The capital investments of the State Oil Company of Azerbaijan (SOCAR) abroad, particularly in Italy, may share the fate of other unsuccessful projects launched by the company, Vugar Bairamov, Chairman of the Social and Economic Development Center, told the Echo newspaper (Azerbaijan) The estimates of SOCAR’s investments in the European Union (EU) show the company does not always make accurate investment efficiency estimates.

In short, Bairamov said, the company invests part of its profits received from the sale of oil. “But it should be noted that the enterprises acquired by the company have seriously fallen in price since the global economic crisis broke out,” he said. In this context, Bairamov pointed out a serious fall in the price of SOCAR’s acquisitions in Turkey. “Investments by any Azerbaijani company are positive and desirable, which, however, does not mean that their action plans must be restricted to the purchase of enterprises in the EU,” Bairamov said. The expert added that the capital efficiency must be estimated in advance, but the company does not seem to do it.

For example, Bairamov said, the company opened a magnificent office building in Geneva, and the opening ceremony was rather expensive. Later the crisis showed much lower efficiency of the company’s projects. “Azerbaijani companies’ major problem is that they do not properly estimate project efficiency,” Bairamov said.

In this context, the company’s investments in Italy are a positive factor, “but there exists a threat that this project may share the fate of SOCAR’s other unsuccessful investment projects.”

Independent experts point out that the company continues staff reduction, which makes it difficult to estimate the capital efficiency in the future.

Not only local, but also overseas mass media have recently reported on SOCAR’s incredible acquisitions. Reuters reported the company’s plans to purchase a considerable share in an Italian oil refinery. Valery Golovushkin, Head of SOCAR Trading, pointed out that the company is willing to invest. “We want to have an oil refinery outside Azerbaijan,” he said, without naming the enterprise or citing the amount. Under fixed-term contracts SOCAR will increase the exports of Azeri Light oil next year — up to 80-85 per cent of the total exports to Asia against 60% this year.