EITI Implementation in Azerbaijan

The Extractive Industries Transparency Initiative was announced September 2002 in Johannesburg by the British Prime Minister Tony Blair.

The delegation headed by the President of the Republic of Azerbaijan Mr. Ilham Aliyev declared at the First International Conference on EITI held on June 17, 2003 in London the decision of the Government of Azerbaijan to join EITI and support the international efforts for higher transparency in the extractive industries. The countries joined in EITI, the extractive industry companies and the non-governmental organizations adopted a Declaration on the principles of EITI.

Three following reporting forms were adopted at the conference: 1) receipts of the host government from the foreign and local extractive industry companies; 2) payments of the foreign extractive industry companies to the host government; 3) payments of the local extractive industry companies.

Cabinet of Ministers of Azerbaijan established National Committee on EITI by its Ordinance No.224 dated November 13, 2003 following the instruction of the President Ilham Aliyev to establish an interagency committee on EITI to implement obligations taken at the EITI Conference in London. The Committee, chaired by the Executive Director of the State Oil Fund, includes Azerbaijan's Ambassador to the United Kingdom and representatives of the Ministries of Foreign Affairs, Economic Development, Industry and Energy, Finance, Tax, Ecology and Natural Resources, Statistics and the state oil company.

The Committee is charged with the task of collecting information about receipts (including from foreign and local industry companies) of the governmental agencies, companies and other governmental institutions and preparation of the government's reporting form.

The Committee is also responsible for the appropriate coordination with the foreign extractive industry companies and also with the UK Department for International Development (www.dfid.gov.uk), which is functioning as a Secretariat for EITI.

President Ilham Aliyev of Azerbaijan pointed out in his speech at the 11th Caspian Oil and Gas - 2004 Exhibition and Conference held June 1-4 in Baku that Transparency would be one of the major reasons for the country's success. "You know that Azerbaijan has joined the international Transparency Initiative. We have been involved in this for more than a year and support the initiative by the British Prime Minister. Azerbaijan is the only country that is actively taking part in this Initiative. It will bring about effective use of oil revenues in the future and every Azerbaijani citizen will feel the benefit in his or her daily life."

The US President George Bush and the British Prime Minister Tony Blair sent their letters of congratulation to President Ilham Aliyev highly appreciating Azerbaijan's successes in transparent management of its oil revenues.

The national Committee on EITI is closely cooperating with the foreign and local extractive industry (oil and gas)* companies and NGOs to implement EITI in Azerbaijan. At the result of such cooperation Memorandum of Understanding (MOU) was signed on November 24, 2004 between the Committee on EITI, foreign and local extractive sector companies and the NGO Coalition.

21 foreign and local extractive (oil and gas) industry companies, including State Oil Company of the Republic of Azerbaijan, Exxon, Statoil, Total, Lukoil, Unocal, Shell, and Devon Energy have signed the MOU. Inpex of Japan (July, 2005), Binagadi Oil (October, 2006), RAFI Oil (October, 2006), Naftiran Intertrade Co. Limited (NICO) (June, 2007) and Apsheron Investments Ltd (February, 2008) joined MOU later by signing the Instrument of Accession. All extractive sector companies operating in the country now are the stakeholders of EITI implementation process in Azerbaijan.

The Selection Group comprising the representatives of all three parties to MOU was established to select the audit firm to collate the EITI reports.

* Precious and base metals are not operational at present.