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Azerbaijan has 7.400.00 population and 86.600m2 surface area. Its capital is Baku and ethnic
republic which has multiple party systems. It declared its independence in 30th August 1991
after the Soviet Union collapse. During the years it is a member of Soviet Union, it is directed
in agriculture, its economy and industry was not developed enough. After it gained its
independence their big problem was the being undeveloped country and relationship with
Armenia. Hence during its first years that can not grow economically because of the potential
war with Armenia but after it achieved stability, it started to develop very fast(Taksim, 2009).
Any property of the physical environment, such as minerals, or natural vegetation, which
humans can use to satisfy their needs. Technically speaking, a property only becomes a
natural resource, especially for countries dependent on tourism. Natural resources may be
classified as renewable and non-renewable. As it has very rich natural resources especially
petrol reserves, its economy is dependent on its natural resources. Petrol is the %75 of its
export(Johansson, 2000).
These resources are meaningless for them and they had to carry its resources to Europe
market. Therefore it made treaty with its neighbor countries and made the necessary
investments. Since 2003 its economy has been ceiling. Hence Azerbaijan is developing,
becoming strong politically and also have a voice in its region. In this project you will see the
process of Azerbaijan natural resources and also how they develop with the money was
gained from their natural resources and their economic development (Taksim, 2009).
Historical Background of Azerbaijan
Eurasia. Located at the crossroads of Eastern Europe and Western Asia, it is bounded by the
Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west,
Azerbaijan was a part of the Russian Empire from the early 19th century to 1918, an
independent republic from 1918 to 1920, and a part of the Soviet Union from 1922 to 1991.
On Aug. 30, 1991, it declared its independence from the Soviet Union. Independence was
formally restored on Oct. 18, 1991. The capital and largest city of Azerbaijan is Baku. The
republic includes two administrative divisions of special status: the autonomous republic of
Nakhichevan, which is separated from Azerbaijan proper by southern Armenia, and the
was seized by Armenian bandit and military forces in 1992(T.B.M.M. Kütüphanesi, 2008).
Capital: Baku
Religion : İslam
Currency : Manat
Azerbaijan’s Natural Resources: Agricultural land, mineral, oil, natural gas, coal, iron
Azerbaijan’s Lands:
Agricultural Favorable: %20
Consistently Sown: %5
Pastures: %25
Forest :%11
The other:%39
Agriculture is the most popular sector after raw materials production in Azerbaijan economy.
Azerbaijan population %40 work from to agriculture. Azerbaijan has too efficient land. Major
agriculture products, cotton, tobacco,tea olive, vegetables and fruit (Seferov, 2009).
oil. Azerbaijan is the 19. oil reserve country. Oil reserve location is under Capsian Sea basin.
Oil production ıs the focus point in Azerbaijan economy. Oil to contribute developing country
and Azerbaijan society. During next ten years, Azerbaijan expect future revenue 50 million $
Azerbaijan has 1.3 trillion m 3 natural gas reserve. Azerbaijan every year average product 14-15 billion
m3 natural gas. This natural gas production to achieve %10 Azerbaijan economy. Azerbaijan has iron
mineral reserve look like oil and natural gas reserve. Azerbaijan has 450 billion tonne iron mineral
reserve. Shortly, increasing Azerbaijan economy cause by natural resources and raw materials
(Seferov, 2009).
Azerbaijan economy but in Union of Soviet Socialist Republics (USSR) period Azerbaijan
economy based on agriculture because Union of Soviet Socialist Republics do not want to
Azerbaijan economy so Union of Soviet Socialist Republics central planning stragety within
Azerbaijan be a agricultural country. When the Azerbaijan be Azerbaijan Republic, they will
to problems such as economy based agriculture, technology not develop so Azerbaijan export
raw oil so Azerbaijan econmy increasing slower until goverment start to investment,
agreement from to abroad country for product raw matarials and export. After this developing
time period investmen start to turn back Azerbaijan ecnomy start increasing rate faster than
Natural Gas: Nearly all of Azerbaijan's natural gas production is associated gas from offshore
fields. Traditionally, Azerbaijan has imported natural gas from Russia, Turkmenistan, and
Iran. In March 1996, state gas distributor Azerigaz announced it did not intend to import any
more gas from Turkmenistan and instead would develop new gas fields in the Caspian Sea to
meet demand. Azerbaijan is also boosting natural gas production by reducing flaring.
Iron Ore: The raw material basis for the ferrous metallurgy consists of large deposits of high
quality iron ore, betonies clay, and dolomite and flux limestone. All of the magnetite ores are
concentrated in Dashkesan, South Dashkesan and Demirli deposits of the Dashkesan ore
region. The resources of these fields are capable of supplying this factory for the next 80-90
years.
Aluminium: The production of aluminium in Azerbaijan is based upon the large alunite ore
fields which are currently being mined in the Dashkesan Zeylik region. The Ganja Aluminium
Factory operates on the basis of 130.2 million ton reserves. Three million tons of alunite are
mined annually which means that the supply will serve the factory 40 more years(Carıkcı,
2001).
Italy (%44.7), Russia (%5.8), Georgia (%5.2), Turkey (%5.1), Iran (%4.2)
Raw Oil and Oil Product (%82.2), Food Product (% 4.3), Transport Vehicles (%4.0), Metals
Russia (%16.2), England (%12.0), Kazakhistan (%6.8), Turkey (%6.4), Germany (%5.7)
Cause of being a new established country, Azerbaijan had more import than export so there
was a deficiency of foreign trade, but in last years it met its deficit trade by making
When we look at exports in past years, the ratio of the petrol products is always increasing,
but in last years this ratio is decreasing while food sector is increasing. Main reasons are
excess investments and making investment to the food sector because of increasing
population(Taksim, 2009).
Azerbaijan’s natural resources are very rich so its economy dependent on resources which are
petrol, natural gas, iron, steel pipes, clay, aluminum, mineral fertilizer, cotton, pongee,
suiting, carpets, weaving products, leather shoes, grape, wine, tea, tobacco, cotton fiber.
When we look at the imports in last year’s, we can say machine components have a large ratio
especially after the investments. After some time its imports are generally metals, food, petrol
products, and vehicles for air transportation, shipping and land transportation. We can
understand that Azerbaijan is a new established country when we look at its imports and
exports(Taksim, 2009).
Natural resources import is consist of food which are sugar, tobacco, meat, oil, animal fat,
flour, grain and wheat. Besides it imports petrol products even though it has enough petrol
reserve in the country. However not having enough technology it can not manipulate the raw
Baku – Tbilisi – Ceyhan pipeline or in shortly BTC, BTC transport Azerbaijan oil over
Azerbaijan’s goverment budget %50 based on oil export.Oil and natural gas be %90
transport Europa and sell to abroad country too important and Azerbaijan carry to oil from to
Europa with pipeline, a few oil carry to land transport with oil tanker therefore Baku –Tbilisi-
Ceyhan pipeline Project is import for Azerbaijan. Azerbaijan has to bad geographical and
goverment chaged Baku –Tbilisi- Ceyhan pipeline route over Georgia from to Turkey so
Baku –Tbilisi- Ceyhan pipeline length to 1760 km and its be too expensive. Azerbaijan earn
34 billion $ from to Baku – Tibilisi – Ceyhan pipeline.Azerbaijan’s raw materials export %40
Azerbaijan economy is managed for 70 years by the Soviet Union. Hence after its declaration
of independence, it faces many problems which are brought by the Communism. Soviet
Union always tried to integrate its members. Hence countries could not effort its need by
itself, the Union would be in guarantee and production would be more effective. Through
these effects Azerbaijan had became an agriculture economy dependent country. Its industry
was tried to be deficient and dependent on the other countries. Therefore after its
independence it faces the same problems with the other countries which were also governed
with Communism. Prices were increased fast and inflation also. Instability in policy during
the process of adapting democracy, competitions, potential war because of the Karabakh
problem with Armenia affected the economy negatively which was not good also. Moreover
because of the collapse of Soviet Union, they lost the market of United Nations which cause
Since Azerbaijan gained its independence in 1991, decided to join the open market economy
to meet its demands. Having such rich petrol reserves cause to be supported by other West
countries so Azerbaijan was willing to open its doors for foreign capital. Hence Azerbaijan
economy started to develop and meet the deficit foreign trade. %90 of its export dependent
on natural resources which are natural gas and petrol. Petrol is playing %75 role of this
export(Aras 2003).
When Azerbaijan gained its independence, its economy is not stable and dependent on the
export of its natural resources but it could not use these resources very effectively because not
having the enough technology. Azerbaijan has approximately 30 trillion m3 natural gas
reserve.
As we can see from the graph its natural gas production is very low in its first years but
following years because it changed the economical strategy and make investment with its
production capacity until 2000, but between 2000-2006 because of some political reasons its
production decreased again. However after 2006, through the recycles of its investments and
stability in policy, the production capacity of natural gas increased again. This increasing met
After that there is a net export in the country which means that production is higher than
consumption(Taksim, 2009)
Source: Energy İnformation Administration, 2009
When Azerbaijan gained its independence, its economy is not stable and dependent on the
export of its natural resources but it could not use these resources very effectively because not
Azerbaijan has 7 million m3 petrol reserves. Petrol has a very big role which is %80 in the
production capacity. Petrol which has very big importance in natural resources is the main
effect on economy for long years. As you see in the graphs petrol production is always much
more than the consumption this is because of petrol export. There is a big increasing after
2003 which is the result of the foreign investments and capital after obtaining stability in
policy.
After decrease of production export was growing fast which leads to met to deficiency of
$30.59 billion (2008 est.) Oil and gas 90%, machinery, cotton,
Exports Partners
Italy 24.9%, US 17.6%, Germany 10.8%, France 10.1%, Czech Republic 6.2%, Canada 4.9%
(2008)
$7.575 billion (2008 est.) machinery and equipment, oil products,
Imports Partners
Russia 18.9%, Turkey 18.2%, Germany 8.5%, China 6.3%, UK 6.2%, Ukraine 5.3%, Italy
4.5% (2008)
petrochemistry goods, food items, agricultural items and some industrial product. Major
import goods, transport vehicle, spare parts, machine, electric and electronic items and
consumption product. The tables focus point, Azerbaijan not export oil, Azerbaijan export raw
oil and semi refined oil. Azerbaijan is a developing country so country not has develop
technology so Azerbaycan export just raw oil and semi refined oil not export refined
oil(Taksim, 2009)
Finally Azerbaijan econmoy is base natural resources esspecıally oil but Azerbaijan not refine oil. If
Azerbaijan refine oil, they will faster increasing so living standarts increase, coununtry reachieve
World’s oil production provide about %41 from to OPEC’s member country and this country
has to worlds oil resources about %78.North America’s country consumption ratio %30.
Europan countries consumption ratio %22. Asia and Pacific countries consumption ratio %27.
World oil reserve and daily oil product and daily oil export schema;
Daily Oil Product (daily barrel) Export Quantity Oil (daily barrel)
2-Canada 178,600,000,000
3-Iran 140,000,000,000
4-Iraq 115,000,000,000
5-Kuwait 104,000,000,000
7-Venezuela 87,040,000,000
8-Russia 79,000,000,000
9-Libya 41,460,000,000
19-Azerbaijan 7,000,000,000
Note: Azerbaijans oil amount is little. Azerbaijan intervention is not recycling because
goverment investment did recently times so Azerbaijan not be in the table but Azerbaijan’s oil
reserve.According to some researcher Middle East has oil reserve but for next 43
years.Worlds must to find new resources so Central Asia’s oil reserve discover. Azerbaijan
and Kazakhistan’s oil reserve call attention to from to Central Asia(Atiker, 2008)
World natural gas consumption increasin to faster and natural gas consumption ratio increase
When we look world natural gas reserve, we can see natural gas reserve shared big location
according to oil.Middle East has %65 world oil reserve but just %35 natural gas reserve.Some
has a few oil reserve country, more much natural gas reserve.Azerbaijan has enough natural
gas reserve rate for develop by country but when we comperaring Azerbaijan from to the
other countries, many o ther country has more reserve according to Azerbaijan(Bıyıklıoğlu,
2008).
Finally, Azerbaijan natural gas export ratio increase too faster(Taksim, 2009).
Conclusion
Consequently even though Azerbaijan is a new established country and has very hard
conditions , is a developing fast through its natural resources. Its economy is stronger than
many countries because of inflow of foreign currency; Azerbaijan is not affected by the crisis.
As it does not have enough technology, it can not use its natural resources very effectively. It
is the common problem for developing countries, even though they have really good oil
reserves, they can not sell raw or semi-processed oil reserves so they sell their reserves for
other countries to manipulate. It imports petrol to meet the demand of petrol in the country.
However this does not affect the economy because it can do enough export. Though these
natural resources have advantages to the country they have also disadvantages. They are
deficient in food industry and also not professional in many areas such as agriculture,
breeding, automotive..etc, they have to import these needs. Today it seems that it can effort
but in the future many problems can occur. There by being rich of natural resources is not a
big deal if you can not effort to manipulate them, because in this global world, the countries
which does not have enough natural resources come and buy your natural resources than sell
these products to you with handsome profit. Hereby it is very important to behave very clever
and strategically to manage these resources. You have to make investments with the money
you are earning from your natural resources, like Azerbaijan otherwise you are sentenced to
Finally, I think if Azerbaijan continuous to increasing too faster, Azerbaycan will be new
power of Central Asia.Azerbaijan has enough natural resources(ex: oil) for be a new power in