We were surprised and disappointed that Global Witness produced the highly misleading report: Azerbaijan Anonymous, based on prejudiced and inaccurate information.

We believe that the organisation, which claims to be “an internationally renowned NGO that works in the public interest on transparency issues” has created a report which wrongfully criticises SOCAR. The report is based on the highly selective interpretation of documentation and the careful selection of superficial questions to create the impression of wrongdoing.

The laws of Azerbaijan which govern procurement and production sharing agreements are publicly available. However, Global Witness chose to ignore this material in order and repeatedly raises the issue of public tendering for the sole purpose of creating a negative impression of SOCAR’s business activities.

The following section covers the “issues” raised by Global Witness and broadly follows the sections outlined in their misleading report. SOCAR seeks to act with genuine transparency rather than to defend against unfounded speculation as made in the report by Global Witness. With that in mind, we have made all the explanations below public and have created a channel by which to contact us directly with comments or further questions.

It is hoped that after reading this information, any independent observer will be able to draw their own conclusions about SOCAR’s business ethnics and speculate on the possible motivation behind Global Witness publishing such an outrageous report.

Socar Trading SA

In 1992, following the restoration of an independent Republic of Azerbaijan, the State Oil Company of the Azerbaijan Republic (SOCAR) was established. Until 2007, volumes of Azeri crude oil were marketed through international trading and supply companies. While this practice continued, Azeri oil sold at a discounted price to Brent with a poor return. SOCAR decided to take control of marketing Azeri crude and to deliver these volumes directly to end users worldwide. In doing so, SOCAR has been able to increase the value of Azerbaijan’s crude exports and capture additional margin.

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SOCAR International DMCC

In 2011, the SOCAR Group established a joint venture entity in the United Arab Emirates (UAE) under the SOCAR brand name – SOCAR International DMCC. The primary goal was to develop trading businesses in the strategic Middle East region.

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Joint Ventures, tendering and bidding

SOCAR Group has dozens of joint ventures across the globe with companies across a wide range of sectors. These can be seen in SOCAR’s consolidated accounts and include joint ventures with companies such as BP, Siemens, John Brown Hydrocarbons and Rosneft.

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SOCAR Petroleum CJSC

SOCAR Petroleum CJSC was established in 2008 as a joint venture between SOCAR and A.P. International. The purpose of SOCAR Petroleum was to manage the sale and purchase of petroleum products in Azerbaijan through the operation of filling stations across the country. The shareholder structure of SOCAR Petroleum CJSC granted SOCAR a 51% ownership stake, while A.P. International held the remaining 49%.

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Oil Trading Contracts Award and Sumato Energy Group

SOCAR as a state-owned company is very strict with its compliance and due diligence procedures with respect to its counter partners. Since the oil industry is a strategic field for Azerbaijan, and taking into account the geopolitical realities and the unresolved conflict with Armenia, we are always very strict with our compliance procedures.

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UGE-Lancer PTE

UGE-Lancer was awarded contracts for the Balakhani oilfield. Balakhani, in contrast to the highly prized offshore assets of Azerbaijan, is an onshore oilfield inherited from Soviet times with obsolete and collapsed infrastructure and substantial social programmes which any potential bidder would need to guarantee. As a result, onshore oilfields such as this one are generally viewed as too problematic and unattractive for foreign investors.

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Anar Alizade

Anar Alizade is a known and successful entrepreneur in Azerbaijan. From 2000 onwards, Mr Alizade has been successfully involved in businesses as diverse as transport, housing development, oil & gas equipment trading and electronics – both in Azerbaijan and internationally.

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