SOCAR CAN DEVELOP NEW FIELDS ITSELF
THIS EMERGES FROM THE COUNTRY'S HIGH CREDIT RATING AND ADVANCED NETWORK OF EXPORT PIPELINES BY 2005, EXPERTS BELIEVE
CONTRACT OF THE CENTURY. EXPERT POLL, 1993 - 2004
During 13 years of work in Azerbaijan market the Marketing research international service ARG-CASPIAN ENERGY has always paid and keeps on paying a special attention to the problem of development of Azerbaijan oil and gas branch, the attitude of local population - socially active part of it - to realization of petroleum contracts and attraction of investments to different sectors of economy.
As it is known, in the period of 1994-2003 Azerbaijan signed more than 20 contracts with international companies and transnational corporations on exploration and development of own fields and promising sites. Some of the consortia failed to reveal commercial stocks and closed, but many contracts keep on developing today to this or that extent.
Today we present you brief comparative data on results of the public opinion polls conducted in 1993, 1994, 1996, 1998, 2004 among the experts and government officials of the Azerbaijan capital. The specialized experts were provided with opportunity to express their opinion on rather significant issues of development of Azerbaijan economy.
The results puzzled us a bit, for they reflected general opinion of the overwhelming (!) majority on the necessity of more serious inclination from or stress on non-oil branches or those adjacent with the strengthened local petroleum branch. At today's onrush of "non-oil sector", taking into account the first results of the petroleum strategy, respondents suppose that signature of new "contracts of the century 2,3" and so on is possible, while others believe it is important.
THE YEAR OF 2004-MARKED BY "NON-PETROLEUM SECTOR"
The poll was conducted in May-June 2004
How do You assess today's influence of the contract of the century over the republic's economy?
Overwhelming majority of the respondents - 87% noted the high positive influence of the contract of the century on development of Azerbaijan economy
Has the realization of the contract of the century reflected on the population welfare?
Note: most of the experts explained the answer "Not much" by the small period for such a scale project (10 years), as well as the Garabagh conflict and 1 mln Azeri refugees. 5% believe the placing of foreign companies' orders abroad a negative factor.
Do You think today's volume of the signed PSA contracts on development of offshore fields is sufficient?
As we see, majority of the respondent experts (74%) do not regard further development of economy - oil and gas production sphere linked with foreign companies in a conventional form of interaction for Azerbaijan - production sharing agreement (psa) as of paramount importance, the fourth of the respondents believe as before that the signature of the following international contracts on offshore oil and gas production as the keystone to success.
Is the inflow of investments in oil and gas branch sufficient?
The given question is the logical continuance of the previous, as we see, most of the experts believe that today's level of Azeri offshore's investment attractiveness is sufficient, the fourth of the respondents are for signature of new contracts.
Do you consider that SOCAR must develop its new fields by itself?
More than half of the respondents stated in their comments that SOCAR has sufficient means and opportunities for attraction of investments on new and more favorable conditions for the country, as well as for independent development of own structures. A bit more than third of the respondents believe that the State Oil Company refuses from the conventional form of cooperation with foreign companies in exploration and development of new promising sites of the Caspian shelf too early.
Do You consider today's economic growth as the merit of Azerbaijan president?
Actually all the respondents (with five failing to determine own position and 2 percents dissatisfied) support the economic course chosen by the Azeri president Ilham Aliyev, which testifies of the president's high political rating.
How do You assess today's investment policy of the government?
The respondents explained the answer "I would like some changes" by that they mean more active attraction of investments to the non-petroleum sector and development of small and medium business, 10% of them would like to see more active investment in agriculture, creation of different branches of tourism.
Do You think today's level of development of economy's non-petroleum sector is sufficient?
Development of which branches of economy do You prefer today first of all?
Let's note that the sector requiring higher development is the oil and gas sector (35%) and 27% of the interviewed businessmen spoke "for" such branches as agriculture and tourism industry developing in parallel, which is a high indicator and in opinion of the CASPIAN ENERGY analytical group is as well a firm ground for reflection of separate governmental structures.
Investment of which states would You prefer today?
How do You assess the recent results of negotiations on the Caspian status and how do they affect economic life of Azerbaijan?
As we see, the respondents regard the economic results of negotiations on the Caspian status quite pessimistically, which in our opinion can not be assessed as the "success" "lack of success" of the negotiators of the five Caspian countries.
It can be assessed rather as reduction of the urgency of this issue for Azerbaijan today. You see, the contract of the century and a number of other scale projects signed under leadership of the country's national leader Heydar Aliyev in 1994 are realized successfully independent of foreign factors' influence.
Do You consider that the companies working in Azerbaijan must adhere to the principle "zero discharge" of wastes to environment, and in case of violations undergo big penalties and liquidation of all the consequences?
In essence, in opinion of CASPIAN ENERGY analysts, the answer to this question is dictated not so much by worsening of the situation with realization of oil and gas contracts than wit worsening of the general ecological situation in the sea, which however does not cancel and requires toughening of the oil companies' responsibility for maintenance of zero discharge of environmental wastes.
DECEMBER 1993 - "THE YEAR BEFORE"
61% of the respondents believe in that expansion of oil companies' activity in Azerbaijan raises its economy to the necessary level, 14% believe that the country becomes dependent on other countries, 10% do not see a big positive affect in this, 6% are tuned pessimistically and say that this situation will cause fall of economy, 9% have not simply thought abut it.
The public opinion poll showed that at that time the Amoco companies were enjoying the highest popularity of Baku population - 41%, then British Petroleum - 30%, Statoil - 20%, Pennzoil - 9%.
1994 - "STARTING"
In 1994 31% of the respondents were sure that this will strengthen the republic's economy, 26% thought that this will a bit strengthen the republic's economy, and 26% believed that this will make Azerbaijan economy dependent on other countries, 8% are sure that this will not affect economy at all, 9% found it difficult to answer.
1996-1998 - "ACTIVE INTEGRATION TO THE WORLD ECONOMIC PROCESSES"
However in 1996 70% of the respondents answering the question "What outlooks for Azerbaijan economy do You see in the activity of oil companies in the republic?" said confidently that the contracts will raise the republic's economy to the necessary level. 9% believe that this will not render a significant positive affect to the republic's economy, and already just 6% of the respondents say that this will make Azerbaijan dependent on other states, 15% have never thought about it. 1993-96 was a transitional period for strengthening of opinion of the vast majority of the population that the contracts influence the country's economy positively.
The crisis in the world market, which started in early 1998 (then cost of 1 barrel of the Brent mix fell to lower than $10), as well as expensiveness of the subcontractor works realized caused that in late 1998 just 59% of the respondents expressed confidence in that the contracts will promote to increase of the republic's economy vs. 65% in 1996. The number of the pessimists asserting that they will render no positive influence to development of economy for the expensiveness of the contracts and today's conditions of the world market. These respondents were 17% vs. 6% in 1996.
Besides, under the results of the poll in 1998, 6% expressed confidence in that further signature of the agreements will cause economic fall.
Thus, the reasons of the somewhat shaken public opinion on efficiency of the work of oil companies in Azerbaijan in this period are pure objective factors, echoes of which may be observed not only in Azerbaijan, but also in other oil producing countries.
However, 31% of the respondents answered the question "what outlooks do You see in expansion of foreign oil companies' activity in the republic for Azerbaijan economy?" that this will give a strong push to development of Azeri economy. 26% of the respondents are sure of strengthening of Azerbaijan economy, the same percentage supposes that which will make Azerbaijan economy dependent on other countries.
At support of the strategic governmental course in 2004 half of the respondents-businessmen regard it necessary to introduce some changes to the government's investment policy with inclination to further, deepened development of non-petroleum sphere of economy - transport, infrastructure, agriculture and tourism. The indicator of economic success of the contract of the century is the fact that if in 1994 just 6% of the respondents believed that SOCAR can itself be engaged in prospecting and development of own fields, in 1998 - 8%, in 2004 this figure equaled to already 52%. Inn opinion of the respondents, this is linked with the quite high credit rating of Azerbaijan, favorable price conjuncture in the world oil market, and presence of advanced network of export pipelines by already 2005.
It is worth noting as well that despite of the geographical closeness of Russia and CIS countries, today the majority of the respondents prefer inflow of investments from Western European countries and USA as well as 10 years ago. So, in 1994 in answer to the question which countries would You prefer in attraction of their investments to development of oil fields 27% of the respondents voted for the Western European countries and USA, while in 1998 and 2004 already 38% of the respondents gave preference to the western investments.
At the same time, overwhelming majority of the respondents believed that it doesn't matter which country's capital it is, the main thing is that its application was profitable for Azerbaijan. The number of these people in 1994 made 46% of the respondents, in 1998 - 41%, 2004 - already 54%, which is the result of the transnational character of the world economy today, as well as the active depoliticization of rather socially and economically active portion of the country's population, which according to the world experience usually causes firm formation of new leading subjects of Azeri economy, development of the middle class. Interestingly that the interviewed experts preferred European investments (23%) to the American ones (15%). CASPIAN ENERGY analytical group believes that this is linked with general tendencies in Azerbaijan economy - energy tendencies, and different polar economic integration with EU countries.
GENERAL DATA ON THE POLL IN 1993-2004.
THE POLL METHOD - on the basis of personal (individual) interviews on special selection among experts - businessmen, as well as employees of different branches of economy. The poll results were fixed in a form.
THE POLL SITE - conducted in the city of Baku.
THE POLL TIME - December 1993, August 1994, September 1996, December 1998 and May-June 2004.
THE NUMBER OF RESPONDENTS - not less than 250 respondents took part in each poll.
THE POLL WAS PREPARED BY: ARG CASPIAN ENERGY research group, CASPIAN ENERGY analytical group.
In September 20, 1994 the contract on prospecting, development and production share in the Azeri, Chirag and deep-water part of the Gunashli field was signed between SOCAR and ten foreign oil companies.
In November 10, 1995 the agreement on the Garabagh structure was signed between Socar and LUKOIL (Russia), Agip (Italy) and Pennzoil (USA).
In June 4, 1996 Socar on the one side and BP (Great Britain), Elf Aquitaine (France), Statoil (Norway), TPAO (Turkey), LUKOIL (Russia), OIEC (Iran) on the other signed the cntract on prospecting and development of the Shah Deniz site.
In December 14, 1996 Socar signed the agreement on the promising structures Dan Ulduzu and Ashrafi with Amoco (USA), Unocal (USA), Itochu (Japan), Delta oil (Saudi Arabia).
The period since 1997 till 1998 is perhaps rather productive for SOCAR. During this period SOCAR signed eight contracts with foreign oil companies, mainly American. They were signed in summer 1997 during the visit of the head of Azerbaijan state Heydar Aliyev t the United States of America.
Besides the Azeri-American contracts, there were concluded agreements on the Kurdashi site (operator - Agip), Lenkoran deniz and Talish deniz structures (operator 0 the French company Elf Aquitaine), as well as the contract on the Yalama block (operator - Russian holding LUKOIL).
In 1998 the Central Fuel Company (Russia) and Monument Oil & Gas (Great Britain) became the new participants of the Azeri offshore projects.