On September 20th, 1994, agreement on joint development and production sharing in the “Azeri”, “Chirag” and “Guneshli” fields of Azerbaijan’s sector of the Caspian Sea was signed with well-known world oil companies. This agreement known later as the “Contract of the century” paved the wide way to signing of new agreements in Azerbaijan. Owing to realization of the oil strategy, Azerbaijan ensured its energy security and representation as very reliable country and partner in international community.
National leader Heydar Aliyev prepared a long term oil strategy program in order to properly direct increasing oil revenues to state economy. The main goal of the oil strategy, realized as the long-term development program is the mobilization of the domestic potential of country and efficient use of abundant oil reserves for the prosperity of the people of Azerbaijan. The basis of the National Oil Strategy consists of attraction of foreign investments and expertise; creation of multi-optional export systems; and efficient and transparent management and use of the obtained revenues.
At the next stage of oil strategy, it was extremely important to efficiently manage accumulated oil revenues generated from the development of country’s oil fields jointly with foreign companies and to assign these assets to the development of advanced areas and implement projects of social-economic importance. To that end, State Oil Fund of the Republic of Azerbaijan was established by the Decree № 240 of Heydar Aliyev, dated 29 December, 1999. Statute of the Oil Fund was approved by the Presidential Decree № 434, dated December 29th, 2000.
In oil-rich countries establishment of the oil funds, sovereign wealth funds or other similar institutions creates an opportunity for the equal distribution of oil wealth among generations and its efficient and purposeful management. Currently, Oil Fund in parallel with its institutional development managed to become an organization recognized both nationally and internationally capable to share its experience on asset management, ensuring transparency.
There are similar funds in some other countries of the world with similar to the State Oil Fund of the Republic of Azerbaijan’s features. At the time of creation of the State Oil Fund, the experience of these funds was used as the reference point alongside with consideration of local peculiarities and present needs. A single model equally accommodating the point of accumulation of oil revenues for future generations and use of revenues for the solution of the problems of present generation was selected.
From the day of establishment transparency was one of the main principles of the activity of the Oil Fund. The Oil Fund has developed both institutionally and in terms of transparency assurance perspective and has become a financial organization of an international level meeting modern standards. It has made achievements that serve to the growth of influence of Azerbaijan on international scene.