilometre-long (60 miles) segment of rail from Kars in Turkey to Akhalkalaki in Georgia (68 kilometres in Turkey, 30 kilometres in Georgia, and the rehabilitation of the Akhalkalaki-Tbilisi line).
The estimated cost of the project is about US$400 million. Today, there are two operational railroads in the South Caucasus, which are part of the EU-sponsored TRACECA initiative that links Azerbaijan's and Georgia's transportation networks. These are the Baku-Tbilisi-Poti and the Baku-Tbilisi-Batumi railways. 
There is, however, no rail link between Georgia and Turkey. The construction of the Kars-Akhalkalaki railroad will connect Georgian and Turkish railroads and facilitate trade in the East-West direction. For example, a cargo from China could be delivered to Aktau (Kazakstan) and then transported by railway ferries to Baku and shipped directly to Istanbul and onward to Europe via the Baku-Tbilisi-Akhalkalaki-Kars-Istanbul rail system.
Likewise, a shipment from Europe could be easily transported to the South Caucasus, Central Asia or China. Hence, Kars-Akhalkalaki serves as a rail connection that will eventually unite railway networks of China-Central Asia-South Caucasus-Turkey and the European Union. 
This project is able both to bring substantial benefits for all countries of the region and to best serve European interest. This project has appeared as the response of the states of the region to the needs of the growing international trade, as a result of normal search for an operational transport network capable of absorbing rising transport flows. 
Though not being a direct beneficiary of the project, Azerbaijan recognises the potential it possesses and extends its full support to the idea. Economically viable, the project perfectly compliments the new geopolitical formation of the European continent by offering an alternative rail link to Asia. 
The president of Azerbaijan, Ilham Aliyev, commenting on the Kars-Tbilisi-Baku railway link underlined its strategic importance for the regional development and commerce between the countries of the region.

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