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									                                                  Economic News Bulletin, No. 61, October 2006

                   EMBASSY OF THE REPUBLIC OF AZERBAIJAN                       No 61, 2006
                   Hügelgasse 2, A-1130 Vienna, Austria
                   Tel.: + 43 (1) 4031322, Fax: + 43 (1) 4031323
                   Email: office@azembvienna.at
                   Website: www.azembvienna.at

                   Contact: Ms. Nargiz Qurbanova

                                   IN   THIS ISSUE:

                                 FUEL & ENERGY
                               FINANCE & BANKING


FIRST GAS FROM SHAH DENIZ                         LUKAgip(10%), NICO (10%), Total
IS EXPECTED IN DECEMBER                           (10%), and TPAO (9%).

First Gas at the Shah Deniz field will            ACG TO PRODUCE 5 BCM OF
be produced this December, Minister               ASSOCIATED GAS IN 2007
for Industry and Energy Natig Aliyev
says.                                             The Azeri-Chirag-Guneshli (ACG)
                                                  field is expected to produce 5 billion
Shah Deniz is to produce 1.24 billion             cubic meters of associated gas in 2007,
cubic meter (bcm) of gas, of which 670            Minister for Industry and Energy of
mcm, 470 mcm and 60 mcm of gas is                 Azerbaijan Natig Aliyev says. "Of this,
booked by Azerbaijan, Turkey, and                 3.6 bcm will be re-injected into the
Georgia, respectively. In addition, 40            reservoir for pressure maintenance.
mcm of gas would be needed for BTC's              Next year 1.4 bcm of associated gas
pump-stations.                                    will be delivered to Azerbaijan," the
                                                  minister added.
The PSA for Shah Deniz was signed in
Baku in June 1996. The parties to the             AIOC will deliver 2.1 bcm of
Shah Deniz Production Sharing                     associated gas to Azerbaijan. AIOC
Agreement are: BP (operator - 25.5%),             injects 9 mcm of associated gas into the
Statoil (25.5%), the State Oil Company            reservoir at Central Azeri per day in
of Republic of Azerbaijan (SOCAR -                order to maintain pressure and increase
10%),                                             production.
                                                Economic News Bulletin, No. 61, October 2006

The parties to the Azeri-Chirag-                The credit volume is 300 mln rubles.
Guneshli (ACG) Production Sharing               The credit term is 12 months. The
Agreement are: BP (operator - 34.1%),           interest rate amounts to MosPrime 3 %
Chevron (10.3%), SOCAR (10%),                   annually.
INPEX (10.,0%), Statoil (8,6%),
ExxonMobil (8%), TPAO (6.8%),
Devon (5.6%), Itochu (3.9%), Amerada            BSTDB PLANS TO IMPLEMENT
Hess (2.7%).                                    A JOINT PROJECT WITH THE
                                                MICRO-FINANCE BANK

FINANCE & BANKING                               The Government of Azerbaijan and the
                                                Black Sea Trade and Development
T-BILLS TO BE AUCTIONED AT                      Bank (BSTDB) initiated discussions of
BAKU STOCK EXCHANGE                             the Bank’s cooperation strategies for
On October 10, 2006 from 11:00 to
12:30 an auction on placement of T-             The BSTDB strategies have been
Bills with the state registration number        redrafted to reflect the changed
10203013S was held at the Baku Stock            economic situation in the region. The
Exchange.                                       document contains new approaches for
                                                cooperation with Azerbaijan. In
The volume of the issue was AZN 5               particular, BSTDB intends to increase
mln, face value per T-bill - AZN 200.           its share in the Azerbaijan Micro-
Term of circulation of T-bills is 91            finance Bank.
days. The maturity date is January 09,
2007.                                           The BSTDB Board of Governors
                                                approved the strategy renovation at the
RAIFFEIZENBANK ORGANIZED                        meeting in Baku on 11 June. The
A CREDIT SYNDICATE FOR                          declared capital of the BSTDB equals
NBA-MOSCOW                                      SDR 1 bn ($1.5 bn). Azerbaijan
                                                contributed SDR 6 mn in the BSTDB
Austrian      Bank       Raiffeizenbank         capital thus fulfilling its obligation, and
operating in Russia is the organizer of a       currently holds 2% of the BSTDB
credit syndicate for affiliated structure       shares.
of the International Bank of
Azerbaijan, NBA-Moscow.
                                                SOFAZ TRANSFERRED AZN 40
On October 5 the two banks signed an            MILLION FOR STRUCTURING
agreement on syndicated credit. Major           THE EQUITY CAPITAL OF
loan organizers are Joint-Stock                 AZERBAIJAN    INVESTMENT
Company Raiffeizenbank Austria,                 COMPANY
Raiffeizen Zentralbank Austria, and
                                              Economic News Bulletin, No. 61, October 2006

The State Oil Fund of Azerbaijan              WORLD      BANK'S LAND
(SOFAZ) transferred the first tranche         CADASTRE PROJECT TO BE
of AZN 40 mln to restructure the              APPROVED IN 2007
authorized capital of JSC Azerbaijan
Investment Company (AIC), SOFAZ               The World Bank appraisal mission on
Executive      Director      Shahmar          preparation      of    the      projected
Movsumov says.                                development of Azerbaijan's land
                                              cadastre and real estate property rights
The AIC was created by presidential           register finalized its visit to Baku on
decree dated March 30, 2006.                  October 9.
According to the decree, AIC's initial
authorized capital is formed with             The project costs are estimated at $30
SOFAZ resources. SOFAZ is expected            mn. However, the WB said it was
                                              ready to extend an unlimited financing
to transfer additional AZN 50 million
                                              facility in support of the project. The
next year.
                                              WB Board of Directors is expected to
                                              approve the project in spring 2007, and
                                              the project work is to begin next
ECONOMY                                       summer.
ROUNDTABLE ON INVESTMENT                      FINANCE     A       NEW
On October 26 the Azerbaijan Export
and Investment Promotion Foundation           The World Bank expressed its
(AZPROMO) held a roundtable on                readiness to finance the third phase of
investment legislation in Azerbaijan          the adapted programme of lending
within the EU TACIS Program.                  (APL) aimed at development of
                                              agriculture of Azerbaijan; the run-up to
The event was attended by Azerbaijani         APL-3 may begin towards the
and foreign business circles as well as
                                              completion of APL-2, according to
local and European experts. The
                                              Gregory Jedrzejczak, head of the WB
roundtable focused on issues of the
                                              Baku office.
existing investment legislation in
Azerbaijan, the role of business
incentives in attraction of investments       On October 5 the World Bank and
and commitments of investors under            Azerbaijan's Ministry of Agriculture
the legislation.                              signed the APL-2 credit agreement for
                                              $29 mn lent under the IDA terms for
                                              35 years with a ten-year grace period
AGRICULTURE                                   and under 0.75% annually.

                                              Economic News Bulletin, No. 61, October 2006

WB    RURAL  INVESTMENT                       The cost of the project is estimated at
PROJECT TO INCLUDE NEW                        $420 million, of which $220 million
COMPONENTS                                    should be financed by the Georgian
                                              side. Georgia has declared its intention
The World Bank’s Rural Investment             to receive credit of $220 million from
Project will include new components,          Azerbaijan.
and the project is subject to re-
assessment, Government sources say.           The project includes the construction of
                                              the rail stretch of Kars- Akhalkalaki 98
WB experts will begin official                km long, with 68 km stretch through
negotiations with Azerbaijan in early         the territory of Turkey and a 30 km
2007.                                         stretch through Georgia.

On June 3, 2004 WB approved a $15
million Rural Investment Project for
Azerbaijan aimed at complementing
the Government's State Program on
Socio-Economic Development of the
Regions by supporting the rural
infrastructure development. The Rural
Investment Project has a maturity of 35
years, including a ten-year grace

The project started by helping support
rural communities in three economic
zones in Shirvan, Mugan-Salyan, and



On October 13 Baku hosted
negotiations on construction of the


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