MoU signed between AZPROMO and ISPAT; Country presentation of Azerbaijan was held in Chicago; Azerbaijan's business opportunities presented in Washington; Meeting of Joint Commission and business forum held between Azerbaijan and Switzerland.
Multilateral strategic partner Azerbaijan Export & Investment Promotion Foundation MoU signed between AZPROMO and ISPAT AZPROMO is the main partner of the bne:Invest in Azerbaijan newsletter. www.azpromo.az Content: 7 Top Story 8 Interview 11 Feature 13 Sector 15 Chart 16 News in brief bne: Invest in Azerbaijan June 2014 www.bne.eu Follow us on twitter.com/bizneweurope On May 13-15 a session of the World Association of Investment Promotion Agencies (WAIPA) and XIXth World Investment Conference were held in Istanbul, Turkey. Besides discussing a proposal to move the organization’s headquarters to Istanbul, a new strategy prepared by the governing committee and permanent secretariat of WAIPA, as well as a preliminary action plan on realizing this strategy were also presented at the conference. Moreover, in pursuant to a protocol signed by the heads of the both states at the session of the Council of Supreme Strategic Cooperation between Azerbaijan and Turkey on September 11, 2012 in Baku, a memorandum of understanding (MoU) was signed between Azerbaijani Export and Investment Promotion Fund (AZPROMO) and Investment Support and Promotion Agency under the prime minister of Turkey (ISPAT). Note: WAIPA was founded in Geneva in 1995 and has 244 members from 162 countries. The main objective of WAIPA is to enhance cooperation among investment promotion agencies and maintain the exchange of information in the field of investment attraction. For three years AZPROMO has been director of South Caucasus and Central Asia in the WAIPA Steering Committee, and in January this year, the President of AZPROMO Rufat Mammadov was appointed the vice-president of WAIPA by a decision of its Steering Committee.
AZPROMO is the main partner of the bne:Invest in Azerbaijan newsletter. www.azpromo.az
Content: 7 Top Story 8 Interview11 Feature13 Sector15 Chart16 News in brief
bne:Invest in Azerbaijan
June 2014 www.bne.eu
Follow us on twitter.com/bizneweurope
On May 13-15 a session of the World Association of Investment Promotion Agencies (WAIPA) and XIXth World Investment Conference were held in Istanbul, Turkey.
Besides discussing a proposal to move the organization’s headquarters to Istanbul, a new strategy prepared by the governing committee and permanent secretariat of WAIPA, as well as a preliminary action plan on realizing this strategy were also presented at the conference.
Moreover, in pursuant to a protocol signed by the heads of the both states at the session of the Council of Supreme Strategic Cooperation between Azerbaijan and Turkey on September 11, 2012 in Baku, a memorandum of understanding (MoU) was signed between Azerbaijani Export and Investment Promotion Fund (AZPROMO) and Investment Support and Promotion Agency under the prime minister of Turkey (ISPAT).
Note: WAIPA was founded in Geneva in 1995 and has 244 members from 162 countries. The main objective of WAIPA is to enhance cooperation among investment promotion agencies and maintain the exchange of information in the field of investment attraction. For three years AZPROMO has been director of South Caucasus and Central Asia in the WAIPA Steering Committee, and in January this year, the President of AZPROMO Rufat Mammadov was appointed the vice-president of WAIPA by a decision of its Steering Committee.
On May 19 in Chicago the 9th Annual Silk Road Conference was organized by Central Asian Productivity Research Center and Northern Illinois University with the support of Azerbaijan
On May 20, a presentation titled "Business and Trade with Azerbaijan" was organized in the Ronald Reagan International Trade Center (ITC) in Washington by AZPROMO and the United States-Azerbaijan Chamber of Commerce (USACC). The purpose of the event was to educate the audience about the fast-developing and emerging Azerbaijani market, with focus on business opportunities in non-energy industries, including information and communication technologies, chemical and waste management industries, agriculture, renewable energy and tourism.
Export and Investment Promotion Foundation (AZPROMO), Silk Way Airlines, Turkish Airlines and Hacitepe University of Turkey.
AZPROMO representative in the United States Elshan Baloglanov delivered a country presentation on "Doing Business with Azerbaijan: Opportunities and Prospects", in which he particularly highlighted industry, including the Sumgait Chemical Industrial Park and Techno Park, both of which should be attractive to U.S companies and investors eager to do business with Azerbaijan.
Other prospects for U.S. businesses in areas such as IT, tourism, hotel & hospitality management, insurance for agriculture industry, food processing and packaging, organization of agro-services in Azerbaijan’s rural areas, and the implementation of projects that will assist, facilitate, support and increase export capacities of small scale growers and food processors were also highlighted during the presentation.
Andrew Gelfuso, Director of the Office of Trade Promotion at Ronald Reagan Center; Aaaron Brickman, Deputy Executive Director at SelectUSA; Mark A. Stuckart, Product and Business Development at Overseas Private Investment Corporation; Susan Sadigova, USACC Executive Director; and Elshan Baloghlanov, AZPROMO representative in the United States delivered presentations at the event.
Mr. Gelfuso stressed the importance of holding business and trade events in the U.S. in order to inform the American audience about the vast opportunities in countries like Azerbaijan.
Representatives from AZPROMO and USACC delivered country presentations with a particular focus on the recent economic achievements of
Azerbaijan and the current business, investment and cooperation opportunities between the two countries, as well as on legal and tax matters, cultural and regulatory considerations in doing business with Azerbaijan.
In addition, the audience was informed about AZPROMO’s activities and its mission, especially
about the “Flavors of Azerbaijan" and "Wine & Spirits of Azerbaijan” projects where the speaker invited food and beverage importers, wholesalers and distributors operating in the United States to cooperate with export-oriented companies of Azerbaijan, and benefit from AZPROMO’s trade facilitating services.
Meeting of Joint Commission and business forum
held between Azerbaijan and Switzerland
On May 26, the 6th meeting of the Joint Commission on Trade and Economic Cooperation between the Government of the Republic of Azerbaijan and the Swiss Federal Council was held in Bern. The meeting was attended by the co-chairs of the Joint Commission – the Minister of Economy and Industry Shahin Mustafayev and the representative of Federal Council on Trade Agreements (SECO) of Swiss State Secretariat
for Economic Affairs Libyan Leu, as well as the officials of the relevant agencies of the two countries represented in the committee.
The co-chair of the Joint Commission, the Minister of Economy and Industry Shahin Mustafayev, highlighted that Azerbaijan attaches great importance to relations with Switzerland, as well as hailing the importance of mutual
visits by heads of states and the agreements reached during these visits in the development of cooperation between the two countries.
The necessary legal framework was established between the two countries, and more than 20 bilateral documents, including the promotion and reciprocal protection of investments, trade and economic cooperation, the avoidance of double taxation were signed. 81 companies with Swiss capital are operating in services, industry, trade, construction, transport, communications, financing and other sectors in Azerbaijan.
Azerbaijan is known as a reliable partner in the world today and has trade relations with more than a 150 countries. Over 50% of foreign trade turnover is accounted for by European countries, and last year the trade turnover between Azerbaijan and Switzerland increased by 8.5%.
Minister Shahin Mustafayev pointed out that the non-oil sector was a priority area of the economy of Azerbaijan, and Switzerland invested $185.3m into this sector during 1995-2013.
It was noted that so far, $70m has also been granted to Azerbaijan by the Swiss government. Including regional projects, 32 projects were carried out in Azerbaijan by SECO, and the implementation of 15 projects has already been completed. Currently, 17 projects are under implementation. Within the framework of the "Investment climate in Azerbaijan" project, draft laws on licenses and permits, the regulation of inspections in the field of entrepreneurship and the protection of entrepreneurs' interests were prepared and an electronic information portal on permissions was established.
At present, Azerbaijan is an investment exporter and Azerbaijan has invested into a number of
European countries, along with the neighbouring countries, and Switzerland. For example, SOCAR has acquired Ecco Schweiz, a division of the US oil giant ExxonMobil in Switzerland and now owns a chain of 150 fuel stations in Switzerland.
Mustafayev presented information on the work done during the 5th session of the Joint Commission and the measures taken to expand economic ties. An agreement on technical assistance for the modernization of capital markets between the governments of the two countries was signed and a memorandum on cooperation between "Switzerland Global Enterprise" of Switzerland and AZPROMO.
Furthermore, the successful activity of "Holcim" company of Switzerland in Azerbaijan, as well as the commissioning of a new cement plant for "Holcim-Azerbaijan" OJSC, based on the dry process technology in 2012 was highlighted at the meeting. The water supply and sewerage systems in the cities of Ganja and Shaki have been reconstructed and the construction of a section of the water supply system in Ganja has already been completed. Azerbaijan has successful relations with Switzerland in the fields of energy, agriculture, financing, culture and tourism and health care.
Speaking about future cooperation, Minister Mustafayev hailed the opportunities for expanding cooperation in the fields of industry, agriculture, financing and banking, tourism and other spheres, as well as highlighting the importance of business forums, exhibitions and fairs for the promotion of business ties.
SECO's Leu noted that Switzerland was interested in boosting relations with Azerbaijan, and assured further development in economic ties between the two countries would take place. Moreover, Leu emphasized the significance of the discussion
held at the meeting of the Joint Commission in the development of cooperation between the two countries. At the end of the meeting a protocol on the results of it was signed between Azerbaijan and SECO by Mustafayev and Leu.
The protocol is intended to expand cooperation in industry, trade, investment, agriculture, water, energy, health care, environmental protection, tourism, transport and other sectors.
After the signing the Switzerland-Azerbaijan business forum was held. About 30 companies operating in the food industry, agriculture, construction, energy, tourism, ICT, health and other economic sectors in Azerbaijan, and more than 120 businessmen from both sides took part in the forum.
Speaking at the forum the minister stressed the successful development of economic cooperation and the role the private sector had in expanding ties between the two countries.
Mustafayev presented information on the economy of Azerbaijan. It was noted that, Azerbaijan is a reliable partner, economic and cultural center in the South Caucasus; boasts political and macroeconomic stability and the country has a favourable geographical position. Furthermore, favourable conditions were created for investors in the country and Azerbaijan's economic successes are highly appreciated by the international
organizations. Mustafayev noted that Azerbaijan is the initiator and active participant in major energy and regional transportation projects and plays an important role in ensuring the energy security of Europe.
The minister highlighted business forums as a way of strengthening economic ties and the establishment of new cooperation between Azerbaijan and Switzerland, as well as inviting Swiss companies to take an active part in the implementation of investment projects in Azerbaijan.
Leu spoke about the economy of the country and the measures taken to enhance business relations.
The Executive Director of the Swiss-CIS Chamber of Commerce and Industry, Dorrit Sallis, and the Azerbaijan Ambassador to Switzerland Akram Zeynally hailed Azerbaijan–Switzerland relations in the business forum. Furthermore, the head of AZPROMO, Rufat Mammadov, made a presentation on business and investment opportunities in Azerbaijan.
Within the framework of the business forum a Memorandum of Understanding was signed between Azerbaijan Export and Investment Promotion Foundation and Swiss Joint Chamber of Commerce in Russia and the CIS countries.The business forum ended with a question-and-answer session.
Two signing ceremonies a week apart have served as concrete evidence of the oft-quoted maxim of the late Azerbaijani president Haydar Aliyev, that the relationship between Turkey and Azerbaijan is one of, "One nation, two states".
Aliyev was referring to not just the geographical proximity of the two countries, but the ethnic and linguistic ties, which bind the two: the two languages, Azerbaijani and Turkish being largely mutually comprehensible, and Azerbaijani and Turkish cultures being particularly close. But arguably nowadays it is the economic ties between the two that bind the most strongly.
The first ceremony on May 30 saw Turkey's state upstream operator TPAO buy up Total's 10% stake in Azerbaijan's Shah Deniz gasfield,
taking its holding to 19%, while Turkey's state gas transit company Botas took a 30% stake in the Azerbaijani-backed Trans Anatolian gas Pipeline (TANAP) – a project that will carry that Shah Deniz gas to Europe by 2018.
The second saw Azerbaijani state oil company Socar sign a credit agreement with 23 international finance institutions including the Exim banks of the US, Canada, Japan, Spain and Italy for $3.29bn towards the $5.6bn cost of its planned 10m tonne a year (t/y) STAR oil refinery to be built on Turkey's Aegean coast. This deal is not only the biggest project finance deal in Turkish history, but at 18 years also boasts the longest maturity.
It will have huge economic consequences for Turkey. Once operational in 2018, the plant will
produce 4.95m t/y of low sulphur diesel, knocking an estimated $2.5bn off Turkey's current account deficit. In addition, it will supply an annual 1.3m t/y of Naphtha and 455,000 t/y of Xylenes as feedstock for the adjacent Petkim petrochemical plant, which is 61% owned by Socar. "This is the biggest real sector project in Turkey for the past 30 years," said Socar Turkey's head, Kenan Yavuz, at the signing ceremony, explaining that sourcing feedstock from the new STAR refinery would save Petkim as much as $100m a year and greatly enhance the company's ability to compete with imports.
According to Socar president Rovnag Abdullayev, the STAR plant is only one facet of a total $10bn investment in the Petkim site, which will also see the creation of a dedicated chemical industry park and logistics complex.
Azerbaijani Energy Minister Natig Aliyev noted that the STAR refinery and Petkim investments coupled with the TANAP pipeline will see Azerbaijan investing over $20bn in Turkey over the next five years. "From the first days of independence, our road (to market) was through Turkey," he said. "We used to receive assistance from other countries, now we invest in other countries."
Pipeline to EuropeArguably the most important part of that investment is in the 31bn cubic metre a year (cm/y) TANAP pipeline, planned to carry Azerbaijani gas to Europe via Turkey. The $7bn pipeline will be developed by a consortium in which Azerbaijan holds 58%, Turkey through Botas 30%, and BP having agreed to take a 12% stake.
Speaking to bne at the recent TANAP and Shah Deniz signings, BP Turkey president Bud Fackrell said that with Turkey's TPAO having taken over Total's stake in the Shah Deniz gasfield, the two projects now have greater alignment and will be
able to progress much faster.
The BP-led consortium developing Shah Deniz made its final investment decision on the second phase of the field late last year and will now push ahead with development to produce an annual 16bn cm/y of gas by 2018, which will be delivered to Turkey via the existing South Caucasus gas line. From there, it will be transited across Turkey through the planned TANAP line.
Turkey will take 6bn cm/y to meet growing local demand in the west of the country, with the gas being taken off close to the western city of Eskisehir. The remaining 10bn cm/y will be transited to the Turkey-Greece border where it will pass into the planned 20bn cm/y Trans Adriatic (TAP) Pipeline.
TAP, which is being developed by a consortium led by Socar (20%), which last year bought 66% of Greek transit pipeline operator DESFA, will run through Greece and Albania and then across the Adriatic Sea to Italy, from where existing transit lines can carry the gas to markets in central and northern Europe.
Other TAP consortium members are currently BP (20%), Statoil (20%), Fluxys (16%), Total (10%), E.ON (9%) and Axpo (5%). That though may be set to change with Socar officials telling reporters that both Total and E.ON are planning to leave the TAP consortium. Neither company has yet commented on the reports, but if correct it would offer an interesting opportunity for Turkey's Botas to take a stake in a gas pipeline downstream from Turkey, further cementing ties with Azerbaijan. And, in the process also further cementing relations with neighbouring Greece, to which Turkey has for the past seven years been exporting volumes of the Azerbaijani gas it has been importing via the South Caucasus pipeline, and further contributing to much-needed stability on Turkey's western borders.
Azerbaijan Leasing Company Ltd, or Ansar Leasing, was established by The Islamic Corporation For The Development of The Private Sector (ICD) and was officially registered in December 2008. With capital of AZN5m on its books and guided by Sharia law, Ansar Leasing’s aims to become a leading player on the Azerbaijani leasing market. Jafar Babayev, Executive Director at Ansar Leasing, talks to bne:Invest in Azerbaijan about the company's activities and prospects.
Whose idea was it to set up Ansar Leasing and when did it begin operating?
The decision was made by ICD to open the Azerbaijan Leasing Company, Ansar LLP, which began to operate from April 2009.
Why was it set up in Azerbaijan and was the market ready for this relatively new (for Azerbaijan) service?
Our feasibility study indicated that the Azerbaijani market was very dynamic and developing rapidly. And although the financial crisis of 2008 didn’t
affect Azerbaijan as badly as it did others, more people began to look for alternative ways to do banking, as they were disappointed with conventional banking. Some saw Islamic banking as an alternative; which is also sometimes called as “ethical banking”.
Another factor was the fact that the majority of Azerbaijan’s population is Muslim and a large proportion of that population felt deprived of the opportunity to arrange their finances according to Sharia law, which forbids borrowing/lending money for interest. So, it was the right time and the right place for ICD to introduce Islamic banking in Azerbaijan, where 98% of population are Muslim. It wasn’t ICD’s first project in Azerbaijan and so they already knew the market and how to meet its growing needs.
What services do you offer and who are your clients?
We offer only one service, the Sharia compliant leasing service, i.e. Ijara. Our main clients/sector are SMEs. We finance SME projects across industries, including construction, medical, IT and education.
One of the reasons our portfolio is mainly built on activities with SME clients is because of the mandate; ICD is required to contribute to member states in the development of the private sector, which it does through financing SME projects in member state countries.
What are you current projects in Azerbaijan and what is planned for the near future?
Ansar Leasing is currently among the top three leasing firms in Azerbaijan (the other two are
Union Leasing and Caucasus Leasing), but Ansar is the only one that is Sharia compliant.
Beginning this year, our goal is to become the biggest leasing company in the region over the next three years. Our previous experience demonstrates that our position in the leasing market is very strong and we have the support of our shareholders. If all goes according to plan, we will be leading Azerbaijan’s leasing market by 2017.
Do you work with International Bank of Azerbaijan's Islamic Banking sector or ICD affiliates in other countries, such as Uzbekistan or Tajikistan?
Yes, we work with the International Bank’s Islamic banking window as partners on a number of projects. We work with other organisations in Azerbaijan that are operated by ICD, but we’re restricted to operate within Azerbaijan by our mandate. Nevertheless, we work with ICD affiliates in Uzbekistan, Tajikistan and Kazakhstan and our cooperation is based on the exchange and sharing of expertise, discussing ways forward for ICD as a whole, etc.
How popular is the Islamic banking concept in Azerbaijan? What is its appeal to clients?
Islamic banking became popular in Azerbaijan over last ten years, largely due to the fact that the majority of the population is Muslim. However, I’d like to point that we don’t request our clients to hold specific religious beliefs; being a Muslim is not a requirement in Islamic banking or in our case, Ansar Leasing. We have clients from all walks of life and different religious backgrounds.
What are the possible obstacles (if any) for leasing companies in Azerbaijan?
There’s a number of issues in Azerbaijani legislation that we’d like to see more regulated. The leasing market in Azerbaijan is largely unregulated. Unlike other CIS countries, leasing trade/services are charged VAT (in other CIS countries leasing companies don’t pay VAT on the services).
This is a taxing situation and is an additional strain on our finances, as it cannot be reimbursed and we can’t pass this cost on to our clients.
That’s another reason why we don’t have many large companies among our clients, as it doesn’t make financial sense to them if they have to pay more in order to cover our VAT costs – the extra cost which can’t be refunded.
For SMEs or individuals the situation is slightly different, as VAT on their borrowing is unlikely to be huge (since they tend to borrow for individual items such as cars, etc.). And unlike big corporates, SMEs or individuals cannot claim back VAT, so it doesn’t make much difference for them.
The Association of Leasing Companies has now prepared a proposal regarding the changes needed to the current legislation, which will also help to reduce corruption. Basically, we suggested that the government relieves leasing companies of paying VAT and introduces a license for leasing companies to operate, like banks (i.e. license to operate and VAT exempt). And this is our major problem, not just for Ansar but for leasing companies.
The proposal is now on the parliament’s agenda and is being reviewed, but we continue to actively draw the government’s attention to the issue of unlicensed leasing operations.
The problem started in January (this year), after the Central Bank of Azerbaijan introduced new
restrictive measures for issuing car loans to private individuals. As a result, many conventional lenders, such as commercial banks, were now limited in their activities, while the number of leasing companies began to rise. Leasing became the only way to lend money for car purchases and make a profit.
Since the beginning of this year, 65 new leasing companies have been registered in Azerbaijan. They’re not all Sharia-compliant and are usually affiliates of banks or car sale distributors. We try to draw the government’s attention to this issue, as it allows almost anyone to enter the leasing market, which makes it difficult to regulate. Introducing a new license as a requirement for all leasing companies which wish to operate in Azerbaijan will remove these companies from the market.
What are Ansar Leasing's long-term objectives? Do you plan to expand into other areas of Islamic banking?
ICD always planned for Ansar Leasing to expand into other areas of Islamic banking, but at present, the legislation doesn’t allow us the scope to expand our activities in Azerbaijan. If the legislation changes, we could start financing Murhaba for example. But no sign of such intentions are currently present.
Do you invest in Azerbaijan and if so, where does the money go and how much has been invested to date?
As we don’t have any activities other than leasing – such as banking advisors or mediators to companies interested in investing in local projects - we can only give advice as a leasing company
on issues concerning leasing. Also, as part of our mandate, we simply aren’t allowed to invest. We have two projects related to expansion plans, but nothing can be confirmed. In your opinion, what is the situation with the private sector in Azerbaijan, its challenges, what can be done and how do you see ICD's role in this?
We all see that everything’s being done in Azerbaijan to develop the private sector in the country. For example, new legislation has been introduced by the government assisting the regulation of the banking sector and facilitating the development of the private sector.
Also government investment in things like infrastructure are helping to develop the private sector, increasing GDP, etc. For example, preparations for the forthcoming European Games will involve building of new roads, construction projects, water and sewage systems, utilities etc. The games will bring profit and development for private companies, such as car sale/rentals, restaurants, tourism, hotels, etc.
Our goal at Ansar is to seize these opportunities, the niche where there might be a demand for our services, before they arise; target the market. ICD is a large organisation that also works with private banks in Azerbaijan as well as separate projects; it was the first organisation that began financing local commercial banks in a Sharia-compliant way and assisting in Sharia-compliant transactions. ICD also has plans to enter other areas of financing/banking, such as sharia compliant insurance.
Russian state-owned oil and gas giant Rosneft is on a roll, signing a succession of deals with oil and gas companies, drilling experts and technology developers. The company now boast partners with state oil companies in Vietnam, India, Cuba and Azerbaijan.
The State Oil Company of Azerbaijan Republic (SOCAR) announced on May 27 a new agreement with Rosneft to set up a joint-venture agreement for oil and gas exploration and production projects in Azerbaijan and Russia, crude swap operations and the joint use of infrastructure.
The announcement came (almost) a year after Russian President Vladimir Putin's visit to Azerbaijan in August 2013, when SOCAR and Rosneft signed the first agreement to set up a new company on a parity basis, which will operate in various countries including Azerbaijan and Russia.
According to local reports, the Russian crude producer wants to increase its presence in
Azerbaijan, and the agreement with SOCAR will give Rosneft the opportunity to take a stake in Caspian Sea projects together with the opportunity to ship oil via the Baku-Tbilisi-Ceyhan (BTC) pipeline. The deal also comes at a time when Rosneft is trying to end the export monopoly on Russian gas owned by state-controlled Gazprom.
It is not clear whether the deal hands Russia any specific concessions over Azerbaijani gas reserves. Undoubtedly, Azerbaijan has become a major energy supplier to Europe, and concerns are being raised in European capitals over the possible effects the deal might have on their hopes to gain greater independence from Russian gas.
Vitaliy Baylarbayov, Deputy Vice President of SOCAR, told the press that Rosneft may seek a stake in the Absheron gas project and could use the BTC pipeline for oil shipments to Europe.
“Rosneft has an interest and is considering participation in the Absheron project,” said Baylarbayov. “If they finally make this decision, we would review it and I am sure we would make a positive decision.” The Absheron gas field is located in the Caspian Sea, around 100 km southeast of Baku and 25 km northeast of the Shah Deniz field. SOCAR and Total each hold 40% in the project and the remaining 20% is held by GDF Suez. Gas production at Absheron is expected to start in 2020 – 2021.
Baylarbayov said that Rosneft could additionally follow in the footsteps of Russia’s Lukoil and use the BTC pipeline for its oil exports to Europe, reported Energy Global. The BTC pipeline is a 1,768 km crude oil pipeline, running from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to
the Mediterranean Sea. The pipeline connects Baku with Ceyhan, a port on the south-eastern Mediterranean coast of Turkey.
“Rosneft also has an interest in shipping its oil via the BTC,” Baylarbayov stated, adding that SOCAR was interested in participating in projects with Rosneft in Russia and other countries.
In addition to launching the joint venture, the two companies plan to cooperate in the marketing and sale of oil, gas and related products, and to jointly use energy infrastructure, such as pipelines and terminals.
"The deal may pave the way for a breakthrough in energy cooperation between Azerbaijan and Russia. Relations between the two countries have not been that great so far," a source at the Russian Energy Ministry says.
The deal is one of many recently signed contracts with companies across a wide range of industries, including service providers, developers and national licensing agencies.
The slew of new contracts facilitates a wide range of new opportunities for Rosneft as it spreads across continents, securing deals with the likes of PetroVietnam, India’s ONGC Videsh and Petrolio from Cuba. The expansionist policy, experts
say, is aimed at increasing Rosneft’ presence in emerging markets. At the same time the new deals will allow foreign businesses to get a slice of the Russian market – something which they have struggled to do in the past.
Putin’s visit to Azerbaijan last year underlined Russia’s growing interest in cooperating with Azerbaijan, which has almost 1 trillion cm in gas reserves, according to BP data.
Azerbaijan plans to start exporting gas from the second phase of the Shah Deniz field to Europe in 2019 via the Trans Adriatic Pipeline (TAP), chosen in June last year by Azerbaijan and Shah Deniz project operator BP. Lukoil, Russia’s largest private oil company, is a member of the consortium developing Shah Deniz, which is a central plank in Europe’s efforts to reduce its energy dependence on Russia. Until the second phase of Shah Deniz comes on-stream, Russia will remain the main transit state for Azerbaijani gas, with 1.55bn cm exported to Russia in 2012.
Absheron and other new fields are expected to increase Azerbaijan gas exports beyond the promised 16bn cm of gas destined for Europe and Turkey from Shah Deniz.
Fireworks, a gala dinner and a laser light show formed an extravaganza laid on in Baku to celebrate one year to go until the first ever European Games.
The milestone for Baku 2015 saw journalists from all over Europe, representatives from national Olympic committees across Europe and other overseas dignitaries converge on the capital to celebrate the start of a year-long countdown to the games.
The festivities attracted over 25,000 spectators from across the city in what organisers could consider as enthusiastic evidence for the support the games have amongst Baku’s population.
Baku 2015 will be the first ever European Games, and will offer participants and spectators the chance to compete in a wide variety of events ranging from athletics to shooting, and involve 16 Olympic sports and three non-Olympic ones. The games will last from June 12 until June 28, 2015, and more than 6,000 athletes are expected to represent their nations over the 17 days of competition.
Nine of the sports will offer Olympic qualification for the Rio 2016 Games: archery, athletics, beach volleyball, cycling, shooting, swimming, table tennis, taekwondo and triathlon.
The scale of the games means that a number of the venues have to be built. The “Olympic Stadium,” gymnastics arena and aquatic centre are all under construction along with the athletes' village.
Baku was awarded the games by the European Olympic Committees (EOC) in December 2012. The Baku European Games Operations Committee (BEGOC) will organise and run the games in co-operation with the EOC.
“We are very proud to have celebrated this important milestone” said Azad Rahimov, Azerbaijan’s Minister of Youth and Sports and Chief Executive of Baku 2015. He added “the whole of Azerbaijan is passionate about hosting the European Games – you could feel the excitement all over Baku for our ‘1 Year To Go celebrations.’ The European Games will have a long-term positive impact on our country, and particularly on the lives of our young people. We look forward to welcoming people from across Europe to Baku to enjoy world class sport in an amazing city.”
EOC President Patrick Hickey added his weight to the project. “With one year to go, it is the perfect moment to look back at what the EOC and BEGOC have achieved together over the last two years. The scale and pace of development here in Baku have been remarkable,” he said. "But we do not have a moment to lose: two years of excellent work have given us the opportunity to stage a truly outstanding inaugural European Games."
The Asian Development Bank (ADB) has invested $1.7 billion in Azerbaijan since 1999, announced Samir Sharifov, the finance minister.
"Following the restoration of Azerbaijan's independence, the effective integration of the country into the global economic system was chosen as a strategic goal of economic policy, and this goal certainly would not have been achieved without cooperation with international financial institutions," said the minister.
The investment has come in the form of 20 loans made since the country’s accession to the ADB 15 years ago.
"The ADB has actively participated in implementing infrastructural projects in Azerbaijan. These projects touched such areas as transportation, water supply and so on. ADB projects cover both public and private sectors, and a representative office of the bank has been operating in Baku since 2004," Mr Sharifov added.
BP becomes Games’ partner
Oil and gas giant BP has become an official partner of next year’s European Games, which will be held in Baku.
BP, which employs over 3,250 people in Azerbaijan, and the government signed an agreement on partnership at a meeting on June 12.
"It has a history of supporting major international sports events around the world and we are delighted to be welcoming it as an official partner of the European Games," said Azad Rahimov, the head of the organising committee. "I am sure its support will help support the Games across Azerbaijan and Europe, and also help develop our athletes further in their pursuit of excellence."
The European Games, the first of their kind, will cover a number of disciplines ranging from athletics to canoeing.
Azerbaijan heads TURKPA
Azerbaijan took over the chairmanship in the Parliamentary Assembly of the Turkic-speaking countries (TURKPA) from Turkey at a meeting of the TURKPA Assembly Council in Baku on June 12.
Cemil Cicek, chairman of the Turkish parliament made a report on his country's chairmanship in the organisation.
The organization includes four countries, namely, Azerbaijan, Turkey, Kazakhstan and Kyrgyzstan.
Russia, Azerbaijan consider
joint investment fund
Russia and Azerbaijan are considering the establishment of a joint investment fund as Azerbaijan rules out membership of any trading
blocs, either the EU or the Eurasian Economic Union (EEU).
Azerbaijan's APA news agency reported on June 3 that Russian Economic Development Minister Alexei Ulyukayev had floated the idea at a meeting with Azerbaijan's Economy and Industry Minister Shakhin Mustafayev in Baku. "A Russian-Azerbaijani fund may help the implementation of major projects," Ulyukayev said. He noted that the State Oil Fund of Azerbaijan (SOFAZ) and the Russian National Welfare Fund, as well as the Azerbaijan Investment Company and the Russian Direct Investment Fund, showed interested in co-financing investment projects in the transport and oil and gas sectors.
During his visit to Baku, the Russian official also said that Azerbaijan's possible membership of the EEU "remains a subject of discussion". However, Mustafayev dismissed this prospect and said Azerbaijan was not considering membership of any bloc, including the EU, because Baku saw no problem in bilateral trade regime.
Money into Georgia
Azerbaijan invested $47m in Georgia's economy in the first quarter of 2014, according to Georgian official figures cited by the news service Trend.GeoStat, Georgia’s national statistics office, said the Netherlands ($73m) ranks first in terms of investments in Georgia's economy, while the third place was occupied by the UK ($35m).
Azerenerji rated stable
International Rating Agency Fitch Ratings has affirmed Azerbaijan's 100 percent state-owned national energy operator's long-term issuer default rating (IDR) at 'BBB-' with a stable outlook and its short-term foreign currency IDR at 'F3', Azernews reported.
Fitch said it continues to align the Azerenerji Joint Stock Company's ratings with those of Azerbaijan (BBB-/Stable), the sole shareholder, to reflect strong legal, operational and strategic ties between the company and the state, as per the agency's Parent and Subsidiary Rating Linkage methodology.
Baku mulls joining Eurasian
Economic Union
Russia’s economic development minister said Azerbaijan is debating whether to join the Eurasian Economic Union (EEU).
“We talked about it, and this issue is still under discussion. From my point of view, Azerbaijan's participation in these agreements would be logical and correct,” said Alexei Ulyukayiev.
"Of course, there are some political issues aside from the economic ones, but I think that there are no issues that cannot be solved," he explained.
