The outcome of Azerbaijan’s oil strategy, laid by Nationwide Leader of Azerbaijan Heydar Aliyev and successfully implemented under the guidance of country’s President Ilham Aliyev, was sustainable development that enabled the State Oil Company of Azerbaijan Republic (SOCAR) to operate successfully and transform into the world-scale company. SOCAR has always been challenged to accomplish complex strategic tasks and has always managed to fulfill its obligations successfully. With its scope of activities SOCAR is rapidly turning into an international vertically-integrated company.   

Implementation of large oil and gas projects such as Azeri-Chirag-Gunashli, Shah Deniz, South Caucasus Pipeline, Baku-Tbilisi-Ceyhan Main Export Pipeline, points out the growth of influence of Azerbaijan in ensuring energy security both in the region and Europe. Azerbaijan’s role is increasing as it becomes involved in implementation of energy, trade and logistics projects in different parts of the world. This, in its turn, leads to strengthening of the country’s positions in the global energy market. 

All changes and accomplishments have been reflected in the work of SOCAR Marketing and Operations (SOCAR MO). 

SOCAR MO is mainly engaged in exporting crude oil and oil products of Azerbaijan origin to the world market in accordance with the export strategy of SOCAR, arranging sales based on the country’s domestic demand for oil products, conducting marketing researches of the world energy market, studying new export markets, implementing coordination functions on ensuring control over delivery and acceptance of hydrocarbon volumes of Joint Ventures and Operating Companies producing crude oil at SOCAR fields. 

SOCAR MO exported 24.9 million tons of crude oil within the frame of export contracts in 2012. Currently the geography of crude oil supply covers such main consumption regions as Mediterranean basin, North-West and Central Europe, North America and Asia.

The Mediterranean region has historically been the main direction for Azerbaijan’s oil export. However, in order to maintain the efficiency of crude oil supply the necessity for expansion of the geography arose. In this regard, big attention is paid to the Asian region and other distant parts of the world.

If in 2006 only 10-15% of crude oil of Azerbaijan origin was supplied outside the Mediterranean market, currently this indicator has reached 40%. Today the export of crude oil to the countries of Asian region comprises about 30% of total export volumes. Market of India is one of the promising directions. Important measures were undertaken for its research and development. Thus, if SOCAR’s crude oil export to India comprised 1.7% in 2011, this figure reached 10% in 2012. 

Along with the supply of crude oil of Azerbaijan origin SOCAR MO exports gasoline, gasoil, jet fuel and fuel oil produced at SOCAR’s Baku refinery named after Heydar Aliyev. 

For the past years Azerbaijan crude oil and oil products have been exported to over than 30 countries of the world including USA, Great Britain, Singapore, India, China, Thailand, Malaysia, Indonesia, South Korea, North-West Europe, and the Mediterranean countries. 

In order to transform SOCAR into one of the major players on the international energy market SOCAR Trading SA was established in Geneva.

Operating for more than 5 years, SOCAR Trading SA managed to acquire good reputation in Europe and expanded its business by opening trading offices in Singapore, Vietnam, Turkey (Istanbul), UAE (Dubai), Russia (Moscow), Egypt (Cairo) and Nigeria (Lagos and Abuja). 

Besides, SOCAR has representative offices in Georgia, Turkey, Romania, Austria, Switzerland, Kazakhstan, United Kingdom, USA, Iran, Germany, Ukraine and Belgium for expanding its activities on the world market. 

It is worth mentioning that SOCAR Trading SA is actively developing its trading activity by engaging in the trade of hydrocarbon resources of non-Azerbaijan origin. Currently 40% of the total volume of trade of oil and oil products of SOCAR Trading SA falls on the trade of third party volumes.

In 2006 SOCAR established SOCAR Energy Georgia, which is engaged in sales of oil products in the Georgian market.

In 2012 SOCAR MO supplied 250.9 thousand tons of gasoil L-62 (D-01), 60.1 thousand tons of gasoline A-92, 18.6 thousand tons of jet fuel TS-1 and 3 thousand tons of fuel oil to SOCAR Energy Georgia. The share of the Georgian market in the total volume of oil products export within the frame of export contracts of SOCAR MO is growing constantly. If the Georgian market accounted for 23% of the total export in 2010, this figure reached 25% and 27% in 2011 and 2012 respectively. 

Most part of oil products exported within the frame of contracts signed by SOCAR MO is supplied to the world markets through the SOCAR-owned Kulevi terminal located on the Georgian coast of the Black Sea. Kulevi terminal transshipped 659 thousand tons of gasoil L-62 (D-01) to the world markets in 2012. It accounted for 70% of the total volume of gasoil exported by SOCAR MO.

Along with it, construction of the oil products storage meeting modern standards started in the port of Fujairah of the United Arab Emirates in October 2010 in accordance with the agreement signed between SOCAR Trading SA and the Swiss Trading House Aurora Progress S.A. SOCAR Aurora Fujairah FZE Terminal started to operate in March 2012 (3 out of 20 commodity tanks with the capacity of 141,000 cubic meters are currently in operation). The Terminal will be capable to store various oil products of different companies as well as splitting large volumes of fuel into much smaller consignments and blending oil products in commodity tanks. Moreover, the terminal may be used as loading terminal (loading oil products from tanks into vessels and transporting them to other tanks located in the area of the port).

At the same time, SOCAR Trading Singapore signed an agreement on storage of up to 5.3 million barrels of Azerbaijan oil in Yeosu Terminal in South Korea which enables SOCAR to strengthen its positions in the Asian market, raise efficiency of crude oil supply of Azerbaijan origin in this direction as well as attract new customers on this market.

Apart from export of crude oil and oil products of Azerbaijan origin to the world markets, SOCAR MO is also engaged in sale of oil products on the domestic market. SOCAR MO sells oil products produced at two SOCAR-owned oil refineries: Baku oil refinery named after Heydar Aliyev and Azerneftyagh oil refinery. The range of oil products sold domestically includes gasoline, gasoil, jet fuel, fuel oil, different types of lubricants and other oil products. SOCAR MO supplied 1.4 million tons of oil products to the domestic market of Azerbaijan in 2012. 

SOCAR Marketing and Operations pays close attention to the quality issues. SOCAR MO and its subdivisions were certified for the second term in accordance with the requirements of international standards OHSAS 18001:2007 (Occupational Health and Safety), ISO 14001:2004 (Environmental Management System) and ISO 9001:2008 (Quality Management System). SOCAR MO’s work was positively evaluated by international auditors. 

Similar to other SOCAR’s structural subdivisions, SOCAR Marketing and Operations started to introduce and develop SAP BRP software in business accounting and other financial issues since 2008.

GL (General Ledger), AP (Accounts Payable), AR (Accounts Receivable), CO (Controlling), BL (Bank Accounting) components of FI (Financial Accounting) module, as well as HR (Human Resources), MM and SD (Sales and distribution) modules and TRM (Treasury and Risk Management) module of FSCM of BRP system were introduced in accordance with the requirements of IFRS (International Financial Reporting Standards) and in order to ensure high efficiency and transparency of activities. By conducting the training courses on IFRS and SAP BRP system, a skilled personnel was trained.

Company’s accounting is carried out on the basis of up-to-date software SAP BPC (Business Planning and Consolidation) and SAP Business Objects.

Along with it, implementation of SAP CO (Controlling) module reflecting formation of costs of products produced and operations performed at SOCAR enterprises has been commenced in accordance with IFRS requirements.

Despite the scope of work performed in this direction and results obtained in the field of introduction of CO, BPC (Business Planning and Consolidation) and BPS (Business Planning and Simulation) modules of SAP system, the work on further improvement of the mentioned components is ongoing.