Transparency initiative annual report

2.4. Contracts

Production Sharing Agreements concluded between the host governments (Azerbaijan) and a contractor regulate the exploitation of oil, gas and minerals in Azerbaijan and these PSAs are effective only after the ratification by the Parliament of Azerbaijan Republic. However, the Azerbaijan government and the contractors act as commercial counterparties in the scope of such PSAs. The Government of Azerbaijan Republic accepts itself and the contractors to be regarded as equal commercial parties.

Together with the main pipeline agreements, PSA enacted after being approved by the National Assembly of Azerbaijan Republic. These agreements regulate the accounting and tax regimes of the operating companies, contractors and sub-contractors’ activities.
There exists no requirement or restriction pursuant to the Azerbaijan legislation for the PSAs to be officially disclosed, but may be disclosed based on mutual consent of the parties thereto. Under the law of Azerbaijan Republic, the party disclosing a commercial secret to third parties in violation of the confidentiality clause shall be responsible before its counterparty (Article 7 of the Law No. 224-IIQ of Azerbaijan Republic on Commercial Secret dated 4 December 2001).
The EITI Secretariat of Azerbaijan Republic conducted surveys among extractive industry companies in 2013 and 2016 in order to disseminate the PSAs for public use. There are six PSAs that were uploaded after surveys and they are available to public on the official website of EITI in Azerbaijan. In addition, the PSA register was uploaded on the official website of EITI in Azerbaijan.