SOCAR does not respond to the question who is Anar Aliyev

SOCAR (State Oil Company of Azerbaijan) rejects allegations that its commercial transactions are not transparent, as it is stated report "Azerbaijan Anonymous'' international NGO'' Global Witness''. 

Publication of the Report ''Azerbaijan Anonymous'' by ''Global Witness''We hereby find the statements contained in a report named ''Azerbaijan Anonymous'' dated December 10, 2013 and published by ''Global Witness'' (hereinafter the ''Report'') with respect to the activities carried out by the State Oil Company of Azerbaijan Republic (hereinafter ''SOCAR'') in connection with the selection of business partners substantively prejudiced and distorted, with the effect of undermining SOCAR's growing reputation. The relationship between SOCAR and a group of subsidiary and affiliate companies has been chosen as the ''object'' of the Report. It should be pointed out that to ensure the quality and completeness of any research, it is necessary to use proper research tools and effective methods relying on an accurate source of information. As will be shown below, the report from ''Global Witness'' relies on inaccurate sources of information while some of the information used in the Report is false or outdated. 

SOCAR is a vertically integrated energy company involved in all types of upstream, midstream and downstream projects, exploration of oil and gas fields, production, processing, and transportation of oil, gas, and gas condensate, marketing petroleum and petrochemical products in domestic and international markets, and supplying natural gas to industries and the public in and outside of Azerbaijan. Being one of the largest oil and gas companies in the region and in the world in the course of carrying out its projects in Azerbaijan and abroad SOCAR attracts partners with extensive business experience. Depending on the size of the projects being carried out, typically SOCAR's partners include large companies or holding groups. This is typical for many enterprises in a similar position as SOCAR. In addition, in contemporary practice it is necessary to establish different specialized firms in order to hedge trade, production and other risks in the course of conducting business. This is why SOCAR cooperates with a large number of firms. We note that the practice of using such a diversified structure is employed by many big oil firms consolidating different firms established in various countries. All of the above mentioned is provided to set in context the number of the companies that SOCAR cooperates with. Now, we would like to inform you about the quality issues regarding the selection of partners in implementation of SOCAR's various projects. 

Commencing from 2007, SOCAR made a commitment and decision to diversify its trading activities. Up until then, volumes of crude oil were marketed FOB Ceyhan, an oil terminal in Turkey, through international trading and supply companies. While this practice continued Azeri oil sold at a discounted price to Brent with a poor return. In 2008, SOCAR decided to take control of marketing Azeri crude to end users and to deliver these volumes directly to end users worldwide, in particular, across Europe, Asia and the Americas. Thus, the company has increased the value of Azerbaijan's crude exports and captured additional margin for the SOCAR group. In order to further optimize and diversify its trading operations, SOCAR has employed more than 100 employees and has housed offices in world trading centers, including Geneva, Singapore, Vietnam, Dubai, Lagos, New York, Cairo and Istanbul. Given the start-up nature of the projects and lack of readiness to calculate risks properly ex ante, it was necessary to engage joint international partners due to their extensive experience and readiness to procure financing on better commercial terms for our projects. After duly and thoroughly examining appropriate proposals received for this objective, the proposals put forth by an Azerbaijani businessman Anar Aliyev were found beneficial turning out to be successful subsequently. 

SOCAR Trading was established as a trading vehicle (joint venture) of SOCAR and upon initiative by Anar Aliyev. Valeriy Qolovushkin as a person of great experience and having been occupied executive positions within Lukoil was hired as CEO of the company. As a result of works carried out within short period of time the trading company delivered Azeri oil for the first time to the world stock markets under its own brand name. Azeri oil which for a long period of time has been sold for prices falling below that of any other brands now is sold for prices higher than Brent oil and for very high premiums. Another important feature of this cooperation is that SOCAR Trading is specialized in trading not only Azerbaijan oil, but oil from other countries as well. This in turn serves the purpose of maximizing profits from additional sources. As a result of the financial inputs and assets of the above mentioned partners, SOCAR Trading now owns specialized network in many countries where the oil markets are located. Within a short period of this joint venture which was initially deemed a quite risky undertaking by many internationally renowned firm specialized in this field proved a great success. Nevertheless, upon the prior agreement with the partners, for long period of time (5 years) no dividends were paid from the project and after this the shares of the joint venture have been transferred to SOCAR. Currently SOCAR exercises control over a trading company with extensive network and great experience. SOCAR highly appreciates the results achieved together with these partners and continues cooperation on mutually beneficial terms in the other projects as well. 

"Global Witness" has failed to objectively analyze the information collected in respect of the perspectives of the projects implemented by SOCAR and the potentials of its partners. Furthermore, the methodology of collection of the information employed by "Global Witness" also cannot be taken seriously. 

There have never been any companies belonging to Anar Aliyev among the beneficiary owners of the Kulevi terminal owned by SOCAR today. In another cases the organization publicizes outdated information causing confusion in public. Thus, SOCAR is a sole shareholder for a long period of time in many of the companies which the Report states are owned jointly by Anar Aliyev and SOCAR. 

SOCAR being committed to the principles of transparency has always supported an open dialogue with society and showed its preparedness to respond to all questions addressed to it in respect of its activities. Thus, SOCAR has been responded to the questions which have been asked by "Global Witness" in the Letter. We were confident that we have clarified all the questions that "Global Witness" has been interested in via a constructive dialogue. However, after 7 months of silence "Global Witness" has issued its Report without apparently taking account of the information provided by SOCAR. 

In recent months, significant achievements in the projects like Shah Deniz 2, TANAP, TAP, agreements about sales of gas to Europe despite the company's exposure to a variety of threats, harassment and interventions caused outrage of some forces and increased their efforts to discredit and stir SOCAR's reputation in the light of the forthcoming Final Investment Decision for the Shah Deniz 2 project. However, we hereby declare our readiness to fight against these ugly intentions taking full advantage of the progressive legal tools and international practice. 

SOCAR hereby criticizes this action by "Global Witness" due to the untrue nature of this Report and the fact that it damages the business reputation of SOCAR. SOCAR declares once again that it is committed to ensure the transparency, responsibility and unity in its operations. Moreover, SOCAR reserves the right to resort to all appropriate legal measures and remedies against "Global Witness" for protection of its business reputation in accordance with the principles of law. 

In a lengthy statement, SOCAR said nothing about kinship of  Anar Aliyev  with its president, Rovnag Abdullayev.

It is not clear why SOCAR ,having more than 20 years of experience working with major foreign oil companies , including LUKoil, could not attract an investor-manager to create a trading company and appealed for the services to an unknown Anar Aliyev.

SOCAR does not answer to the question,  there was not a tender for creation of a trading company, and this process was not transparent.

This story  makes  more actual  the important issue on the need  of the  adoption of  the oil law, and the creation of public control over the use of oil and gas wealth  of the country.-06D-