Baku, April 27, AZERTAC

Prospects of development of the oil-gas industry and possibilities of cooperation of SOCAR with member companies of the Caspian European Club (Caspian Business Club) have today been discussed at a business forum arranged by the Club and attended by Vice President of the State Oil Company of Azerbaijan (SOCAR) for Economic Issues Suleyman Gasymov.

Addressing the business forum, Suleyman Gasymov noted that the company’s financial situation came worse due to the man-caused catastrophe at Guneshli platform, which happened at the end of the past year, caused human casualties, decline of oil production as well as devaluation of the national currency.

“In spite of this we have fulfilled an oil-gas production plan for 2015 and for the first quarter of 2016. We also fulfilled our obligations before the state budget,” he emphasized.

Domestic capital investments into operating fields have been reflected in the investment program, income and expenditure estimate. “Based on the Azerbaijan government’s decrees, we borrowed bank credits in manats to continue program of drilling at Bulla-Deniz, Umid, Gunesheli fields so that to meet mainly gas demand of the country,” Gasymov noted.

“The first tranche for drilling and operation of wells on these fields totaled 200 mln AZN in 2015”, he continued.

According to him, SOCAR signed a number of agreements worth 1 bln 260 AZN with the International Bank in order to reconstruct petrochemical plants. The financing is split into several stages depending on the necessity. The first tranche worth 69 mln AZN has already been received and is being assimilated. The work is carried out in accordance with the schedule. The purpose is to produce oil products meeting European standards. In this regard, new units will be built. Old ones will be upgraded and their capacity will be increased.

He also touched the gas supply matter within the country which is being implemented at the expense of state credits and is at stage of completion. “We think that we will complete the program this year.” Gasymov emphasized.

The major task for now is to maintain and stabilize oil-gas production and increase gas production as far as possible, he says.

According to him, there are projects in which SOCAR raises profits by reducing or optimizing expenditures. This work is carried out in cooperation with Ernst & Young. “Owing to this work, 705 activities have been carried out and still are ongoing in 9 departments and enterprises, which will help to save 350mln AZN. 123 mln AZN was saved in 2015 alone,” he emphasized.

According to the orders of President of Azerbaijan Ilham Aliyev, the work on transforming SOCAR into an international company is continued. Institutes of internal audit and risk management have been created in the company. Creation of the internal control system together with PricewaterhouseCoopers was completed at the beginning of this year. Meanwhile, the number of employees working in the company has been optimized.

“There were 78000 employees working for SOCAR five years ago while now this number totaled 52.5 thou people. We have introduced a new system and standards on salary payment since January 1, 2016. Over 5,000 of official standards have been introduced. These standards make it possible to evaluate the work of employees both horizontally and vertically. As a result, a salary increases on basis of 7 categories (length of service, experience, professionalism, etc.) Thus, workers get motivation to develop their working skills, S. Gasymov emphasized.

He also touched the investment projects of SOCAR. According to him, the project of construction of Star refinery in Turkey will be completed in 2018. The shareholders of the project are the Ministry of Economy of Azerbaijan (40%) and SOCAR (60%). The Azerbaijani side has already invested $1.9 bln into the project.

Speaking about the project of Petkim in Turkey, he noted that construction of the port has been practically completed. The opening of the facility will take place in coming months,” he noted.

TANAP is among priority projects in which SOCAR owns 49% via the Southern Gas Corridor Company (51% belong to the Ministry of Economy of Azerbaijan). “We issued first Eurobonds and there are no financial problems here,” he noted.

He also noted that implementation of projects on construction of Carbamide plant, SOCAR-Polymer would be continued in 2016 owing to investments of SOCAR.

“Our debt makes $6.3 bln. We manage it very sensitively. We have mainly long term debts lasting for a period of 10-15 years,” he noted.

According to the results of 2015, balance profit within the framework of Petkim project totaled 500 mln TRL. Dividends obtained by SOCAR were spent on return of debts and financing of construction of Star refinery.

He also touched structural reforms in SOCAR. According to him, appointment of two new Vice Presidents for Geology and Development will promote more effective management.

Addressing the business forum, First Vice Chairman and Chief Executive Officer of the Caspian European Club (Caspian Business Club) Telman Aliyev thanked Suleyman Gasymov for a constructive dialogue as well as for an attention to proposals and requests made by the member companies of the Caspian European Club (Caspian Business Club) in the course of the event.

Telman Aliyev noted that Caspian European Club (Caspian Business Club) was established in June 2002 under support of large oil-gas companies operating in the Caspian and Black Sea region. His Excellency President of the Republic of Azerbaijan Ilham Aliyev is the Chairman of the Caspian European Club (Caspian Business Club). According to Telman Aliyev, the Caspian European Club (Caspian Business Club) has promoted attraction of oil sector revenues into development of the non-oil sector since its establishment. Caspian European Club, which brings together over 5,000 member companies and organisations, is operating in 50 countries around the world, carrying out an active work to maintain the dialogue between government agencies and the private sector.

In the course of the business forum Suleymah Gasymov was presented an honorary membership certificate of the Caspian European Club (Caspian Business Club). Certificates were also given to new member companies of the Caspian European Club (Caspian Business Club) - New Technologies JSC, Grata Azerbaijan LLC and SOCAR Polymer. Heads of companies, ambassadors, representatives of a number of diplomatic agencies and international organizations took part in the forum.