State Oil Fund of Azerbaijan

State Oil Fund of the Republic of Azerbaijan
Azərbaycan Respublikasının Dövlət Neft Fondu
AbbreviationSOFAZ
EstablishedDecember 29, 1999 (1999-12-29)
TypeSovereign wealth fund
HeadquartersNizami, Baku, Azerbaijan
Executive Director
Israfil Mammadov
AwardsUnited Nations Public Service Awards
EITI Award
Websitewww.oilfund.az

The State Oil Fund of the Republic of Azerbaijan (Azerbaijani: Azərbaycan Respublikasının Dövlət Neft Fondu), also known by its abbreviation SOFAZ, is a sovereign wealth fund of Azerbaijan founded in December 1999.[1][2]

Nearly all the fund's revenues come from Azerbaijan's oil and gas exports.[3][4] SOFAZ invests internationally and holds assets in more than 60 countries, including listed securities as well as infrastructure and renewable energy projects.[5]

The fund has been criticized for its lack of transparency and for enriching Azerbaijan's political elites.[6][7]

History and organization

The State Oil Fund of the Republic of Azerbaijan (SOFAZ) was established by Heydar Aliyev's Decree No. 240 dated December 29, 1999.[8][9] Statute of the State Oil Fund was approved by the Decree of the President of the Republic of Azerbaijan No. 434 dated December 29, 2000.[10]

SOFAZ has been criticized for lacking transparency in its finances and in its contracting, which has raised questions about corruption.[6] Critics have described projects funded by SOFAZ as useless,[7] and noted that contracts have been awarded to companies owned by the ruling Aliyev family in Azerbaijan.[6] Funds from SOFAZ are frequently transferred to make up for state deficits.[6][11]

Azerbaijani banks purchased nearly $5 billion foreign currency from SOFAZ in 2016.[12] In 2018, SOFAZ sold more than $5.8 billion foreign currency to Azerbaijani banks.[13]

In 2020, the Azeri-Chirag-Gunashli (ACG) oil fields recorded their lowest profits since 2003 at $3.52 billion, with SOFAZ receiving about $5 billion from oil sales that year.[14] In 2022, revenue from oil and gas sales of the ACG and Shah Deniz gas field increased by 65.4% to $11.3 billion compared to 2021.[15] In 2024, the revenue generated by SOFAZ from the sale of oil from the ACG field was US$ 5,725 billion.[16][17][18] SOFAZ owns 25% of the shares amongst BP, ExxonMobil, Amoco, Unocal, Statoil, McDermott and others.[18]

As of 30 September 2025, SOFAZ reported assets under management of $70.2 billion, reflecting an increase of 16.9% since the beginning of the year, driven by investment returns, currency movements, and asset allocation.[5]

SOFAZ Executive Director Israfil Mammadov signed a Memorandum of Understanding with Hassana Investment Company in October 2024 to discuss investment in Saudi Arabia.[19]

In 2024, SOFAZ sold $7.128 billion foreign currency for 12.1 billion manats.[20]

Executive Director

The operational management of the Fund's activities is carried out by the Executive Director, who is appointed and dismissed by the President.[21] As of 2018, the executive director reports to the President.[22] There have been three executive directors since 2001:

  • Samir Sharifov (January 3, 2001[23] – April 18, 2006[24])
  • Shahmar Movsumov (May 15, 2006[25] – November 29, 2019[26])
  • Israfil Mammadov (November 29, 2019[27] – present)

Supervisory Board

The President of Azerbaijan appoints the members of a Supervisory Board, who are de facto powerless.[21] The board comprises 7 key officials including the Prime Minister, Deputy Speaker of the National Assembly, Assistants to the President of Azerbaijan – Head of Economic Affairs and Innovative Development Policy, and Head of Economic Policy and Industrial Affairs departments of the Presidential Administration, Minister of Finance, Minister of Economy, and the Chairman of the Central Bank of Azerbaijan.[28]

Subsidiaries

SOFAZ owns 12 subsidiaries. Five are located on the channel island of Jersey, four in Luxembourg and one each in Russia,[29] France[30] and Japan.[31]

Others

In June 2024, SOFAZ announced a plan to invest US$100 million in Dubai-based GEMS Education.[32][33]

Since 2013, SOFAZ owns a 2.95% stake in state-owned Russian VTB Bank until now this investment has paid USD 57.3 million in dividends to SOFAZ.[34]

In 2025 SOFAZ announced an investment in Italian rail operator Italo – Nuovo Trasporto Viaggiatori S.p.A via a fund vehicle led by U.S.-based Global Infrastructure Partners (GIP) which is part of BlackRock.[35][36]

In May 2025 SOFAZ invested a €20 million stake in the private equity fund Azzurra Capital Fund I, managed by the company Azzurra Capital, based in Dubai.[37]

In July 2025, SOFAZ acquired a 49% stake in 14 solar power plants in Italy operated by Enfinity Global, with a combined capacity of 402 MW, operating under long-term power purchase agreements.[5][38]

In October 2025, SOFAZ invested £50 million in London Gatwick Airport alongside Global Infrastructure Partners, part of BlackRock, as part of a major infrastructure investment in Europe.[5]

SOFAZ works with major global asset managers, including BlackRock, Brookfield, JP Morgan, Franklin Templeton, Blackstone, Neuberger Berman and KKR, to access large-scale international investments.[5]

Awards

References

  1. ^ "IFC and Azerbaijan Support Private Sector Development in Emerging Markets". pressroom.ifc.org. Retrieved 28 October 2021.
  2. ^ Columbia Center on sustainable investment. "Natural Resource Funds Azerbaijan State Oil Fund of the Republic of Azerbaijan" (PDF).
  3. ^ Curran, Enda (13 February 2013). "Azerbaijan to Buy Australian Real Estate". Wall Street Journal. ISSN 0099-9660.
  4. ^ Di Bonaventura Altuve, Leonardo (2023). "The demise of sovereign wealth funds". Review of International Political Economy. 31: 277–303. doi:10.1080/09692290.2023.2190601. ISSN 0969-2290. S2CID 257817535.
  5. ^ a b c d e Aliyeva, Esmira (14 November 2025). "How Azerbaijan's oil fund is expanding its influence in Europe". Euronews. Retrieved 28 January 2026.
  6. ^ a b c d Altstadt, Audrey L. (2017). Frustrated Democracy in Post-Soviet Azerbaijan. Columbia University Press. pp. 24, 114–120. ISBN 978-0-231-80141-6.
  7. ^ a b Waal, Thomas de (2 November 2018). The Caucasus: An Introduction. Oxford University Press. p. 185. ISBN 978-0-19-068311-5.
  8. ^ "State Oil Fund (Azerbaijan)". www.investopedia.com. Retrieved 28 October 2021.
  9. ^ "Azərbaycan Respublikasının Dövlət Neft Fondunun yaradılması haqqında AZƏRBAYCAN RESPUBLİKASI PREZİDENTİNİN FƏRMANI". www.e-qanun.az. 29 December 1999. Retrieved 28 October 2021.
  10. ^ "Azərbaycan Respublikasının Dövlət Neft Fondu haqqında Əsasnamənin təsdiq edilməsi barədə AZƏRBAYCAN RESPUBLİKASI PREZİDENTİNİN FƏRMANI". www.e-qanun.az. 29 December 2000. Retrieved 28 October 2021.
  11. ^ "Baku's Balancing Act: Azerbaijan Between Green Energy and Oil Rents". Carnegie Endowment for International Peace. 4 November 2024. Set up in 1999, this sovereign wealth fund is designed to ensure the country's oil profits are invested and fairly distributed across social groups and generations. In reality, it has been used in part to cover short-term budget shortfalls and fund massive public infrastructure projects.
  12. ^ "SOFAZ sells almost $5B to local banks at auctions in 2016". Azvision.az. 31 December 2016. Retrieved 25 February 2025.
  13. ^ "SOFAZ increases sales of dollars to Azerbaijani banks". Azernews.Az. 8 January 2019. Retrieved 25 February 2025.
  14. ^ "Azerbaijan Faces Declining Oil Revenues: What should the government do?…". turan.az. 17 May 2024. Retrieved 25 February 2025.
  15. ^ "State Oil Fund of Azerbaijan beefing up reserves - Review by Caliber.Az". caliber.az. 25 February 2025. Retrieved 25 February 2025.
  16. ^ "Azerbaijan unveils revenues from Azeri-Chirag-Gunashli, Shah Deniz fields". caliber.az. 9 December 2024. Retrieved 9 December 2024.
  17. ^ "SOFAZ reveals its revenues from ACG". Apa.az. Retrieved 9 December 2024.
  18. ^ a b "State Oil Fund's income soars to almost $1.8 billion from ACG this year". Azernews.Az. 7 May 2024. Retrieved 3 July 2024.
  19. ^ "SOFAZ to explore investment opportunities in Saudi Arabia". Report News Agency. 29 October 2024. Retrieved 25 February 2025.
  20. ^ "SOFAZ increased sale of foreign currency 3.2-fold for December". ABC.AZ. Retrieved 25 February 2025.
  21. ^ a b Gawrich, Andrea; Franke, Anja; Windwehr, Jana (2010). Are Resources a Curse?: Rentierism and Energy Policy in Post-Soviet States. Verlag Barbara Budrich. p. 78. ISBN 978-3-86649-677-4.
  22. ^ Altstadt, Audrey (2018), Frustrated Democracy in Post-Soviet Azerbaijan, Columbia University Press, pp. 114–, doi:10.7312/alts70456, ISBN 978-0-231-80141-6
  23. ^ "S. R. Şərifovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı Direktoru təyin edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı". www.e-qanun.az. 3 January 2001. Retrieved 28 October 2021.
  24. ^ "S. R. Şərifovun Azərbaycan Respublikasının Dövlət Neft Fondunun İcraçı direktoru vəzifəsindən azad edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı". www.e-qanun.az. 18 April 2006. Retrieved 28 October 2021.
  25. ^ "Ş.A.Mövsümovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı Direktoru təyin edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı". www.e-qanun.az. 15 May 2006. Retrieved 28 October 2021.
  26. ^ "Ş.A.Mövsümovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı direktoru vəzifəsindən azad edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı". www.e-qanun.az. 29 November 2019. Retrieved 28 October 2021.
  27. ^ "İ.A.Məmmədovun Azərbaycan Respublikası Dövlət Neft Fondunun İcraçı direktoru təyin edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı". www.e-qanun.az. 29 November 2019. Retrieved 28 October 2021.
  28. ^ "Azərbaycan Respublikası Dövlət Neft Fondu Müşahidə Şurasının yeni tərkibinin təsdiq edilməsi haqqında Azərbaycan Respublikası Prezidentinin Sərəncamı". www.e-qanun.az. 9 December 2019. Retrieved 23 August 2023.
  29. ^ "SOFAZ shifts from loss to profit from Moscow-based property". Report News Agency. 9 July 2020. Retrieved 28 March 2025.
  30. ^ "SOFAZ buys €135m property in Paris". Azernews.Az. 21 December 2012. Retrieved 28 March 2025.
  31. ^ "International Financial Reporting Standards Consolidated Financial Statements and Independent Auditor's Report" (PDF). www.oilfund.az. 31 December 2023. Retrieved 28 March 2025.
  32. ^ "Azerbaijan's State Oil Fund to invest $100M in one of world's largest private education providers". Report News Agency. 18 June 2024. Retrieved 3 July 2024.
  33. ^ "SOFAZ invests in one of largest private companies providing educational services in world". Azernews.Az. 18 June 2024. Retrieved 3 July 2024.
  34. ^ "Russian bank paid USD 57.3 mln. dividends to SOFAZ so far". Apa.az. Retrieved 6 January 2025.
  35. ^ "Azerbaijan's State Oil Fund buys share from Italy's rail operator". Apa.az. Retrieved 27 February 2025.
  36. ^ "SOFAZ expands portfolio with strategic investment in Italo high-speed rail". Azernews.Az. 19 February 2025. Retrieved 27 February 2025.
  37. ^ "Azerbaijan's State Oil Fund acquires stake in Dubai-based private equity fund -EXCLUSIVE". Apa.az. Retrieved 7 May 2025.
  38. ^ "Azerbaijan's oil fund SOFAZ invests $66 mln in London's Gatwick airport". Reuters. 9 October 2025. Retrieved 28 January 2026.
  39. ^ "List of Winners and Finalists for the 2007 UN Public Service Awards" (PDF). unpan1.un.org. Archived from the original (PDF) on 5 March 2016.
  40. ^ "EITI Chairman's Awards presented in Doha". eiti.org. EITI. 24 February 2009. Archived from the original on 30 October 2021. Retrieved 28 October 2021.

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