SOCAR SOCAR State Oil Company of the Republic of Azerbaijan

The State Oil Company of Azerbaijan (SOCAR) was established by the Decree of the President of the Republic of Azerbaijan. The SOCAR structure included production associations with the right of the enterprise, trusts and management with the right of the enterprise, individual structural units with the right of management.

The Group of Companies includes: Azneft PO, Geology and Engineering Geology PO, Oil Pipelines Directorate, Marketing and Economic Operations Directorate, Foreign Investments Directorate, Azerneftyag Refinery, Azerneftyanajag Refinery, Baku Deep Water Base Plant.

SOCAR's activities in the territory of the Republic of Azerbaijan consist of exploration of oil fields at sea and on land, preparation, use, transportation of oil, gas, condensate and products obtained from them, processing, sale, stable demand of consumers for relevant energy resources and sustainable payment, from other works and services and revenue generation. The Company carries out the following main activities defined by law:

• development and preparation of long-term programs for the development of the industry, targeted comprehensive scientific, technical, economic and social programs;
• improving production efficiency, implementing a policy of saving energy and material reserves, creating profitable production, technological and economic ties between enterprises of the industry;
• ensuring mutual contacts between the Company and the relevant authorized state bodies in determining the prospects for the development of the industry;
• development of the production and social base of the industry, modernization of the enterprises included in the company, their expansion, reconstruction, investment activities to equip them with the latest equipment and technologies in a form determined by law;
• geological exploration using modern construction technology and technical means, improving the efficiency of field operation, accelerating the construction of oil and gas wells, as well as the use of the earth's subsoil, improving the quality and acceleration of field preparation for operation, complying with the current legislation on environmental protection;
• improvement of economic methods and forms, introduction of the latest achievements of science into production;

attracting credit funds from banks, including foreign banks and other sources for the implementation of economic and production and technical programs;

• personnel policy, organization of personnel training in the republic and abroad and advanced training;

creating favorable conditions for the social development of enterprise collectives by strengthening the material base of the social sphere;

• interrelated activities with government agencies, foreign companies and entrepreneurs;
• ensuring the development of the main areas of geophysical, geological exploration and appropriate approval;
• making decisions on the transfer for the development of new fields, development and approval of pilot industrial production projects of fields operated by enterprises, technological schemes, projects for the development of oil, gas and gas condensate fields;
• approval of annual working programs of oil and gas producing enterprises, determination of their annual budgetary funds, according to these programs;
• arrangement of transportation of produced crude oil and natural gas, payment of a certain amount to transportation enterprises for the service;
• organization of crude oil and natural gas processing, payment by the Company to processing enterprises for the service of an amount in a certain amount;
• arrangement of sales of crude oil, natural gas and petroleum products and payment of supply costs in a certain order;
• carrying out the necessary measures for land reclamation and environmental protection;
• conducting foreign economic relations in a manner determined by law, etc.

History

2023: $1.5 billion loan from Lukoil to process Russian oil in Turkey

Lukoil [1] will give Azerbaijan's state oil company Socar a $1.5 billion loan in a broader deal that will allow Socar's 200,000-bpd Turkey STAR refinery to process Russian oil again, three industry sources familiar with the deal said in October 2023.

The deal would allow Lukoil to get another customer in close proximity to Russian ports after most European oil refiners stopped importing Russian oil under U.S. and allied sanctions.

2022: Russia begins gas supplies to Azerbaijan under new agreement

In November 2022, it became known that Russia is starting gas supplies to Azerbaijan under a new agreement. The document was signed between Gazprom and the state oil company of Azerbaijan SOCAR. Deliveries will last until the end of March 2023, Russia will supply 1 billion cubic meters of gas.

2021: Pumping oil through the Druzhba pipeline through Odessa

The long-term agreement between the Belarusian Oil Company and the state-owned Azerbaijani SOCAR was concluded in December 2020. It was assumed that the supply volumes would be at least 1 million tons of Azeri Light grade.

In September 2021, the Druzhba oil pipeline was paralyzed due to the synchronous decision of Poland and Belarus to "block the cranes" for Russian raw materials.

Both branches of the pipeline, built in the 1960s to supply Soviet oil to Eastern European CMEA countries, were blocked for Russian exports.

Belarus was the first to announce the termination of pumping for four days. On August 9, on the day of the visit of President of the country Alexander Lukashenko to Moscow, the state concern Belneftekhim stopped exports along the southern branch of Druzhba in order to launch it in reverse mode and accept Azerbaijani oil from Odessa.

1999-2011: Informal collaboration of top executives with Unaoil and Reza Rain to advance KBR's interests

According to the leaked files of one of the largest clients of Unaoil, the American engineering giant KBR, Reza Rain had direct access to the top leadership of Azerbaijan.

Unaoil mainly operates in oil-rich regions. And there was no other intermediary in the oil game like Reza Rain. He was one of the most prominent members of the New York socialite, with secular magazines calling him one of the city's best-dressed men. For several years he was married to the New York socialite Marjorie Gubelmann.

But Reza's best contacts were abroad, where he worked as an intermediary in Azerbaijan's oil industry at Unaoil.

The decision to appoint Unaoil and Rain as mediator in Azerbaijan was made by KBR management in 1999. In a memo to KBR, it was noted that Rain was very close to the President of Azerbaijan and his family, and had access to any offices.

If in 1999 the contacts of the company's lobbyist Reza Rain with the President of Azerbaijan and his people did not cause KBR alarm, then by 2007, when the company again checked Rain's connections and his work, there was reason for concern.

For KBR, the stakes were high: if Rain was involved in obtaining information or services illegally from his Azerbaijani contacts, KBR could be accused of violating American corruption laws. After all, the company officially paid for his services.

A 2007 memo from KBR stated: - 'The Managing Director of Unaoil Group [in Azerbaijan] Mohammad Reza Rain appears to have connections with some senior Azerbaijani government officials and decision makers, as evidenced by his ability to organize meetings for KBR with various Azerbaijani officials. However, there has been no indication or suggestion that Rain has undue influence over these officials. Rather, these contacts are the result of family and business ties that have developed over time without the use of illegal relationships. '

However, documents from Unaoil's internal leak cast doubt on that assessment.

It follows that Rain obtained confidential government information from a man whose identity Rain and Unaoil appeared to want to keep secret. In their emails, they gave him the code name V1.

From the emails Unaoil made available to journalists , it becomes clear that V1 held a position in the state oil company of Azerbaijan SOCAR. They reveal Rain's confidence that V1 will provide them with important information when they travel outside Azerbaijan, and say that Unaoil is hatching a plan to convince him to disclose the details of the Caspian gas field development project in the interests of its customers' before it is too late '.

'I eventually spoke to V1, who said he would only have information for us when he went to London, 'Rain wrote in a 2002 email to Unaoil executives.

Later that year, an executive at Unaoil sent an email saying that Rain had promised to personally push V1 'as hard as possible' to get 'numbers' on the gas field project.

Although the main client of Unaoil in Azerbaijan at that time, KBR, was unable to receive a contract for the construction of offshore drilling platforms worth $90 million, it has already won contracts for the construction of pipelines related to this project. Another Unaoil customer, Swiss technology company ABB, has been awarded a contract to supply control and safety systems for offshore gas platforms.

V1 organized the necessary acquaintances for Unaoil. Rain met with Azerbaijani businessman Nizami Piriev in 2006 to discuss a methanol plant, for the construction of which Piriev received a license from the Azerbaijani government.

Rain told Unaoil she could take part in the project. And he offered to attract one of Unaoil's major international customers to help build the plant. Rain was confident that the project would go ahead as he was supported by an 'important person'. Perhaps here we are talking about President Ilham Aliyev.

So who was V1? His identity remained under wraps for years until it was revealed by Unaoil's careless top executive Peter Willimont in a 2006 email addressing the then events on Azerbaijan's political scene.

'V1 still works for Socar [Azerbaijan Oil Company], but as you know, he was elected (if you can call it that) to parliament and became deputy speaker in charge of the environment, 'the letter read.

Thus, V1 became known as Valekh Aleskerov, Vice Speaker of the Azerbaijani Parliament and Chairman of the Committee on Ecology and Natural Resources. At the national oil company, Aleskerov was responsible for conducting Azerbaijan's affairs with foreign investors. Rain and Aleskerov continued to meet on Unaoil projects until at least 2011.

Two other Azerbaijani government officials also explicitly leaked secret information to Raina in the interests of Unaoil customers, including KBR and Rolls-Royce. They too were given the codenames V2 and V3.

Who they are is not entirely clear, but it can be determined from numerous emails that both were senior officials at SOCAR, most likely vice presidents who regularly assisted Unaoil.

Once again, Unaoil's Willimont was most outspoken: - 'The other talks I've been in have been less important than the fact that the V3 seems to be sidelined by the V2, which is back in the cage. V3 doesn't seem to be able to provide any help at all since V2 returned to Socar!!!!!!! '.