Dear participants of the session!

Today, I convened the first session of the State Oil Fund`s Observation Council. As you know, at the end of 1999, the State Oil Fund in Azerbaijan was created on my Decree. Creation of the State Oil Fund became possible owing to the oil strategy of the Azerbaijan state which has been carried out since 1994. Developing oil strategy in Azerbaijan and starting its realization, we put before ourselves one basic great duty as a purpose: to organize development of oil and gas deposits - rich natural resources of Azerbaijan - together with the foreign companies, by means of attraction of their investments and as a result of it, to provide an oil and gas extraction on our rich deposits and, naturally, to direct all this on providing Azerbaijan`s national interests. That is, this strategy has been developed and carried out only and only for the sake of Azerbaijan`s national interests.

Naturally, interests are very wide concept. Here, there are many questions. But development of Azerbaijan`s economy, solution of social problems and improvement of well-being of the Azerbaijan`s population take the first place among them. Since the first day, our strategy has given us great hopes. As it is known, we started realization of oil strategy in complex conditions and as we started to do it, we faced with sabotages, acts of terrorism, attempts at revolution directed against our country. But, despite it, we did not renounced from our will and went on a way of which we have selected. Today it is already known that good results have been attained and great opportunities, conditions for achievement of better results have been reached.

Implementation of the contract, signed in 1994 related to development of oil deposits "Azeri - Chirag - Guneshli", has begun first of all with development of a deposit "Chirag". This grandiose project was realized for a short time. On the oil deposit "Chirag" the platform, which meets modern requirements, possess high techniques, technology was established, and in November, 1997 we noted extraction and export of the first oil there.

Construction of the Baku - Supsa oil pipeline was necessity. Because, we exported the oil, extracted on the deposit "Chirag", on a route of Baku - Novorossiysk. However this pipeline, first, did not provide duly realization of the export program and we have faced with a lot of problems. And secondly, we at the same time considered expedient creation alternative oil pipelines, with this purpose the Baku-Supsa oil pipeline, which was put into operation in April, 1999, was constructed. That is, the pipeline has already been filled with oil, and we observed how oil on this pipeline is transported in Supsa and marked this event.

Thus, the first results of implementation of oil strategy are known to everyone. They consist of that we together the companies, with which we conduct teamwork, extract oil on the oil deposit "Chirag", we export it and we receive profitable oil from this project. For this reason a question of using this profitable oil that is the income, which Azerbaijan receives from oil, arose in the agenda. Not only in that time but also earlier it was in the agenda and we thought of it. We had an idea to create separately oil fund and to collect the incomes, received from these projects, in Oil fund, to use the collected means for the solution of the most important questions for the country. But at the first stage we decided to collect incomes and pave the way for the future. Incomes, naturally, gradually grow and will grow. After growing incomes, even great opportunity will be possible for their use.

Creation of the Oil fund was discussed in Azerbaijan. It was discussed in the international financial centers. We have studied world experience in detail in this field. Carrying out all this, we pursued one purpose: the Oil fund`s creation, form, management, the mechanism of use should be certain so that incomes coming there and means spent from there were opened, transparent not only for those who are engaged in this business, but also for all our society and even for those who are interested in it in other countries.

We have brought it to the forefront always. First, because in the past - it is true there was not the Oil fund at that time - we got incomes from oil, but unfortunately, in some cases they were squandered. Secondly, sometimes the republic has great needs, and if the system, which I noted above, was not created, someone could try to use it for providing these needs and would achieve it. And besides, natural resources of Azerbaijan belong to people. They belong only to people and the state, authority to which people have rendered trust, always should remember belonging of these natural resources to people and use these means only and only for providing needs of people. And on the basis of these principles we have conducted so many discussions to generate the Oil fund. In some cases there were even arguments, various opinions. Having studied all international experience, considered features of Azerbaijan, we have created the State oil fund of Azerbaijan, and the last two years confirm that we have created very correct and true structure, system.

During creation of the fund, the certain forces in various countries have spread rumors that it would ostensibly collapse, it was supposedly collapsed in other country, put forward a number of offers touching the sovereign rights of the Azerbaijan state. Or oppositional forces always try to find something in Azerbaijan and to conduct insignificant, senseless conversations around it for months. And in most cases, when they find nothing, - they really find nothing, - fabricate something.

But here, naturally, there is a subject - an oil recovery, the income of sale of oil. Use of this income, really, is very serious question. It is a serious question as well as today, both for the future and the future generations. Creation of such very reliable Oil fund system provides full use of the incomes during our present authority, in interests of Azerbaijan people. But if in the future someone changes this system or dismembers, squanders it, certainly, then Azerbaijan will have great losses and people will lose riches belonging to it. It is extremely serious question. I consider that the Oil fund, created by us, is very reliable and it is necessary for us to provide this reliability constantly. Therefore, activity of this system should support this reliability constantly.

I noted that the regulations, reflected in my Decree, provide full publicity, transparency of this work. The oil fund periodically informs and henceforth should inform in a press about its means or an expenditure of any part of these means. But there are also a lot of processes in management of Oil fund. Therefore, at that time we have created Oil Fund`s Observation Council by my Decree. We have created the Observation Council in structure of representatives both from executive, legislative bodies and our public. Representatives of executive bodies and the public have been appointed by the President. Representatives of the legislative body have been appointed by decision of Milli Majlis (Parliament).

Thus, we have provided involvement of executive and legislative bodies in this business. I repeat that very serious regulations concerning providing a transparency have been reflected in my Decree, the accepted statues, other documents. They will prevent those or other infringements at use of means of Oil fund.

The Observation Council should operate constantly. It is necessary to hold quarterly its sessions, and the Observation Council should listen to the report of the State Oil fund. It should listen to the report of not only Oil fund, but also auditor service and express its attitude. I repeat, all this structure, system is necessary only and only for correctness, fidelity, transparency of activity of the State Oil Fund.

It seems to me, at a present stage we should still collect incomes entering to Oil fund and keep them in various banks - it is well-known to a management of the Oil fund where we should keep it. We can use them only in the most important cases. But in a year, two, three years our incomes will grow and will grow rapidly. Here then it will be possible to consider the question which part to keep and which - to direct on the solution of some social questions, social problems of people or various ways to use any part as investments and to receive profit from it. That is we should not keep means of the Oil fund in the same place. These are huge means. As it is known from a world financial system, a state or structure, or a bank, possessing such large means, not only collect and keep these means, they use them. This use makes profit. Therefore, one of the forthcoming duties of the Oil fund consists of taking measures to bring additional income to our country from the means collected in the Fund.

Today is the first session of the Observation Council. Members of the Observation Council are known. I do not know whether there is a necessity to read their names. Arthur Rasizadeh, Arif Rahimzadeh, Vahid Akhundov, Ilham Aliyev, Avez Alakberov, Farhad Aliyev, Heydar Babayev, Elman Rustamov, Ali Abbasov, Mahmud Kerimov and the head of the Oil Fund Samir Sharifov. Besides, here it was invited Ali Hasanov, deputy Prime Minister, - we have allocated the first means for settling problems of refugees, IDPs from Oil fund, it is known, it was announced, he probably, should inform about it, - my assistant Ali Asadov, other assistant Dilara Seyidzadeh and my other workers were also invited. Here there is also a representative of the auditor company "Ernest and Young" Jodi Ketpbel. We, probably, will listen to his information too.