AZERBAIJAN HOLDS ENERGY TRANSPARENCY CONFERENCE

UNCLAS SECTION 01 OF 02 BAKU 000801 SIPDIS SIPDIS SENSITIVE E.O. 12958: N/A TAGS: ECON EFIN PREL PGOV AJ SUBJECT: AZERBAIJAN HOLDS ENERGY TRANSPARENCY CONFERENCE AND WINS UN PUBLIC SERVICE AWARD SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION - PLEASE HANDLE ACCORDINGLY ¶1. (SBU) SUMMARY: On June 7, the State Oil Fund and Embassy of Norway collaborated to organize a conference highlighting Azerbaijan's successful role in the Extractive Industries Transparency Initiative (EITI) during the Caspian Oil and Gas show. Oil Fund Executive Director Shahmar Movsumov and the Norwegian Ambassador (NOTE: Norway is the new host of the EITI Secretariat) chaired the event which included presentations by the British Ambassador and several international energy companies, including BP and Statoil. The presentations highlighted that Azerbaijan was among the first to join EITI in 2003 and to publish audited and reconciled EITI reports. The EITI conference participants remarked that the Government of Azerbaijan (GOAJ) recognized early the urgent need for EITI as one of the means to avoid the macroeconomic distortions caused by an energy-driven economy. END SUMMARY. ¶2. (SBU) The EITI conference attracted a packed audience of oil company executives, NGO leaders and diplomats. It was held during the Caspian Oil and Gas Show in order to maximize involvement by international participants. State Oil Fund Executive Director Movsumov's presentation, entitled "Implementation of EITI in Azerbaijan," emphasized that EITI has already been fully accepted in Azerbaijan and noted that by implementing EITI the GOAJ has achieved full accountability and transparency in oil and gas revenue management. Movsumov emphasized the importance of transparency in the investment environment adding that EITI could also assist in strengthening accountability and good governance, as well as promoting greater economic and political stability, in Azerbaijan. ¶3. (SBU) The British Ambassador (representing the outgoing chairmanship) praised Azerbaijan for producing EITI reports, noting that earlier this year the Oil Fund completed its fifth set of EITI reports. The British Ambassador stated that Azerbaijan is set to be the first EITI participating country to go through the validation process. He noted that EITI was developing into a more international effort, with Azerbaijan and other countries demonstrating that it is possible to produce meaningful EITI reports which can contribute to better management of oil and gas revenues. The visiting Norwegian Deputy Minister of Petroleum and Energy Anita Utseth echoed the sentiments of the EITI participants and positively assessed the experience of Azerbaijan in EITI. ¶4. (SBU) Representatives from Azerbaijani State Oil Company (SOCAR),Statoil and BP also gave presentations at the EITI seminar. SOCAR Vice President Suleyman Gasimov briefed on SOCAR's efforts in the EITI implementation process. Statoil reiterated that Azerbaijan's participation in EITI was an important contribution to increasing transparency and the country's sustainable development. BP noted that Azerbaijan was invited to become a member of the multi-stakeholder board that will manage EITI globally. The Azerbaijan-based Coalition for Increasing Transparency in Extractive Industries also made a presentation about the role of civil society in EITI implementation. Comment -------------- ¶5. (SBU) Azerbaijan's leadership in EITI is something the government is rightly proud to trumpet. The United Nations announced in May that the State Oil Fund won the 2007 UN Public Service Award in the category of "Improving transparency, accountability and responsiveness in the Public Service." The United Nations Public Service Awards is the most prestigious international recognition of excellence in public service. The State Oil Fund is the first governmental agency of a country from the former Soviet Union to be awarded the UN Public Service Award. ¶6. (SBU) Comment Con't: The Norwegian Ambassador privately commented that EITI has been a remarkable success in terms of making more transparent the process of transferring funds from the oil and gas companies to the Azerbaijani Government. In order for EITI to have relevance for average BAKU 00000801 002 OF 002 Azerbaijanis, however, the Norwegian Ambassador said that it must revise its mandate to include promotion of transparency in terms of how the government spends its oil and gas wealth. LU