STATE OIL FUND OF THE REPUBLIC OF AZERBAIJAN
"Transparency will be one of the major grounds to our success.
It will bring about efficient management of the future oil revenues
and allow every citizen of Azerbaijan to feel it in everyday life."
Ilham Aliyev
President of the Republic of Azerbaijan
National leader Heydar Aliyev signed a Decree “On the establishment of the State Oil Fund of the Republic of Azerbaijan” on December 29, 1999. The main goal of the establishment of the State Oil Fund is collecting the revenues of the Republic of Azerbaijan related to the implementation of agreements on oil and gas reserves, managing efficiently, and preserving the future generations. The State Oil Fund has thoroughly fulfilled its obligations since its starting date and has taken a number of important measures to achieve its goals. The cornerstone of the philosophy behind the State Oil Fund of the Republic of Azerbaijan is to ensure intergenerational equality of benefit with regard to the country's oil wealth, whilst improving the economic well-being of the population today and safeguarding economic security for future generations.
The experience of a number of countries, the advice of the international financial organizations were used in the establishment of the Oil Fund, and at the same time, the local characteristics and existing demands were also taken into account.
It should be noted that one of the main goals of the Government of Azerbaijan is to ensure the optimal balance between the funds used for the needs of the present generations and those accumulated for future generations.
At the end of September 2019, the Fund's assets increased by 10.4% to $ 42.5 billion.
One of the important achievements of the State Oil Fund is its activity in the field of asset management. the State Oil Fund has always demonstrated a positive return on asset management during the period of its activity. Additionally, since 2012, it has been investing in new financial instruments which aim to diversify the Fund's investment portfolio and increase profitability.
The new investment policy of the Fund was adopted in accordance with the amendments under the Presidential Decree No. 519 dated October 27, 2011, made to "Rules on the management of foreign currency assets of the State Oil Fund of the Republic of Azerbaijan", for the purposes of increasing profitability and diversification of the Oil Fund’s investment portfolio. According to the new investment policy, a maximum of five percent of the investment portfolio can be allocated into each of the new asset classes such as gold, equities, and real estate. The currency composition of the investment portfolio of the Fund consists of the 3 main currencies: 50% invested in assets denominated in USD, 40% invested in assets denominated in EUR, and 5% invested in assets denominated in GBP. Besides, State Oil Fund is allowed to invest up to 5% of the investment portfolio in assets of member countries of the G7, European Monetary Union, denominated in Turkish lira, Russian rouble, and currencies of countries with a sovereign credit rating of not less than “A”.
The State Oil Fund also financed a number of significant projects for the socio-economic development of our country. Currently, the Fund continues to finance some national projects.
Funds allocated from the State Oil Fund:
1.Financing of the share of the Republic of Azerbaijan in Heydar Aliyev Baku-Tbilisi-Ceyhan Main Export Pipeline project (completed in 2006) - 297.9 mln. manats.
2.İmproving social conditions of refugees and solving the problems of internally displaced families settlement - 2 102.7 mln. manats.
3.Construction of a water pipeline from the Oghuz-Gabala region to Baku (completed in 2011) - 779.6 mln. manats.
4.Reconstruction of Samur-Absheron irrigation system - 1 379.6 mln. manats.
5.Transfers to the state budget - 77 617.0 mln. manats.
6. Financing the statutory capital of State Investment Company (completed in 2006) - 90.0 mln. manats.
7.Baku-Tbilisi-Kars new railway project - 572.4 million manats.
8.Financing the State Program on Education of Azerbaijani Youth Abroad in 2007-2015 - 205.4 million manats.
9.Financing of SOCAR share in the Azeri-Chirag-Gunashli project - 87.6 mln. manats.
10.Construction of STAR oil refinery complex - 1 663.3 mln. manats.
11.Financing the share of the Republic of Azerbaijan in “Southern Gas Corridor” CJSC statutory capital - 1 530,3 mln. manats.