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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: 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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