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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: 309- (26/09/06)
The anomaly of elections
There are municipal elections coming up in October in Azerbaijan and
parliamentary ones coming up in November. It is a curious fact that dictatorial
regimes feel it necessary to hold elections. It is hypocrisy of course, the
homage that vice pays to virtue; but why?
Most people want to be loved. There are others who are quite content to be
feared. There are few who are utterly indifferent to what others think of them,
'the happy few.'
President Ilham Aliyev of Azerbaijan is a sensitive soul who does care about
public opinion about him. He wants, moreover, to be esteemed, in at least the
way his father, Haidar Aliyev, who had been a KGB general was as a resolute
dictator and father of his people. But the paternity needs to be proved. Hence
the need for elections.
The elections will consequently be rigged. But one day there will be genuine
elections in the country in which he and his kind will be wiped out.
The Ukrainian democrat comes to town
President Viktor Yushchenko of Ukraine made his first official visit to
Azerbaijan on September 7-8th. The trip produced seven bilateral cooperation
agreements, including a commitment to expand energy cooperation.
He has the advantage of having been genuinely elected, albeit now an unpopular
figure in Ukraine, after two unsatisfactory years since the Orange Revolution of
2004.
Yushchenko said his administration's top priority was to forge deals concerning
"the extraction, refining and sale of oil," the Trend news agency
reported. In talks with Aliyev, he touted Ukraine's Odessa-Brody pipeline as a
potentially new energy conduit linking Azerbaijan, and possibly Kazakhstan, to
Western European markets. The Yushchenko-proposed route would bypass Russia, as
does the already existing Baku-Tbilisi-Ceyhan pipeline.
Following his discussions with Azerbaijani leaders, the Ukrainian president
acknowledged that Kiev and Baku were not a natural fit as partners. "Our
talks were easy-going, but there are problems in our relations that we are ready
to resolve," he said.
For much of the past two years, Ukraine and Azerbaijan have been at political
odds. Yushchenko, who led the Orange Revolution in Kiev in late 2004, became the
embodiment of the democratisation movement in the former Soviet Union. Aliyev,
meanwhile, drew international criticism in connection with the Azerbaijani
government's manipulation of the 2003 presidential and 2005 parliamentary
election. In short, the two seemed to be polar opposites in terms of political
practices.
After Yushchenko's triumph in Ukraine, Azerbaijan was among the
authoritarian-minded former Soviet states that took action to prevent the spread
of what became known as the Orange Revolution phenomenon. In September 2005, for
example, authorities at Baku airport barred an activist of the Ukrainian youth
organization Pora, which served as a catalyst for the Orange Revolution, from
entering Azerbaijan, prompting a protest from Kiev.
The "cold war" between Kiev and Baku reached a peak in October of last
year in a dispute over the fate of Rasul Guliyev, an Azerbaijani opposition
leader who is wanted in Baku they say on "embezzlement charges."
Guliyev, who denies the allegations against him, was attempting to return to
Azerbaijan to take part in the country's parliamentary elections.
Azerbaijani authorities barred his plane from landing in Baku and he was
diverted to a Ukrainian airfield. With an international warrant against him, he
was briefly detained in Ukraine, but then released. The decision against keeping
Guliyev in custody caused displeasure in Baku, and Aliyev reportedly personally
called Yushchenko to complain.
Geopolitical circumstances in the Caspian Basin seem to have forced the
Azerbaijani and Ukrainian leaders to set aside their philosophical differences.
From Azerbaijan's perspective, Ukrainian political support can reinforce Baku's
stance toward a Nagorno-Karabakh settlement. In a September 7th statement,
Aliyev expressed thanks for "Ukrainian understanding of Azerbaijan's
Karabakh position."
Addressing students of Baku Slavic University on September 8th, Yushchenko
placed Ukraine firmly on Azerbaijan's side, saying that "recognition of
Azerbaijan's territorial integrity is a necessary condition for settlement of
the Karabakh conflict."
Yushchenko's Karabakh statement appears linked to Ukraine's desire for
Azerbaijani support in the energy sphere. Kiev's efforts to reduce its energy
dependence suffered a considerable blow in early September, when Russia cut a
deal with Turkmenistan on gas supplies, thereby denying Ukraine significant
access to Ashgabat's abundant energy reserves. The Russian-Turkmen deal will
likely require that Ukraine pay a significantly higher price for gas imports, if
indeed there is sufficient supply after the Gazprom contract is fulfilled.
Russia also wields considerable influence over Ukraine's oil supplies. The
Odessa-Brody pipeline was supposed to reduce that dependence, but the oil route,
which is capable of transporting 40 million tons of oil per year, remains under-utilised.
Yushchenko sought an Azerbaijani commitment to ship a relatively modest amount -
about 4.5 million tons - via Odessa-Brody bound for Western markets. Aliyev did
not give a clear response, although he indicated that diversification of
Azerbaijan's energy export routes is a basic element of the country's oil
strategy. "We have already established three pipelines to export our oil to
world markets. However, as oil exploration in Azerbaijan increases we consider
new facilities for export," Aliyev said.
Azerbaijan targets OSCE special representative for criticism
Azerbaijan's patience is wearing thin over the lack of movement toward
Nagorno-Karabakh peace settlement, and officials in Baku are taking out their
frustration on the OSCE's trouble-shooter responsible for monitoring the
cease-fire.
Hopes for a breakthrough in the Karabakh peace process, so high at the outset of
2006, now appear to be thoroughly dashed. In a mid-August speech to Azerbaijani
diplomats, President Ilham Aliyev indicated that Baku's position is hardening.
"Azerbaijan will not tolerate the creation of a second Armenian state on
its territory," the president said.
Another sign that trouble may be looming on the horizon is the vehement
criticism coming from Baku aimed at Andrzej Kasprzyk, the special representative
of the OSCE chairman-in-office on Karabakh-related issues. Recent statements by
Azerbaijani officials, backed by media reports, have portrayed Kasprzyk as
incompetent, biased in favour of Armenia and possibly involved in nefarious
financial dealings under the guise of diplomatic immunity.
Having held the special representative designation for nearly a decade,
Kasprzyk's responsibilities include managing existing cease-fire monitoring
mechanisms and promoting confidence-building measures between Armenia and
Azerbaijan. He also supports the OSCE's Minsk Group in promoting a lasting peace
settlement for Karabakh.
Now it appears that Kasprzyk no longer enjoys the confidence of Aliyev's
administration. Dissatisfaction with Kasprzyk's handling of a recent inquiry
into a series of fires in areas of Azerbaijan under occupation by Armenian
forces triggered Baku's attacks against him. The fires began breaking out in
June. Convinced that the blazes had been deliberately set by Armenians,
Azerbaijani officials pressed Kasprzyk to look into the matter, and quickly
started to criticize him for not pursuing the investigation vigorously.
Azerbaijani officials reportedly became enraged when Kasprzyk's report went into
specific detail about the damage done by the fires, but shied away from
examining how they started. The closest the report got to taking a stand was a
suggestion that, given the arid conditions prevailing in the area during the
summer, fire was a perennial threat.
"I am not an investigator," the Arminfo news agency quoted Kasprzyk as
saying. "I could not find any evidence about what caused the fires."
He indicated that international efforts to monitor the fires was hampered by
gunfire exchanges between Armenian and Azerbaijani forces deployed along the
so-called contact line.
On August 17, the Turan news agency quoted Novruz Mamedov, the head of the
Azerbaijani presidential administration's International Department, as
complaining that Kasprzyk and the Minsk Group co-chairs had "displayed a
belated reaction" to Baku's request for an investigation, thus
"showing their one-sided position."
The same day, Azerbaijani Foreign Minister Elmar Mammadyarov stated that
"the non-prevention of Armenian-instigated blazes in the occupied
territories may lead to an ecological catastrophe." Other Azerbaijani
officials assailed Yerevan, accusing Armenian authorities of taking no action to
fight the fires. Azerbaijani authorities at the same time appealed to the
Parliamentary Assembly of the Council of Europe and UNESCO for help in
containing the fires. Armenian officials have generally maintained a low profile
in the controversy.
From Baku's viewpoint, the fires are politically motivated, designed to prevent
the resettlement of Azerbaijani internally displaced persons. "If the fires
continue, it will create problems for people who will move to these areas;
people will not be able to use this land for at least the next five-10
years," Araz Azimov, Azerbaijan's deputy foreign minister, told reporters.
Azimov went on to ridicule Kasprzyk's assessment on the fires. "Kasprzyk
himself admitted that he is not an ecologist," Azimov said.
"Therefore, his inference that natural causes were behind the fires in the
occupied territories is completely groundless," Azimov said.
Despite their clear dissatisfaction with Kasprzyk's performance, Azerbaijani
officials have not taken formal action to prompt the special representative's
replacement. Without such action, Kasprzyk said he intends to keep performing
his duties. "I will not resign," the Turan news agency quoted him as
saying August 26th.
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ENERGY
Baku to contribute to European energy security
Azerbaijan is ready to make its contribution to efforts aimed at ensuring energy
security in Europe, Azeri President, Ilham Aliyev, said after talks with
Slovenia head, Janez Drnovsek, in Bled, Slovenia, Interfax News Agency reported.
"Azerbaijan, as a country that produces oil and gas, is ready to play its
role in bolstering Europe's energy security," he said. "New
possibilities are being created in this sphere. Azerbaijan is becoming a major
producer and exporter of oil and gas," Aliyev said. Large-scale projects
are being implemented to ship oil from Azerbaijan to the Mediterranean Sea
coast, the Azeri president said. A major gas pipeline that will allow the
republic to deliver gas to Europe is to begin operating later this year, he
added. "Of course, all this will help strengthen cooperation between
Azerbaijan and Europe in the energy sector. We are ready for it and want it. We
also feel that European countries share this aspiration. In these conditions
Azerbaijan is turning into a new and highly important energy source for European
consumers," Aliyev said.
Azeri-Chirag-Gunashli pays 825 million in 2005
Azerbaijan received revenue of 825m Euro from the Azeri-Chirag-Gunashli project
in 2005. BP-Azerbaijan President David Woodward said on August 28th at a
presentation of the company's third long-term development report for 2005 that
of this amount, 807m Euro was received from the sale of profitable oil, and 18m
Euro in other payments. Woodward said that Azerbaijan would receive three
billion Euro from the project in 2006, including revenue from profitable oil and
other payments. According to the report, this year Azerbaijan's revenue from the
Azeri-Chirag-Gunashli, the Shah Deniz, the Baku-Tbilisi-Ceyhan and the South
Caucasus pipeline projects with world oil prices at 40 Euro per barrel is
expected to amount to 1.45 billion Euro, at 50 Euro per barrel - 2.1 billion
Euro, and at 60 Euro per barrel - 2.8 billion Euro, he said. In total,
Azerbaijan's net revenue from the Azeri-Chirag-Gunashli project during the
entire period of its development will account for 82-83 per cent of total
revenue.
Petroleum fund export revenue could exceed US$52m
The State Petroleum Fund of Azerbaijan is expecting revenue of 46.2 million
manta (more than US$52m) in 2006 from high prices for oil exported by Azeri
state oil company SOCAR, a source in the fund said, Interfax News Agency
reported.
"We are expecting revenue of 46.2m manta from the difference between
domestic wholesale and export prices for oil. Of that amount, SOCAR will
transfer 5.3m manta in the fund," the source said. Azerbaijan's federal
budget for 2006 is based on an oil export price of US$40 per barrel. SOCAR will
pay 25 per cent of the difference between the domestic and export price amid an
oil export price of up to US$40 for one barrel, 50 per cent amid a price of
US$40-US$50 per barrel and 75 per cent for a price higher than US$50 per barrel.
The State Petroleum Fund receives income from oil contracts, namely from the
sale of profit oil.
SOCAR to build pipeline from Shah Deniz field
Azeri state oil company SOCAR is to build the Sangachal-Garadag-Gadzhikabul
pipeline to transport gas from the Shah Deniz field, Azerigaz Deputy CEO, Nazim
Samedzade, said recently, New Europe reported.
"SOCAR is to be responsible for the construction of the new
Sangachal-Garadag-Gadzhikabul pipeline. According to calculations, construction
work should begin by the end of 2006 and be completed in the first half of
2007," he said.
The new Sangachal-Garadag-Gadzhikabul pipeline will stretch 68km and will cost
US$45m. Gas production will begin at Shah Deniz in the third quarter of 2006.
Shah-Deniz holds an estimated 625bn cubic metres of gas and 101m tonnes of
condensate. Stage-1 development includes the production of 178bn cubic metres of
gas and 34m tonnes of condensate. During peak production under Stage-1 the field
will produce 8.4bn cubic metres of gas and two million tonnes of condensate a
year. Gas will be produced from 15 wells at the TPG-500 platform at sea depths
of 105 metres.
Gazprom, E.ON sign NEGP contract
Russian gas giant Gazprom and Germany's E.ON Ruhgras AG recently signed an
agreement to extend current contracts for natural gas supplies by 15 years (from
2020 to 2035) and have signed a contract for additional gas supplies through the
North European Gas Pipeline, Gazprom said in a press release, New Europe report.
Gazprom Deputy CEO, Alexander Medvedev, and E.ON Ruhrgas CEO, Burckhard Bergmann,
signed the documents. According to the extended contracts, annual supplies of
gas will amount to about 20bn cubic metres, and total supplies - up to 300
billion cubic metres.
The contract to supply gas through the NEGP calls for annual supplies of up to
four billion cubic metres. Total supplies from 2010-2011 to 2036 will amount to
up to 100 billion cubic metres. E.ON also said that it is taking part in the
construction of two new gas pipelines that will connect the NEGP with the
existing gas supply system in Germany.
"These contracts strengthen our partnership with the world's largest
producer of natural gas," the press release quoted Bergmann as saying.
"At the same time, we are compensating for a drop in supplies from Western
European sources and are ensuring additional volumes of gas for the growing
European market," he said.
"In the gas business, long-term contracts provide the possibility not only
of meeting current obligations but of creating a foundation for the future, by
developing modern infrastructure to ensure reliable supplies of natural gas for
the coming decades," the press service quoted Medvedev as saying.
The North European Gas Pipeline will have a capacity of 55 billion cubic metres.
Its first line, which is due to begin operating in 2010, will have a capacity of
27.5 billion cubic metres.
The first contract for the delivery of gas via the North European Gas Pipeline
was signed with WINGAS GmbH, a gas trading joint venture between Gazprom and
BASF, in 2005. The 25-year deal envisions the delivery of nine billion cubic
metres of gas. Denmark's DONG Energy has also signed a contract for one billion
cubic metres of gas a year over the next 20 years and it will have the
possibility to significantly increase annual supplies.
BP-Azerbaijan confident about safe BTC operations
BP, the operator for the construction of the Baku-Tbilisi-Ceyhan pipeline is
confident about the long-term safe operation of the pipeline, BP-Azerbaijan
Press Secretary, Tamam Bayatly, said recently, Interfax News Agency reported.
"In terms of design, engineering and construction technology, the BTC is of
the highest standards.
The use of complicated mechanisms and technology during construction gives us
the right to say that the pipeline will operate totally safely for at least 40
years," Bayatly said. She said the pipeline is totally protected against
corrosion and damage, both on the inside and on the outside. The international,
ecological organisation Platform earlier announced that the BTC is threatened by
corrosion, which might lead to an ecological catastrophe in Azerbaijan, Georgia
and Turkey.
The pipeline stretches 1,767 kilometres (443km through Azerbaijan, 248km through
Georgia and 1,076km through Turkey) and has a capacity of 50m tonnes of oil per
year. Construction began in April 2003 and cost US$3.9 billion. The participants
in the project are BP (30.1 per cent), Azeri state oil company, SOCAR, (25 per
cent), Chevron (8.9 per cent), Statoil (8.71 per cent), TP-AO (6.53 per cent),
Itochu (3.4 per cent), ConocoPhillips (2.5 per cent), INPEX (2.5 per cent),
Total (5 per cent) and Amerada Hess (2.36 per cent).
SOCAR to sign Shah Deniz loan agreement
Azeri state oil company, SOCAR, plans to sign an agreement to attract a credit
to finance its share in the Shah Deniz project, company president, Rovnag
Abdullaev, announced on August 14th, Interfax News Agency reported.
"We are holding talks with a number of foreign commercial banks to attract
a credit. The funds will have to be at very attractive conditions for us - at
the lowest commercial rates. We have not yet had a credit with these
conditions," he said, without disclosing the amount of the loan, its terms
or the names of the banks with which talks were being held.
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FOREIGN LOANS
Unibank acquires 7.5m syndicated loan from EBRD
Azerbaijan's UniBank and the European Bank for Reconstruction and
Development (EBRD) signed an agreement on the allocation of a 7.5 million Euro
syndicated loan to the Azerbaijani bank, a source in UniBank said, Interfax News
Agency reported.
"UniBank has been issued a second syndicated loan for 7.5 million Euro from
the EBRD and six banks from Europe, the US and Russia. The EBRD share in the
loan is 2.5 million Euro. The money will be used to finance projects in small
and medium-sized businesses," the source said.
UniBank signed an agreement with the EBRD in 2005 on a three-year syndicated
loan for five million Euro. Of that amount, the EBRD provided 1.5 million Euro,
while Austrian Creditanstalt and Anglo-Romanian Bank provided 3.5 million Euro.
Shareholders in UniBank include the EBRD with a 15 per cent stake and DEG with
an 8.33 per cent stake. UniBank ranked 457th by asset value in the
Interfax-1000: CIS Banks list for 2005, and fourth among more than 40 banks in
Azerbaijan. The list is compiled by the Interfax Centre for Economic Analysis.
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TELECOMMUNICATIONS
Azercell to invest 142m Euro
Azercell plans to invest 142.183m Euro in cellular network development and
social projects this year. The company plans to invest 51.7m Euro in the
cellular network in the second half of 2006, Halim Atesh, its general director
said at a press conference, Interfax News Agency reported.
Investment was 90.4m Euro at the start of 2006 and totals 495.108m Euro for the
9.5 years in which the company has operated, Atesh said. "Azerbaijan's
cellular market grew five per cent in the first half of 2006 and Azercell
accounted for 80 per cent of that growth. Azercell had 1.966m subscribers at the
end of June, and has more than two million now. This figure has doubled in the
last two years," Atesh said. Azercell Telecom is owned by Dutch holding
company Fintur (64.3 per cent) and the Azerbaijani Communications Ministry (35.7
per cent). It controls 76 per cent of Azerbaijan's cellular communications
market. Its network covers 74.5 per cent of the country's territory and 98 per
cent of the population use its services.
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