State Oil Fund of Azerbaijan
{{Short description|Sovereign wealth fund of the Republic of Azerbaijan}}
{{Infobox organization
| name = State Oil Fund of the Republic of Azerbaijan
| native_name = Azərbaycan Respublikasının Dövlət Neft Fondu
| logo = State Oil Fund of Azerbaijan logo.png
| logo_size = 150px
| image = SOFAZ Tower in 2016.jpg
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| caption = SOFAZ Tower at Heydar Aliyev Ave.
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| abbreviation = SOFAZ
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| established = {{start date and age|1999|12|29}}
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| type = Sovereign wealth fund
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| headquarters = Nizami, Baku, Azerbaijan
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| leader_title = Executive Director
| leader_name = Israfil Mammadov
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| awards = United Nations Public Service Awards
EITI Award
| website = [https://www.oilfund.az www.oilfund.az]
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The State Oil Fund of the Republic of Azerbaijan ({{langx|az|Azərbaycan Respublikasının Dövlət Neft Fondu}}), also known by its abbreviation SOFAZ, is a sovereign wealth fund of Azerbaijan founded in December 1999.{{cite web |url=https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=21372 |title=IFC and Azerbaijan Support Private Sector Development in Emerging Markets |last= |first= |date= |website=pressroom.ifc.org |publisher= |access-date=October 28, 2021 |quote=}}{{Cite web |last=Columbia Center on sustainable investment |title=Natural Resource Funds Azerbaijan State Oil Fund of the Republic of Azerbaijan |url=https://ccsi.columbia.edu/sites/default/files/content/docs/our%20work/NRF_Azerbaijan_September2013.pdf |website=}} Nearly all the fund's revenues come from Azerbaijan's oil and gas exports.{{Cite news |last=Curran |first=Enda |date=2013-02-13 |title=Azerbaijan to Buy Australian Real Estate |language=en-US |work=Wall Street Journal |url=http://online.wsj.com/article/SB10001424127887324162304578301463713013322.html |issn=0099-9660}}{{Cite journal |last=Di Bonaventura Altuve |first=Leonardo |date=2023 |title=The demise of sovereign wealth funds |url=https://www.tandfonline.com/doi/full/10.1080/09692290.2023.2190601 |journal=Review of International Political Economy |volume=31 |pages=277–303 |language=en |doi=10.1080/09692290.2023.2190601 |s2cid=257817535 |issn=0969-2290|url-access=subscription }} The fund has been criticized for its lack of transparency and for enriching Azerbaijan's political elites.{{Cite book |last=Altstadt |first=Audrey L. |url=https://books.google.com/books?id=RgbRDgAAQBAJ |title=Frustrated Democracy in Post-Soviet Azerbaijan |date=2017 |publisher=Columbia University Press |isbn=978-0-231-80141-6 |pages=24, 114–120 |language=en}}{{Cite book |last=Waal |first=Thomas de |url=https://books.google.com/books?id=8dp1DwAAQBAJ |title=The Caucasus: An Introduction |date=2018-11-02 |publisher=Oxford University Press |isbn=978-0-19-068311-5 |pages=185 |language=en}}
History and organization
The State Oil Fund of the Republic of Azerbaijan (SOFAZ) was established by Heydar Aliyev's Decree No. 240 dated December 29, 1999.{{cite web |url=https://www.investopedia.com/terms/s/state-oil-fund.asp |title=State Oil Fund (Azerbaijan) |last= |first= |date= |website=www.investopedia.com |publisher= |access-date=October 28, 2021 |quote=}}{{cite web |url=https://www.e-qanun.az/framework/5261 |title=Azərbaycan Respublikasının Dövlət Neft Fondunun yaradılması haqqında AZƏRBAYCAN RESPUBLİKASI PREZİDENTİNİN FƏRMANI |last= |first= |date=December 29, 1999 |website=www.e-qanun.az |publisher= |access-date=October 28, 2021 |quote=}} Statute of the State Oil Fund was approved by the Decree of the President of the Republic of Azerbaijan No. 434 dated December 29, 2000.{{cite web |url=https://www.e-qanun.az/framework/148 |title=Azərbaycan Respublikasının Dövlət Neft Fondu haqqında Əsasnamənin təsdiq edilməsi barədə AZƏRBAYCAN RESPUBLİKASI PREZİDENTİNİN FƏRMANI |last= |first= |date=December 29, 2000 |website=www.e-qanun.az |publisher= |access-date=October 28, 2021 |quote=}}
SOFAZ has been criticized for lacking transparency in its finances and in its contracting, which has raised questions about corruption. Critics have described projects funded by SOFAZ as useless, and noted that contracts have been awarded to companies owned by the ruling Aliyev family in Azerbaijan. Funds from SOFAZ are frequently transferred to make up for state deficits.
Azerbaijani banks purchased nearly $5 billion foreign currency from SOFAZ in 2016.{{Cite web |date=2016-12-31 |title=SOFAZ sells almost $5B to local banks at auctions in 2016 |url=https://en.azvision.az/news/55734/sofaz-sells-almost-$5b-to-local-banks-at-auctions-in-2016.html |access-date=2025-02-25 |website=Azvision.az}} In 2018, SOFAZ sold more than $5.8 billion foreign currency to Azerbaijani banks.{{Cite web |date=2019-01-08 |title=SOFAZ increases sales of dollars to Azerbaijani banks |url=https://www.azernews.az/business/143696.html |access-date=2025-02-25 |website=Azernews.Az |language=en}}
In 2020, the Azeri-Chirag-Gunashli (ACG) oil fields recorded their lowest profits since 2003 at $3.52 billion, with SOFAZ receiving about $5 billion from oil sales that year.{{Cite web |date=2024-05-17 |title=Azerbaijan Faces Declining Oil Revenues: What should the government do?… |url=https://turan.az/en/economics/azerbaijan-faces-declining-oil-revenues-what-should-the-government-do-780614 |access-date=2025-02-25 |website=turan.az |language=en}} In 2022, revenue from oil and gas sales of the ACG and Shah Deniz gas field increased by 65.4% to $11.3 billion compared to 2021.{{Cite web |date=2025-02-25 |title=State Oil Fund of Azerbaijan beefing up reserves - Review by Caliber.Az |url=https://caliber.az/en/post/state-oil-fund-of-azerbaijan-beefing-up-reserves |access-date=2025-02-25 |website=caliber.az |language=en}} In 2024, the revenue generated by SOFAZ from the sale of oil from the ACG field was US$ 5,725 billion.{{Cite web |date=2024-12-09 |title=Azerbaijan unveils revenues from Azeri-Chirag-Gunashli, Shah Deniz fields {{!}} Caliber.Az |url=https://caliber.az/en/post/azerbaijan-unveils-revenues-from-azeri-chirag-gunashli-shah-deniz-fields |access-date=2024-12-09 |website=caliber.az |language=en}}{{Cite web |title=SOFAZ reveals its revenues from ACG |url=https://en.apa.az/energy-and-industry/sofaz-reveals-its-revenues-from-acg-454973 |access-date=2024-12-09 |website=Apa.az |language=en}}{{Cite web |date=2024-05-07 |title=State Oil Fund's income soars to almost $1.8 billion from ACG this year |url=https://www.azernews.az/oil_and_gas/225671.html |access-date=2024-07-03 |website=Azernews.Az |language=en}} SOFAZ owns 25% of the shares amongst BP, ExxonMobil, Amoco, Unocal, Statoil, McDermott and others.
In July 2024, SOFAZ had more than $58 billion in assets under management, an increase of 3.4% from January of that year.{{Cite web |title=SOFAR's assets exceed $58 billion |url=https://abc.az/en/news/151323/sofars-assets-exceed-58-billion |access-date=2025-02-25 |website=ABC.AZ |language=en}}
SOFAZ Executive Director Israfil Mammadov signed a Memorandum of Understanding with Hassana Investment Company in October 2024 to discuss investment in Saudi Arabia.{{Cite web |date=2024-10-29 |title=SOFAZ to explore investment opportunities in Saudi Arabia |url=https://report.az/en/energy/sofaz-to-explore-investment-opportunities-in-saudi-arabia/ |access-date=2025-02-25 |website=Report News Agency |language=en}}
In 2024, SOFAZ sold $7.128 billion foreign currency for 12.1 billion manats.{{Cite web |title=SOFAZ increased sale of foreign currency 3.2-fold for December |url=https://abc.az/en/news/165109/sofaz-increased-sale-of-foreign-currency-32-fold-for-december |access-date=2025-02-25 |website=ABC.AZ |language=}}
= Executive Director =
The operational management of the Fund's activities is carried out by the Executive Director, who is appointed and dismissed by the President.{{Cite book |last1=Gawrich |first1=Andrea |url=https://books.google.com/books?id=biZpDwAAQBAJ |title=Are Resources a Curse?: Rentierism and Energy Policy in Post-Soviet States |last2=Franke |first2=Anja |last3=Windwehr |first3=Jana |date=2010 |publisher=Verlag Barbara Budrich |isbn=978-3-86649-677-4 |pages=78 |language=en}} As of 2018, the executive director reports to the President.{{Citation |last=Altstadt |first=Audrey |title=Frustrated Democracy in Post-Soviet Azerbaijan |date=2018 |url=https://www.degruyter.com/document/doi/10.7312/alts70456/html |pages=114– |publisher=Columbia University Press |language=en |doi=10.7312/alts70456 |isbn=978-0-231-80141-6|url-access=subscription }} There have been three executive directors since 2001:
- Samir Sharifov (January 3, 2001{{cite web |url=https://www.e-qanun.az/framework/4537 |title=S. R. Şərifovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı Direktoru təyin edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı |date=January 3, 2001 |website=www.e-qanun.az |publisher= |access-date=October 28, 2021 }} – April 18, 2006{{cite web |url=https://www.e-qanun.az/framework/11631 |title=S. R. Şərifovun Azərbaycan Respublikasının Dövlət Neft Fondunun İcraçı direktoru vəzifəsindən azad edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı |date=April 18, 2006 |website=www.e-qanun.az |publisher= |access-date=October 28, 2021 }})
- Shahmar Movsumov (May 15, 2006{{cite web |url=https://www.e-qanun.az/framework/11718 |title=Ş.A.Mövsümovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı Direktoru təyin edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı |date=May 15, 2006 |website=www.e-qanun.az |publisher= |access-date=October 28, 2021 }} – November 29, 2019{{cite web |url=https://www.e-qanun.az/framework/43723 |title=Ş.A.Mövsümovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı direktoru vəzifəsindən azad edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı |date=November 29, 2019 |website=www.e-qanun.az |publisher= |access-date=October 28, 2021 }})
- Israfil Mammadov (November 29, 2019{{cite web |url=https://www.e-qanun.az/framework/43722 |title=İ.A.Məmmədovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı direktoru təyin edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı |date=November 29, 2019 |website=www.e-qanun.az |publisher= |access-date=October 28, 2021 }} – present)
= Supervisory Board =
The President of Azerbaijan appoints the members of a Supervisory Board, who are de facto powerless. The board comprises 7 key officials including the Prime Minister, Deputy Speaker of the National Assembly, Assistants to the President of Azerbaijan – Head of Economic Affairs and Innovative Development Policy, and Head of Economic Policy and Industrial Affairs departments of the Presidential Administration, Minister of Finance, Minister of Economy, and the Chairman of the Central Bank of Azerbaijan.{{cite web |date=December 9, 2019 |title=Azərbaycan Respublikası Dövlət Neft Fondu Müşahidə Şurasının yeni tərkibinin təsdiq edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı |url=https://e-qanun.az/framework/39260 |access-date=August 23, 2023 |website=www.e-qanun.az |publisher=}}
= Subsidiaries =
SOFAZ owns 12 subsidiaries. Five are located on the channel island of Jersey, four in Luxembourg and one each in Russia,{{Cite web |date=2020-07-09 |title=SOFAZ shifts from loss to profit from Moscow-based property |url=https://report.az/en/business/sofaz-shifts-from-loss-to-profit-from-moscow-based-property/ |access-date=2025-03-28 |website=Report News Agency |language=en}} France{{Cite web |date=2012-12-21 |title=SOFAZ buys €135m property in Paris |url=https://www.azernews.az/business/47797.html |access-date=2025-03-28 |website=Azernews.Az |language=en}} and Japan.{{Cite web |date=2023-12-31 |title=International Financial Reporting Standards Consolidated Financial Statements and Independent Auditor's Report |url=https://www.oilfund.az/report-and-statistics/get-download-file/flip/8_2023_en.pdf |access-date=2025-03-28 |website=www.oilfund.az}}
Others
In June 2024, SOFAZ announced a plan to invest US$100 million in Dubai-based GEMS Education.{{Cite web |date=2024-06-18 |title=Azerbaijan's State Oil Fund to invest $100M in one of world's largest private education providers |url=https://report.az/en/finance/azerbaijan-s-state-oil-fund-investing-in-one-of-world-s-largest-private-education-providers/ |access-date=2024-07-03 |website=Report News Agency |language=en}}{{Cite web |date=2024-06-18 |title=SOFAZ invests in one of largest private companies providing educational services in world |url=https://www.azernews.az/business/227549.html |access-date=2024-07-03 |website=Azernews.Az |language=en}}
Since 2013, SOFAZ owns a 2.95% stake in state-owned Russian VTB Bank until now this investment has paid USD 57.3 million in dividends to SOFAZ.{{Cite web |title=Russian bank paid USD 57.3 mln. dividends to SOFAZ so far |url=https://en.apa.az/finance/Russian-bank-paid-USD-57.3-mln.-dividends-to-SOFAZ-so-far-313478 |access-date=2025-01-06 |website=Apa.az |language=en}}
In 2025 SOFAZ announced an investment in Italian rail operator Italo – Nuovo Trasporto Viaggiatori S.p.A via a fund vehicle led by U.S.-based Global Infrastructure Partners (GIP) which is part of BlackRock.{{Cite web |title=Azerbaijan's State Oil Fund buys share from Italy's rail operator |url=https://en.apa.az/finance/azerbaijans-state-oil-fund-buys-share-from-italys-rail-operator-460882 |access-date=2025-02-27 |website=Apa.az |language=en}}{{Cite web |date=2025-02-19 |title=SOFAZ expands portfolio with strategic investment in Italo high-speed rail |url=https://www.azernews.az/business/237982.html |access-date=2025-02-27 |website=Azernews.Az |language=en}}
In May 2025 SOFAZ invested a €20 million stake in the private equity fund Azzurra Capital Fund I, managed by the company Azzurra Capital, based in Dubai.{{Cite web |title=Azerbaijan's State Oil Fund acquires stake in Dubai-based private equity fund -EXCLUSIVE |url=https://en.apa.az/finance/azerbaijans-state-oil-fund-acquires-stake-in-dubai-based-private-equity-fund-exclusive-466618 |access-date=2025-05-07 |website=Apa.az |language=en}}
Awards
- United Nations Public Service Awards (2007){{cite web |last= |first= |date= |title=List of Winners and Finalists for the 2007 UN Public Service Awards |url=http://unpan1.un.org/intradoc/groups/public/documents/un/unpan026198.pdf |archive-url=https://web.archive.org/web/20160305130820/http://unpan1.un.org/intradoc/groups/public/documents/un/unpan026198.pdf |archive-date=March 5, 2016 |access-date= |website=unpan1.un.org |publisher= |quote=}}
- EITI Award (2009){{cite web |last= |first= |date=February 24, 2009 |title=EITI Chairman's Awards presented in Doha |url=https://eiti.org/es/node/3912 |url-status=dead |archive-url=https://web.archive.org/web/20211030030114/https://eiti.org/es/node/3912 |archive-date=October 30, 2021 |access-date=October 28, 2021 |website=eiti.org |publisher=EITI}}
References
{{Reflist|2}}
Source
- {{Cite journal |date=2015 |title=Fiscal sustainability and the State Oil Fund in Azerbaijan |journal=Journal of Eurasian Studies |language=en |volume=6 |issue=2 |pages=114–121 |doi=10.1016/j.euras.2015.03.004 |issn=1879-3665 |doi-access=free |last1=Aslanli |first1=Kenan}}
Category:Government agencies of Azerbaijan
Category:Government agencies established in 1999
Category:Economy of Azerbaijan
Category:Sovereign wealth funds
Category:Petroleum organizations