The State Oil Company of Azerbaijan (SOCAR) and Foroof International (Saudi Arabia) in Baku signed a memorandum of understanding and long term projects in the petroleum sector in Saudi Arabia. The memorandum was signed by SOCAR president Rovnag Abdullayev and Prince Bander Bin Abdullah Bin Mohammed Al Saud. The contract will be prepared within a month, Abdullayev said after the signing ceremony. A joint venture in which SOCAR will have 75 percent equity will operate in Saudi Arabia in the coming months. The contract includes the work of SOCAR in the oil and gas sector of Saudi Arabia and in particular the exploration of gas structures and the geological, geophysical and other works in which SOCAR has considerable experience. Prince Bander stressed that currently Saudi Arabia aims to attract foreign companies in the exploration and development of advanced gas structures. A century on, and Azerbaijan has once again come to be regarded as a key player in global energy. This re-emergence, which began in the mid-1990s and has strengthened ever since, can be primarily attributed to three factors: huge remaining oil and gas reserves, a location at the crossroads of Europe and Asia (linking major supply routes across the region) and a transparent system of energy revenue management. Hardly a day now passes without some mention in the media of the country's key role in ensuring Europe's energy security. Azerbaijan's proven (as opposed to potential) oil reserves have been estimated at seven billion barrels, currently allowing for a peak production capacity of roughly one million barrels per day. As for natural gas, proven reserves are estimated at just under one trillion cubic meters, and in 2007 the country became a net exporter following the launch of the Shah Deniz gas field. Although not game changers in global perspective, these figures do enable Azerbaijan to play a vital role in its neighborhood, where demand for oil and gas continues to increase. As far as energy export routes are concerned, the Azerbaijani government has pursued a policy of diversification, thus avoiding over-dependence on any single country, which in the event of conflict could disrupt energy supplies. Alongside the Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Erzurum (BTE) pipelines, Azerbaijan's two leading westbound outlets for oil and gas respectively, new routes have been constructed toward Black Sea ports in both Russia and Georgia; a new gas pipeline to Iran is also under way. Late last year Azerbaijan signed an agreement to export its gas to Russia – a striking reversal of roles, given that until just a few years ago Azerbaijan was importing natural gas from Russia to meet domestic demand. Moreover, negotiations are currently being held over the construction of facilities at Georgian ports which will enable liquefied natural gas (LNG) to be shipped to potential consumers such as Bulgaria and Romania. Of course, Azerbaijan continues to export much of its oil and gas toward European markets, mainly via the BTC and BTE pipelines. – SGIn addition, Azerbaijani gas is now re-exported through Turkey's domestic gas network to Greece and Italy. Meanwhile Azerbaijan's political leadership has given its full support to the construction of the Nabucco gas pipeline, which when complete will effectively extend the BTE pipeline from Turkey to Austria. However, exploiting energy resources is one thing - building a solid framework to manage energy revenues is quite another, and often more of a challenge. Having observed the difficulties encountered by other energy-rich countries, in 1999 the government established its State Oil Fund. Oil revenues are accumulated in the Fund, which in turn exercises responsibility over the management of those revenues, transfers to state budgets (in emergencies) and investing in strategic projects. So far, oil revenues have been used to solve housing shortages created by the Armenian occupation of Azerbaijani territories, establish an overseas scholarship for some 5,000 Azerbaijani students and build a water pipeline extending toward Baku. Azerbaijan was the first country to join the Extractive Industries Transparency Initiative initiated by former Prime Minister Tony Blair, and in 2007 the State Oil Fund was recognised by the UN for its transparency and responsiveness. __
