OIL EXTRACTION IN AZERBAIJAN

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AZERBAIJAN AND THE EXTRACTIVE INDUSTRIES
TRANSPARENCY INITIATIVE
PRESENTATION BY Vugar Bayramov, PhD Center for
Economic and Social Development (CESD),
Azerbaijan, www.cesd.az
OIL EXTRACTION IN AZERBAIJAN 19TH
CENTURY
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Objectives

• To analysis what role of CSOs plays in enhancing
  of transparency in oil spending
• How civil society can build political will for
  participatory governance in oil-rich Azerbaijan.
• Participatory approaches to fighting corruption,
  and especially the importance of active
  involvement by civil society and the media, are
  now generally accepted as fundamental to any
  successful anti-corruption reform program. From
  this perspective, CSOs are playing fundamental
  role in building political will to enhance
  transparency and curb corruption in oil sector.

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Item
Estimate
2007 AZERBAIJAN FACTS FIGURES BOX
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Oil Production, Forecast
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To reach faster- go by yourself, To reach to
longer- go with others
The proverb of people of Africa
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First Step to Build PW

• CSOs set up EITI NGO Coalition and started
  influencing the governments policy related to
  the oil revenues

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Structure of PW established by CSOs
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IMPLEMENTATION CYCLE IN AZERBAIJAN
2003 National Committee on EITI
IMPLEMENT DISCLOSURE PUBLICATION DISCUSSION
INITIATE commitment, M o M
2004 Coalition (31- 109 NGOs) Informational
campaign
REVIEW ANALYSIS VALIDATION
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AZERBAIJAN AND EITI MILESTONES
September 2002 Prime-Minister Tony
Blair announces EITI
June 2003
Azerbaijan delegation
joins EITI at the
First International Conference on
EITI held in London


Azerbaijan volunteers to become a
pilot country
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EITI IMPLEMENTATION IN AZERBAIJAN

• November 2003 President Ilham Aliyev
  instructs the Cabinet of Ministers of
  Azerbaijan to establish an interagency committee
  on EITI to implement obligations taken at the
  EITI Conference in London
• Cabinet of Ministers of Azerbaijan
  establishes National Committee on EITI by its
  Ordinance No.224 dated November 13,2003
• The Committee is chaired by the Executive
  Director of the State Oil Fund and includes
  representatives
• of the ministries of foreign affairs,
  economic development, industry and energy,
  finance, tax, ecology and natural resources,
  statistics

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EITI IMPLEMENTATION MECHANISM

• Reports to be submitted twice a year
  annual on March 15 and semiannual on August 15
  (reporting dates).
• An internationally recognized audit firm
  to be hired to aggregate reports of foreign and
  local companies. It will then review and collate
  report of the Government and aggregated report
  of the companies
• Audit firm shall be selected on a
  competitive basis by a Selection Group
  comprising equal number of representatives of
  Committee on EITI, foreign and local companies,
  NGO Coalition. Selection procedure will be
  applied for each reporting session.

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• Strategy targets
• The strengthening of civilian oversight of the
  effective use of natural resources
• Expansion of the strength and capabilities of
  civil society
• The strengthening of accountability and
  transparency of the government and companies
• Diminution of corruption in the extractive
  industry
• Achievement of poverty reduction and sustainable
  growth.

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COALITION PRIORITY AREAS OF ACTIVITY

• The monitoring of the transition of local
  companies to reporting under international
  accounting standards
• The deciding on the classification of incomes of
  local mining companies and the monitoring of
  those incomes
• Analysis and monitoring of petroleum production,
  sale and supply
• Analysis and monitoring of gas production, sale
  and supply
• The inclusion of incomes from other minerals
  (besides oil gas) in EITI and the monitoring of
  them
• The monitoring of the impact of the exploitation
  of natural resources on the environment
• The monitoring of the treatment of staff by
  companies

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Direct result/success

• Equitable involvement, along with other
  stakeholders, in the selection of the audit
  company
• Accessible information on oil incomes to public
  , and awareness activities via co-operation with
  CSI-s, building the capacity of civil society
  institutions
• Mobilization of the capacity of civil society
• Development of the scope and authority of media
  co-operation with media
• Campaigning for the raise of public awareness of
  and the stimulation of the interest of citizens
  for the effective use of oil incomes.

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Fresh ideas and future plans

• Increasing transparency in the activities of
  local and foreign oil companies
• Monitoring and analysis of efficiency of Oil Fund
  Financed projects
• Making information on oil incomes accessible to
  the masses, and carrying out the corresponding
  enlightenment activities
• Development of institutional and expertise
  capacity in order to honour the commitments of
  the Coalitions as per the memorandum on EITI.

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• The main way to reach political will was to set
  up CSOs Alliances in order to concentrate all
  opportunities in civil society sphere. Now,
  Azerbaijani CSOs has right to attend auditing
  process in oil revenues, State Oil Fund of
  Azerbaijan Republic regularly report to EITI NGO
  Alliance.
• Thats the power that civil society has in
  ensuring transparency and accountability.

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End of presentation
Oil Extraction in Azerbaijan nowadays
Thank you