State Oil Fund of Azerbaijan Republic

The State Oil Fund of the Republic of Azerbaijan (SOFAZ) was established in accordance with the Decree of the President of the Republic of Azerbaijan dated December 29, 1999. The cornerstone of the philosophy behind the Oil Fund is to ensure intergenerational equality with regard to the country's oil wealth. It is a mechanism whereby energy-related windfalls will be accumulated and efficiently managed. The Oil Fund is a special purpose state organization in which Azerbaijan’s revenues from implementation of oil and gas agreements are accumulated, efficiently managed and preserved for future generations.

Activities of The State Oil Fund of the Republic of Azerbaijan

Oil funds, sovereign wealth funds and other similar institutions serve to efficient management of revenues generated from the sale of natural resources and its equal distribution among generations. Currently, Oil Fund has achieved high institutional development, and became nationally and internationally recognized organization capable of sharing its experience in asset management and ensuring transparency. There are several funds in the world similar to SOFAZ. Experience of those funds was used as the reference point alongside with local peculiarities and present needs when the Fund was established.

A single model equally accommodating the point of accumulation of oil revenues for future generations and utilization of revenues for the solution of the problems of present generation was selected. Since its establishment transparency is one of the main principles of the activities of the Fund. SOFAZ has developed both institutionally and in terms of transparency assurance perspective and has become a financial organization at international level meeting modern standards. Fund’s achievements served to the growth of influence of Azerbaijan in the international arena.

Mission and goals of the State Oil Fund

SOFAZ's mission is to transform depletable hydrocarbon reserves into financial assets generating perpetual income for current and future generations, to finance strategically important infrastructure and social projects of national scale, to ensure the representation of the country in international agreements on joint exploration of natural resources.Number of agreements on joint development of oil and gas resources were signed with foreign investors in the frame of Oil Strategy, created by the national leader Heydar Aliyev. The issue on effective management of revenues from implementation of these agreements was brought to agenda. For this purpose, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) was established in accordance with the Decree of the President of the Republic of Azerbaijan dated December 29, 1999.

The cornerstone of the philosophy behind the Oil Fund is to ensure intergenerational equality with regard to the country's oil wealth. The main goal of establishment of the Oil Fund is to accumulate and efficiently manage oil revenues.SOFAZ is an extra-budgetary, legal and state entity with its own accounts in banks and owns a seal with the emblem of the Republic of Azerbaijan and its name, stamp and letterhead. Relation between the Oil Fund’s revenues and expenditures, and state budget is built only within bounds of summary revenues and expenditures of public administration sector and pursues a goal of following a single macroeconomic policy. The assets of the Fund could not be used for lending to state authorities, state and non-state organizations and as guarantee for the liabilities of any subject. In accordance with the Constitutional Law of the Republic of Azerbaijan on “Law on Normative Legal Acts” the Fund could not create legal regulation acts.