Nothing Says Transparency Like Thick, Sweet Crude
I’m working through a few things about oil in Azerbaijan right now. There are various avenues this can go down. First, there’s the IMF discussing how oil cannot be the future of Azerbaijan’s economy. Then there are the recent developments regarding the Baku-Tbilisi-Ceyhan and the Nabucco pipeline agreement with Turkey.
A few interesting things have come up about how oil and gas are managed in Azerbaijan, including their standing with the Extractive Industries Transparency Initiative (EITI) and recent reports filed by the State Oil Company of the Azerbaijan Republic (SOCAR). Wikipedia has a brief piece on the EITI:
The Extractive Industries Transparency Initiative (EITI) increases transparency over payments by companies to governments and to government-linked entities, as well as transparency over revenues by those host country governments. It was announced by Tony Blair, the then-Prime Minister of the United Kingdom, at the World Summit on Sustainable Development in Johannesburg, South Africa in September 2002.
And you can find Azerbaijan’s first Validation Report on the EITI website. You’ll notice also that Azerbaijan is listed as one of two countries that have complied with EITI standards, along with Liberia. This is particularly interesting for a country who’s most recent annual reports from the government, SOCAR, and State Oil Fund (ARDNF) all contain some rather significant differences:
…while SOCAR gave its revenues in 2006 from oil extracted within the framework of production-sharing agreements as 924.4 million manats ($1.156 billion), the State Oil Fund put the figure at 929.9 million and the Council of Ministers at 933.7 million….In 2007, the discrepancy between the figures provided by those three agencies was even greater: 1.851 billion manats (SOCAR), 1.799 billion manats (State Oil Fund), and 1.860 billion manats (Council of Ministers)….it was in order to conceal such discrepancies that SOCAR simply omitted any data on revenues in its report for 2008.
It’s true that ARDNF (or SOFAZ, in english) is separate from SOCAR and the government. Yet, the three different organizations should be able to come to a consensus on basic statistics about their most important economic activity. And this certainly doesn’t make them look good. Maybe the ARDNF is transparent and accurate, but that would mean the other two are covering something up, right? That’s a bit disconcerting.