MARCH 17 2014 (The Conway Bulletin) — Between 2009 and 2013 Azerbaijan increased by nearly four times the amount of arms it imported, the Stockholm International Peace Research Institute reported. Azerbaijan has been spending profits from energy sales on re-arming. It is still officially at war with Armenia over the disputed region of Nagorno-Karabakh.
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(News report from Issue No. 176, published on March 19 2014)
MARCH 17 2014 (The Conway Bulletin) — Azerbaijan’s non-oil sector, a key benchmark of economic development, grew by 8.8% in January and February of this year compared to the same period in 2013, the state statistics agency reported. International economists have said that Azerbaijan needs to reduce its economic dependence on energy.
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(News report from Issue No. 176, published on March 19 2014)
MARCH 9 2014 (The Conway Bulletin) — If it materialises, it would be quite a publicity coup for Azerbaijani President Ilham Aliyev.
Bernie Ecclestone, the unofficial ringmaster of Formula One, told British newspapers that plans were crystallising to hold a race in Baku in 2015 or 2016.
“We’re going to Azerbaijan,” Mr Ecclestone told British newspapers.
“The people out there [in Azerbaijan] are talking about holding a race in 2015. That may be a bit soon, unless it’s at the end of the season, that’s a possibility. But 2016 is more likely.”
This must be music to Mr Aliyev’s ears. As Azerbaijan has grown increasingly rich on energy wealth, Mr Aliyev has used various sports events and competitions to promote the country.
Next year, Azerbaijan hosts the inaugural European Games, it has placed a bid to hold the summer Olympics and also to stage the European Champions League final.
The glamour of Formula One, though, is unrivalled and Mr Aliyev would no doubt welcome it to Baku. Formula One is also one of the most watched TV sports around the World.
Mr Ecclestone has been trying to broaden the venues of Formula One races over the past few years. India and Malaysia now host their own race and Russia will host a Formula One race this year in Sochi.
If Azerbaijan does host a race in 2016, though, it will become the country with the smallest economy to host a Grand Prix.
Still, this does also come with pitfalls.
Human rights demonstrators in Bahrain targeted their demonstrations around the Formula One race in 2011. They may also take their opportunity in Baku too.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 9 2014 (The Conway Bulletin) — Azerbaijan increased its exports of military equipment by 500% in 2013, media quoted a government report as saying. Azerbaijan has previously said that it wants to boost its arms manufacturing sector. It has invested much of its relatively recent oil wealth into its military.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 10 2014 (The Conway Bulletin) — It’s tough times for emerging market economies. Currencies are under pressure from an upturn in the US economy and Russia’s moves in Ukraine have made people nervous.
Azerbaijan, though, seems to be handling all this with aplomb with the successful launch of its inaugural $1.2b 10-year Eurobond.
Analysts said that orders came in for around 4b, making the issue more than three times over-subscribed.
The yield came in at around 5%, roughly 200 basis points over US treasures. This shows that investors feel that Azerbaijan is a relatively good bet at the moment — certainly better than other parts of the former Soviet Union which have been dented by the brewing crisis in Ukraine.
Although analysts have said that Azerbaijan does not need to issue the loan, it may have wanted to put a marker down for any future issues.
It will also help other companies from Azerbaijan gauge how easy, or difficult, it is to enter the debt market. The state-controlled International Bank of Azerbaijan said it may look to enter the debt market this year.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 6 2014 (The Conway Bulletin) — Azerbaijan has started a 500m euro project to transform an old Yugoslav navy base in Montenegro into a luxury resort. The construction of the resort is controversial because it is being bankrolled by Azerbaijan’s sate-owned oil company and Azmont Investments, a company with close links to the Azerbaijani elite.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 7 2014 (The Conway Bulletin) — Azerbaijan wants to impose harsher penalties on people who break its anti-terrorism laws, media quoted the head of the Azerbaijani parliament’s security committee, Ziyafat Asgarov, as saying. Azerbaijani officials have said they are worried about radicalised Islamists returning to Azerbaijan from Syria’s civil war.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 7 2014 (The Conway Bulletin) — The United States’ Federal Aviation Administration handed Azerbaijan a category 1 ranking, allowing Azerbaijani aircraft to fly to the US. The decision is an important boost for Azerbaijan’s aviation industry. It had previously been banned from flying to the US.
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(News report from Issue No. 175, published on March 12 2014)
MARCH 11 2014 (The Conway Bulletin) — Azerbaijan cut its oil exports by 6.5% in January and February to 3.73m tonnes compared to a year ago, Reuters quoted a source at Azerbaijani energy company SOCAR as saying. The source said that declining output was behind the drop in exports. Azerbaijan has been trying to stem a general decline in oil production.
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(News report from Issue No. 175, published on March 12 2014)
FEB. 28 2014 (The Conway Bulletin) — Looking to move out of projects in which it owns only a minority share, Total announced plans to sell its 10% stake in Azerbaijan’s Shah Deniz oil field.
Botas, a Turkish pipeline company, confirmed that it is in talks to buy Total’s stake.
There will probably be others interested too. Azerbaijan is an attractive place for countries in the region which need to boost their energy supplies. Last year India’s state-owned ONGC Videsh bought a stake in Azerbaijan’s biggest oil field for $1b.
A Botas spokesman explained the attraction of buying into Shah Deniz. “The acquisition of a 10% stake from Total is commercially profitable,” he told Reuters.
Shah Deniz is the mainstay of Azerbaijan’s gas industry and is currently the subject of a $28b expansion. Some analysts said the cost of the expansion may have triggered Total’s sale plans.
Importantly, a purchase by Botas of Total’s stake would reduce Western Europe’s interest in a gas field which is critical to its long-term energy plans. Azerbaijan has increasingly turned to Turkey, its natural partner, to push through infrastructure and energy projects.
Total is the second major energy company to exit the Shah Deniz project in the Caspian Sea in the past couple of months.
In December, Norway’s Statoil cut its stake in Shah Deniz to 15.5% from 25.5%. Statoil sold this 10% stake for $1.45b to BP and Socar, Azerbaijan’s state-owned energy company, indicating that Total may be able to fetch a similar price for its own stake.
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(News report from Issue No. 174, published on March 5 2014)