Azerbaijan State Economic University,

Elshan M. Hajizadeh

From times of acquaintance with oil inAzerbaijanhas passed more than IV thousand years. Serving then to people as a light source and heat, medical means and as the building material oil, having warmed mentality of people became an integral part of a local civilization. Personifying abundance of the given power resource the name of the whole geographical space proceeding from this reality is namedAzerbaijanwhich is interpreted as «the country of fires».

During an epoch of technological revolution and industrial capitalization of the economic, occuring in XIX century oil, having created so-called «a hydrocarbonic era» has turned to driving force of society. By then to one of two major international centers of the concentrated basic potential of hydrocarbonic resources of all planet began theBakuoil area. The oil fountains beating from bowels of this remoteprovinceofRussiabeing capitalized, turned to an additional source of receipts in treasury of powerful power.

The quantity of made oil inAzerbaijanin 1894 was made even to extraction in theUSAand, in 1899-1901 having outstripped it has won first place in the world. In 1901 from 20 million tons of extracted oil on a planet more than half belonged toAzerbaijan. With the beginning of II world war, in one 1941-year manufacture of oil in republic has raised up to a record level and has made 23541 thousand tons. Within warAzerbaijanhas provided the country of advice 75 million tons with oil. It made 73,4% of the oil made in theUSSR. And though theBakuoil, down to the middle of XX century managed to keep a rating, the next years could not hold the positions.

Accepted to the end of the last century the decision on development of new richest deposits onCaspian seahas caused powerful reaction to global oil arena. In this connection at a present stageAzerbaijanagain has turned to a place of collision of geostrategic interests of great powers. At the end of 1994 with the foreign companies the first international petro-contract including in a history under the name «Contract of the age» has been signed. Joint development of the Caspian oil of Azerbaijan, and as a whole the further use of his full hydrocarbonic potential has put in pawn a basis of the new beginnings in revival of a social-economic life of a society and the number of similar oil contracts by present time has led to to formation of oil strategy of the country With carrying out national oil strategists has reached 22. 14 states and 32 conducting oil companies of the world participate in these contracts. Within the nearest 20-30 years in a national economy the investment of large investments for the sum of $50-60 billion from which at present more than 15% it is already realized is planned. Structures providing great volumes of extraction are generated, the Oil Fund /SOFAR/ in which it is already accumulated about billions dollars is created. Projects of an output on the world markets of oil and gas to the Baku-Tbilisi-Ceyhan and the Baku-Tbilisi-Erzurm turn to realities.

But not all plans stipulated in contracts have crowned success. Because of the factor of unprofitableness revealed during prospecting drilling actually the activity was stopped with 6 Caspian consortia. In republic this situation did not count a trouble. The most important in a wide spectrum «parade» of the conducting world transnational oil companies with participation of the parent states has taken place. Left the contract area have left in republican oil sector 500 $ one million investments beforehand stipulated from $12 billion. Having fixed it his infrastructural formation and a geologist-conomic information database the block of structures, which potential of stocks makes 480 million tons of oil.

Despite of the conceptual deviations, spent national oil strategy today's successes give the basis to believe, that the nearest years the republic actually will turn in the major economic zone through which power resources of Caspian sea will be transportation the markets of Europe in summary real revival of the Great Silk way Azerbaijan begins transit-реexport by space for all region.

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Role of oil-and-gas resources as strategic raw material, in a life of any country it is rather many-sided. It is known that, oil and gas the most valuable industrial, financial and economic resource underlying the big number of industrial productions. In many respects due to oil-and-gas resources the mankind provides itself with energy, transport, components for various technological processes. As a result of realization of these power resources of the state, the enterprise and people integrate economic attitudes, make corresponding payments essentially filling financial and economic life of the country. Oil-and-gas resources in various forms it is consumed by all branches of economy and members of a society and is the strongest components investments. As the major strategic branch of economy oil-and-gas sector in significant to a measure defines economic conditions of the country, industrial and military potential of the state. One more important function of oil-and-gas resources in a life of economy and a society is her сity and region forming effect. In superfluous aspect and set all these properties raise a rating of oil and gas resources in the international aspect, transforming its diplomatic tool.

And the major properties of oil-and-gas riches follow from the analysis of functions obvious and known conclusions, that the main priority orientation of these resources is appreciable influence on a social and economic situation, transformation of innovations and improvement well-being of a society. Stability and increase of social and economic efficiency of oil branch needs direct participation of the state. These principles as well forAzerbaijanhave adequate character. Therefore in republic the role oil strategists of the country in strengthening national and economic safety, improvement of quality of a life and hanging of social efficiency is allocated priority.

It is known, that disorder ofSoviet Unionhas left a deep trace in social and economic position of the countries included in his structure. Destruction of old economic system has resulted not only in infringement of balance in macroeconomic, to losses of the markets and traditional trading communications but also to that that impreparation to these processes detained formation of new economic attitudes. The created reality, dialectic succession of events cause higher rates of transition of relations of production in existing economic structures on rails of market principles. At the present stage the most important local problem will be to realize process of transition and adaptation in maximum short terms. Presence of natural resources, real potential opportunities provide target results for fast transition of republic to a full measure to market space.

Azerbaijanon a parameter of extraction per capita adjoins to such big exporters of oil asNigeria,AlgeriaandMalaysia. She also enters in first ten conducting countries of the world on a level the forecast of stocks per capita. At all notability of the listed facts at all it is impossible to believe completely about the found decisions of all problems connected to oil of the country. To republic, rich hydrocarbonic resources in structure of economic automatically allocate a place of the country-exporter of crude oil and not in a smaller measure of mineral oil. Practice of the conducting oil countries shows, that presence of the rich natural resources which are were of great importance for industrial development not always results in achievement of economic rise. Economic readiness of the country, inside and the foreign policy, the accepted economic model, features of national mentality, social adjust, the ecological environment, all this finds reflection in a range of changes. But, nevertheless, developed specific regional features possess force of influence on political-economical transformation. Therefore to the order presence by qualities in republic a lot of specific difficulties and not similar problems in the attitude of other countries having parallel tendencies of development. Among the main specific reasons braking changes are allocated «Karabakh problem» and million continent of refugees. Together with it also serious difficulties is the problem of non-payments in power sector and as a whole of a national economy. The government of republic shows efforts for search of the decision of a problem, decrease in its acuteness getting the inheritance from a former mode. For strengthening payment discipline the corresponding economic mechanisms carrying factoring, bill strategists and other financial algorithms adequate a consensus and technologies are developed.

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Steps of transition of economy ofAzerbaijanin market space can be counted successful. With starting1996 inall spheres of economy increase of growth is observed. These tendencies are connected, first of all, with spent economic reforms. Having by many-sided character, economic reforms cover various spheres and acceptance of thorough measures demand. Realization of all these measures is connected to the big difficulties as it was necessary to refuse former economic psychology of the past and to carry out new economic thinking to allow to reach positive resultsIn the general context prevention of depression in economy is observed by regenerative fruitful works during spent reforms. Anti-inflationary actions have created a climate not only to sharp decrease in inflation, but also creation of conditions of relative progress of a deflation. The efforts directed on development of economy, liberalization of trade have led to to inflow in the country of foreign investments, to increase in external commodity circulation. The total amount of investments into economy ofAzerbaijansince time of reception of independence /for the period since 1992 for 2003/ has made $16,5 billion, of them of 72,8% foreign. On volume of investments per capitaAzerbaijanwins first place among the countries CIS.

Foreign investments реализируется in the basic oil complex. Growing this vector at a present stage it is transformed and to other sectors of economy. Grows his share as well in social sphere. In given просессе the foreign oil companies actively participate. As in 2003 BP-Azerbaijan and his partners under all projects inAzerbaijan invested $4,525 one million in social sphere of republic. Financing of social sphere covers so-called investments into the population at which the help appears to the local residents living near to objects controlled ВР and its partners. The primary goal is creation of new workplaces, improvement of an infrastructure, construction and repair of objects of public health services and formation, assistance to development of small and average business by means of rendering the technical help and creation of new opportunities.

Cooperation with IMF has brought a primary economic gain. Further even more frank intentions of large investors and IMF have caused the certain updatings an economic rate. Positive tendencies in the decision of questions of social protection of the population, making a basis of a state policy of the country have increased. On reduction of poverty and maintenance of economic development in republic the state program is prepared. Carrying out wide cooperation with the international organizations, including with the Program of development of the United Nations, the International Currency Fund, the World bank and other structures the given program will be to promote to development of business, improvement of a social infrastructure, reduction of poverty and strengthening of a civil society in republic. As a result of a policy in the field of development of business, now the share of public sector of gross national product has reached 71%, a share of a private sector in the general employment of the population of 70%. On results of 2003 the number of economic-financial structures past the state registration with the status of the legal person exceeds 40 thousand, number of farms more than 34 thousand. The number of economic subjects borrowed enterprise activity without creation of the legal person, having increased, has exceeded hundred thousand.

It is known, that privatization in the transitional countries is one of the major factors in development of business. Such strategy full-scalely adheres and inAzerbaijan. As a result of privatization more than hundred thousand citizens became owners of actions and 140 thousand owners of property. In conformity with oil strategy since 2000 year the wave of privatization has captured also power sector, in particular oilgas the industry. On present a stage all basic former service organizations of an oil complex are privatized and transformed into joint-stock companies almost. In the further stage in expansion of economic changes attraction of national businessmen on a basis concession in industrial structures is planned.

It is necessary to note, that the system of the state financial help to business for the present is not constructed at a required level. The serious need for improvement of structure, increase of volume of the financial help is felt. In this connection the certain measures are carried out, the important steps on rendering to businessmen of services and area of formation, consultation and the information are accepted, are carried out training rates, seminars, for studying the best practices is organized business trips in foreign countries. In development small and average business at the further stage it is planned to use means SOFAR.

Philosophy SOFAR consists that at the given stage, received profit on the oil industry to enclose in other sectors of economy and reproduced incomes to make active and forward for the future generations of the country. Realization of this programs in many respects depends from itself management of fund as management of currency means SOFAR is made on the basis of conservative the investment policies, on principles the insured financial rules and modes. By this principle of means of fund contains on accounts of leaders international financial the organizations as supercurrency, highly rating actions, securities and other actives, and also the part of a portfolio of investments copes authoritative foreign managers. On comparisons with other analogical funds of means SOFAR to be accumulated on the accounts of the Ministry of Finance available in National Bank of republic. Direct direct communication SOFAR with the state budget is not present. But, in definition of a macroeconomic and financial policy of the state activity of fund is taken into account. Means of fund, basically it is directed on stimulation of economic development of the country, on financing of the major infrastructural projects, and also on maintenance of transition of republic to new economic system, in a deepening of the lead economic reforms and is in, certain to a measure, the guarantor of stabilization of economy and economic safety.

Oil strategy for young independentAzerbaijanhas also ideological underlying reason. Oil, as well as, in the past and at the given stage will play the important role economy, in national way, in mentality, social thinking, traditions, in pride of people and a society. Therefore the ideological motivation is one of leaders principles national oil strategy. As is known theAzerbaijanoil and his oilmen have played the big role in economy of Russian empire and in сonstruction Soviet building.

Oil strategy ofAzerbaijanсalculation not only on oil sector. Its mission to the full covers wide ranges as it is marked, and other sectors of economy. Development of an oil complex gives pulses to correct fiscal system, stimulates structural reforms. Today his share in a total internal product has reached 71%, including in the industry - 50%, construction - 76%, an agriculture and trade - 99%. As a result of spent economic policy and oil strategy in the country financial and economic stability is achieved, the necessary legal and economic base for consecutive democratic reforms is created. InAzerbaijanfor today high among the states CIS a gain of manufacture of total internal production.

Last years for increase in a social orientation of economic development in the country, increases of well-being of people have been accepted a number of the important measures that has allowed to raise a standard of living of the population. The last year monetary incomes of the population have increased for 10 percent Volume of deposits stored by the population in banks, only in 2001-2002 has increased in 1,8 times and 140 million US dollars has reached. Growth of monetary incomes of the population is connected, first of all, to increase of wages. The monthly average wages in republic on 2003 have made 80 US dollars. This achieved limit is considered not high. In the project the budget of the country for 2004 increase of wages and other social payments is planned. The nearest years from increase in manufacture of oil and gas the average salary to exceed limits of 100 US dollars.

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Ascertaining the statistics the facts once again is emphasized, that in a comparative context in all achieved successes in republic a significant role is allocated oil the strategists, developed on the basis of hydrocarbonic potential. This factor the guarantor foreign investments and effective stimulus of the economic reforms spent for republic. As the basic part of a social and economic policy of the republic, spent oil strategy is the locomotive of all economic and social transformations.

All this testifies that value of oil strategy comprehensively grows every year in a social life of the country and she will play the increasing role in a policy and economy. For deeper transformations on a background of oil strategy in republic again proceed a deepening of economic reforms. Works are carried out in the field of perfection of the legislation, his reduction conformity with the international norms and the world practice, providing encouragement and protection of foreign investments by creation of necessary legal, financial and economic conditions. All this will allow to overcome faster a transition period of republic in economy on a way of integration to the world community.

79.Social and economic contours of oil potential of Azerbaijan. Oil and gas.Ukraine,Kiev. №6.2004. 0,7 v.q.