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An Azerbaijani Success Story? SOCAR and the Foreign Policy of Azerbaijan

An Azerbaijani Success Story? SOCAR and the Foreign Policy of Azerbaijan. Samuel Lussac PhD candidate, Sciences Po Bordeaux (France). Tirsdagsseminaret, University of Oslo, 15 December 2009 . Methodology.

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An Azerbaijani Success Story? SOCAR and the Foreign Policy of Azerbaijan

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  1. An Azerbaijani Success Story? SOCAR and the Foreign Policy of Azerbaijan Samuel Lussac PhD candidate, Sciences Po Bordeaux (France) Tirsdagsseminaret, University of Oslo, 15 December 2009

  2. Methodology • Research design: PhD thesis started in October 2007 at Sciences Po Bordeaux (France). Funded by the French Ministry of Defence from October 2008 to October 2011. • Fieldworks in Azerbaijan, Belgium, Georgia, Greece, the Netherlands, Norway, Turkey and the United Kingdom yet. • The theoretical approach: combination of the Actor-Network Theory and of management theories.

  3. The oil and gas transportation infrastructures in the South Caucasus Source: BP

  4. The Baku-Batumi Railroad Source: Stratfor

  5. The South Caucasian Hydrocarbons Transportation Complex System • Concept derived from the Actor-Network Theory • It is ‘made up of networks of heterogeneous, complementary and interdependent agents’ (Ferrary and Granovetter 2009) • This complex system is made of 3 networks: • The Kazakh oil transportation network • The Azerbaijani oil transportation network • The Azerbaijani gas transportation network

  6. The Azerbaijani Oil Transportation Network in the South Caucasus QavqazTransServis Azerbaijan State Railways SOCAR Energy Georgia BTC Co MEPF Azerbaijani Presidency Cross Caspian AIOC INOGATE AzTransRail SOCAR Baghlan Trading BP TRACECA PetroTrans AzerTrans Georgian Railways EAzL

  7. The typology of the Azerbaijani oil transportation network

  8. Three types of linkages within the Azerbaijani Oil Transportation Network • Commercial relationships (between AIOC and SOCAR or between EAzL and AzerTrans for instance) • Crony capitalist relationships (between Azersun Holding and the Azerbaijani presidency) • Clanic relationships (between AzerTrans and the Azerbaijani presidency)

  9. One research question • Due to the deep relationship between the Azerbaijani oil and gas sector and the Azerbaijani presidency, one may assume that the evolution of the Azerbaijani oil transportation network may be related to a change in the foreign policy of Azerbaijan.

  10. Three hypotheses • There is a ‘shared leadership’ within the Azerbaijani oil transportation network; • Within one part of this network, some actors are competing to take over the rail transportation business; • The changes within the Azerbaijani oil transportation network give Azerbaijan and its oil company SOCAR the opportunity to improve their economic and political position on the regional scene.

  11. One problematique • To what extent does the increasing activism of SOCAR within the Azerbaijani oil transportation network help Azerbaijan becoming a regional (economic) leader in the South Caucasus?

  12. Plan • A co-leadership within the Azerbaijani oil transportation network; • Competition within the network: the case of the rail transportation business; • The network from the Azerbaijani side: a mean to acquire new regional positions?

  13. A co-leadership of the Azerbaijani oil transportation network • The makings of the Azerbaijani oil transportation network • A division of translation between AIOC and the Azerbaijani presidency

  14. The makings of the Azerbaijani oil transportation network • A network based on one crucial issue: oil transportation from the landlocked Caspian Sea to the European and world oil markets. • A network progressively framed since 1992: the role of AIOC and the Azerbaijani presidency. • The role of the non-human actors (pipelines and railroad) in co-framing the network.

  15. A division of translation between AIOC and the Azerbaijani presidency • No level distinction within the network: the actors may act at the local level as well as at the regional one. Ex.: BP. • Two centers of translation within the network: AIOC and the Azerbaijani presidency • Several meanings inscribed within the network: foreign policy and crony capitalism.

  16. The Azerbaijani Oil Transportation Network in the South Caucasus Azerbaijan State Railways SOCAR Energy Georgia QavqazTransServis TRACECA INOGATE MEPF Azerbaijani Presidency Cross Caspian AIOC AzTransRail Baghlan Trading SOCAR BP BTC Co AzerTrans PetroTrans Georgian Railways EAzL Division of the network

  17. Competition within the network: the case of the rail transportation business • The clans in Azerbaijan and their effects on the Azerbaijani oil transportation network • A progressive takeover of this network by the Azerbaijani presidency?

  18. The clans in Azerbaijan and their effects on the Azerbaijani oil transportation network • The clan in Azerbaijan: a very new political phenomenon with an old mapping • Three main ‘clans’: the Nakhchivanis, the Yeraz and the Kurds • A clanic system that overlaps a crony capitalist structure in the case of the Azerbaijani oil transportation network

  19. The khanates in Azerbaijan in the early 19th century Source: Avioutskii 2007

  20. A progressive takeover of this network by the Azerbaijani presidency? • An evolution of the actors’ interests within the network: the case of AzerTrans • Enrolment within the network as a political-economic compromise: the examples of Baghlan Trading and CrossCaspian • Taking over and re-framing the network: the recent moves of the Azerbaijani presidency

  21. The Azerbaijani Oil Transportation Network in the South Caucasus Previous links QavqazTransServis Azerbaijan State Railways SOCAR Energy Georgia BTC Co New links after 2005 MEPF Azerbaijani Presidency Cross Caspian AIOC INOGATE AzTransRail SOCAR Baghlan Trading BP TRACECA PetroTrans AzerTrans Georgian Railways EAzL

  22. The network from the Azerbaijani side: a mean to acquire new regional positions? • The economization of foreign policy in Azerbaijan • Expanding the network: how can emerging companies use it to develop their assets?

  23. The economization of foreign policy in Azerbaijan • A very close relationship between SOCAR and the Azerbaijani presidency: the structure of the Azerbaijani energy policy • Energy’s overflow in Azerbaijani politics: oil and gas as a foreign policy’s tool • Building bridges with neighbours: the role of energy in the increasing cooperation between Azerbaijan and Georgia

  24. Expanding the network: how can emerging companies use it to develop their assets? • SOCAR’s learning process: taking advantage of its key position in the 1990s to acquire capacity and technology • SOCAR as a new flagship firm: building a regional position • The diversification of SOCAR: being active at every stage of the oil business (upstream, midstream and downstream)

  25. Clanic or crony capitalist relationships Flagship Relationships within the Azerbaijani oil transportation network Commercial relationships Selected competitors Key customers Key Suppliers Baghlan Group AIOC Petkim SOCAR Other suppliers Key consumers Non-business infrastructures Network Partners Governments: Azerbaijan, Georgia

  26. Taxonomy of diversifying companies High Economies of connectedness: advantages from sharable personal relationships High Degree of state control Low High Low Economies of scope: advantages from sharable production inputs

  27. Conclusion • ANT as a tool to understand and analyze the very inner dynamics of a network • An opportunity to shed light into the very own dynamics of diversification in an ENOC • A network that also helps understanding the evolution of the internal political landscape in Azerbaijan after 2003 • The Azerbaijani oil transportation network: a way to analyze the role of the ‘energy factor’ in the foreign policy of Azerbaijan

  28. Thank you for your attention! Contact: samuel.lussac@gmail.com

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