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AUGUST, 2002
Azeri oil fund chief says foreign companies must pay compensation
Text of report by Azerbaijani TV station ANS on 4 August
[Presenter Leyla Nasirova] The executive director of the
State Oil Fund [of the Azerbaijani Republic, SOFAR], Samir
Sarifov, has said that foreign companies which fail to meet
their commitments in the Caspian Sea oil sector should pay
a definite amount of compensation.
Some 30m dollars, which had been paid up to now, have been
transferred to the State Oil Company [of the Azerbaijani Republic]
but not to SOFAR.
[Correspondent] In the Azerbaijani sector of the Caspian
Sea, foreign companies do not honour their commitments on
some contracts. Given their failure to honour their commitments,
the sides to contracts should pay a pre-determined compensation
to the Azerbaijani government. The executive director of the
State Oil Fund, Samir Sarifov, believes that the above situation
existed in the exploration of the Kurdasi and the Lankaran
Daniz, Talis Daniz structures.
[Samir Sarifov, captioned, voice] Over the year 2001, SOCAR
was paid about 30m dollars. You know that companies on two
contracts refused to meet their commitments under contracts.
[Correspondent] It is so far an unresolved issue whether
this sum should be paid to SOCAR or SOFAR. Mr Sarifov believes
that though the regulations of the oil fund do not stipulate
transfer of the compensation, this issue is expected to be
resolved soon.
[Samir Sarifov] There is no problem there. Currently, we
are in consultations with SOCAR.
[Correspondent] Sarifov says that 30m dollars are in a SOCAR
account. In his words, SOCAR pays extra expenditure for the
sale of Azerbaijan's profit oil under the contract of the
century. Therefore, it is not ruled out that the sum will
be spent in that direction.
Anar Cabrayilli, Emil Babaxanov for ANS.
Source: ANS TV, Baku, in Azeri 1000 gmt 4 Aug 02
BBC
Foreign oil companies help Azerbaijan to secure funds
for pipeline project
Text of report by Azerbaijani news agency Sarq
1 August, Sarq correspondents K. Mustafayeva and S. Aliyev:
The problem of investment in the Baku-Tbilisi-Ceyhan pipeline
has been resolved. Agreements were reached with international
financial organizations and banks on allocating credits for
the construction of the pipeline. Azerbaijan was again forced
to seek outside help in order to fund its 25 per cent share
in the project.
At the beginning it was planned to cover 70 per cent of the
pipeline's construction cost with foreign debts. According
to a representative of SOCAR's [State Oil Company of the Azerbaijani
Republic] foreign investment department, project members held
talks on obtaining consolidated credits. The state company
did not expect any problems as international institutions
and banks were themselves convinced in the project's viability
in terms of investment.
However, Azerbaijan failed to obtain credits independently.
According to the recent decree by President Heydar Aliyev
on funding Azerbaijan's share, three foreign companies - BP,
Statoil and Unocal - became Azerbaijan's guarantors for obtaining
the credit. These companies are giving their guarantees in
return for 2m barrels of crude oil, which they will receive
after the commissioning of the pipeline.
According to some experts, a company affiliated to SOCAR
should have been set up to take part in the project. This
company, as a legal entity with respective assets, could have
taken part in the existing PSAs [Production Sharing Agreements].
This would have made it possible for this company to gain
a reputation necessary for receiving credits independently
and without any mediators. SOCAR representatives say that
this might have given the expected results as all these assets
would have been Azerbaijan's.
It is not ruled out that the conditions for the allocation
of credits to Azerbaijan will be more severe compared with
other participants in the project because guarantees by Azerbaijan
itself which has stable oil production, including profitable
production from the Azari-Ciraq-Gunasli oil field, are not
sufficient for obtaining the credit.
The State Oil Fund of the Azerbaijani Republic [SOFAR] is
to allocate funds for the 25 per cent share of Azerbaijan.
The project is currently estimated at 2.94bn dollars, i.e.
SOFAR is to allocate about 220m dollars for investment in
the project.
According to the same decree, SOFAR will get funds from the
hard currency reserves of the National Bank of Azerbaijan
for this purpose. The National Bank of Azerbaijan is to transfer
118m dollars to SOFAR. These funds include foreign companies'
bonuses for Azerbaijan which were granted before SOFAR was
set up. It is not clear why these bonuses were "forgotten"
when SOFAR was established. SOFAR will allocate the rest of
the funds - about 102m dollars - from its own resources. A
total of 584m dollars have been accumulated in SOFAR so far.
According to Sarq news agency's information, previous bonuses
worth slightly more than 80m dollars are still in the National
Bank of Azerbaijan. Some 640m dollars [bonuses] have been
given to Azerbaijan since foreign companies began their activities
in the republic's oil industry. Of this, approximately 340m
dollars were allocated for covering the budget deficit, while
95m dollars were transferred to SOFAR when it was established.
Source: Sarq news agency, Baku, in Russian 1130 gmt 1 Aug
02
BBC
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