EFFECT OF SOUND COOPERATION

AZFEN JV was established under the current laws of the Azerbaijan Republic on 11 January 1996 by the State Oil Company of the Azerbaijan Republic, owner of 60% of the equity shares in the Charter Fund and TEKFEN Insaat ve Tesisat AS, Turkey, owner of 40% of the equity shares in the Charter Fund.

Though young, today AZFEN has taken its place in growing and maturing market economy of Azerbaijan, and in implementation of large-scale projects. Since the day of its foundation AZFEN JV has been completing significant projects competing with world’s leading companies.

The Joint Venture was formed with the primary purpose of performing construction, fabrication, survey, transportation, engineering and project management, as well as carrying out activities related to marketing of various construction materials on a commercial basis; repair, construction and design of various projects to realize its own goals; purchase, fabrication and import and export of required construction materials in accordance with the laws of the Azerbaijan Republic; construction and installation works to be carried out within other signed contracts.

Skill level of personnel employed by AZFEN JV and compliance with highest HSE standards ensure timely and successful completion of projects. AZFEN JV has always attached highest importance to such issues working to recognized international standards. In 1999, AZFEN JV for the third time was presented an award in recognition of achievement of 3 million accident free man-hours.

AZFEN JV won the following tenders within Early Oil Project:

• Mechanical, Electrical & Instrumentation Works at Sangachal Terminal

• Fabrication and Installation of Off-Spec Oil Tanks at Sangachal Terminal

• Baku-Supsa Export Oil Pipeline - Azerbaijani Sector

• Pump Stations and Pressure Reducing Stations for Baku-Supsa EOP

• Instrumentation Works at Supsa Terminal

• Construction of Water Injection Module for Chirag 1 Platform

• Fabrication, Construction and Installation Works within Early Crude Project (Service Contract)

While completing the above projects, AZFEN JV made full use of the capacities of its founders - SOCAR’s material and technical basis and personnel, and TEKFEN’s experience and management principles.

At present, AZFEN JV in alliance with Tekfen is carrying out works related to Sangachal Terminal Expansion Project within Full Field Development, ACG, Phase 1. Having been awarded and successfully completed Preliminary Civils, AZFEN JV proceeded with execution of the Main Construction Works.

Furthermore, AZFEN JV in alliance with TEKFEN and AMEC (UK) will carry out “in-country” works within TPG 500 construction project for production of gas from Shah Deniz offshore field.

AZFEN JV together with TEKFEN won Shah Deniz Gas Terminal Construction Project. Interim Agreement has already been awarded to TEKFEN-AZFEN Alliance. The Project includes Construction, Installation, Testing and Pre-commissioning works.

AZFEN JV in alliance with TEKFEN (Turkey) and AMEC (UK) (ATA Consortium) have been awarded C&WP Topsides Fabrication Project within ACG FFD Phase 1 Program. The works started on 18.09.2002. Completion of the Project is scheduled for the 3rd quarter of 2005.

AZFEN JV is also a Subcontractor to SAIPEM (Italy), which will carry out loadout and erection of the platform to be constructed within Phase 1. Fabrication and Installation of various steel structures will be carried out within this project.

At present, Gas Pipeline Construction Project offered by AZERIQAZ SC is one of the projects being implemented by TEKFEN-AZFEN Alliance. The project includes Engineering, Procurement (with the exception of pipeline), Construction and Commissioning of 85.5 km (43km - 40”, 42.5km - 28”) High Pressure Gas Pipeline to be extended from the new Qaradag Compressor Station to Severnaya Power Plant. TEKFEN-AZFEN Alliance is the Subcontractor to Toyo Engineering Corporation for this project.

Activities based on previous experience and present principles lay the foundation of future successes and AZFEN JV intends to take active part in oil and gas projects to be carried out in the Azerbaijan Republic.