SOCAR and BGP Inc., a subsidiary of China National Petroleum Corporation (CNPC) have signed a Foundation Agreement on the establishment of a joint venture.
Rovnag Abdullayev, President of SOCAR, Khoshbakht Yusifzadeh, First Vice President of SOCAR, Bahram Huseynov, Vice President for Geology and Geophysics at SOCAR, Gou Liang, President of BGP Inc., as well as other high-ranking officials from both companies attended the signing ceremony, which took place in SOCAR Tower. The contract was signed by Rovnag Abdullayev, President of SOCAR and Gou Liang, President of BGP Inc. The newly established joint venture will carry out joint seismic exploration in the Republic of Azerbaijan and the Caspian Sea, creating new opportunities for exchange of experience between the professionals of the two companies.
Rovnag Abdullayev shared his opinion on the signed contract: “Today, SOCAR is working on modern technologies in all areas and testing different and alternative methods to explore new oil and gas fields and stabilize production levels. Establishing a joint venture with China's BGP for geological and geophysical studies creates an alternative perspective in this area and a fertile ground for sharing experiences that will be useful for professionals of both countries”.
On June 6, SOCAR signed a Memorandum of Understanding with the purpose of establishing cooperation with BGP Inc., a subsidiary of the China National Petroleum Corporation (CNPC), as well as the establishment of a joint venture for geophysical services. In accordance with the Memorandum of Understanding, the companies held negotiations and prepared a final document.
BGP is a 100% subsidiary of CNPC, a state-owned oil company of the People's Republic of China. BGP's main areas of activity include onshore, transboundary and offshore exploration, including acquisition and interpretation of seismic data, production of seismic equipment and providing information and communication technologies (ICT) services.
According to a report from Ernst & Young, SOCAR is one of the world's leading state-owned enterprises not listed on a stock exchange.
Recent monitoring shows that it is impossible to improve the performance of enterprises without effective corporate governance system. In 2016, two regulations were signed by the President of the Republic of Azerbaijan to strengthen the corporate governance system of state enterprises in the Republic of Azerbaijan. For this purpose, in the same year, Ernst & Young, one of the world's leading audit companies, was involved in preparing a report on competency assessment of corporate governance at SOCAR, where it has investigated the SOCAR’s internal documents and conducted relevant surveys. The project was implemented in order to assess the current level of competency of the corporate governance system at SOCAR, to focus on desirable indicators, and to identify strengths and potential development areas for each component of corporate governance.
As a result of the interviews and review of internal documents, it was concluded that SOCAR gives high priority to the principles of corporate governance and the company’s overall corporate governance has been rated as ''STRONG'' at 81 percent of the maximum result. This indicates that SOCAR takes a leading position among the enterprises not listed on a stock exchange, and is in the forefront of the local state-owned enterprises. SOCAR has not only prepared documents on corporate governance components but also held functional procedures. The company is constantly exploring advanced practices, preparing financial statements in line with international standards and audited by an independent external auditor.
During the report presentation meeting attended by SOCAR top-managers, attention was drawn to the issues related to the areas to be improved. It was noted that the company had completed significant work to develop key performance indicators and more than a thousand indicators had been identified and approved. The next stage is to coordinate these indicators with strategic targets, appropriate motivation systems, and approve the calculation methodology. It was recommended to provide automation of the risk management process, training in corporate governance and use of certification programs, as well as an evaluation of the effectiveness of internal audit and internal control systems by external experts.
It should be noted that most of the recommendations provided by the consulting company are already being implemented by SOCAR. Thus, within the framework of cooperation with IBM and SAP companies, the company is working on the automation of production and management processes now.
Ernst & Young regularl audits, and all reports of the company are published after review by outside observers. In the coming years, these and other projects will contribute to the further improvement of corporate governance indicators of SOCAR.