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Regulatory overview

Regulation

What are the primary laws and regulations governing the oil and gas industry in your jurisdiction?

The primary laws and regulations governing oil and gas industry in Azerbaijan include the Subsoil Law (439-IQ/1998), the Energy Law (541-IQ/1998) and the Energy Resources Law (94-IQ/1996). On March 28 2000 the president of Azerbaijan issued the Decree on Measures to Improve the Issuance of Special Permits (310/2000), as subsequently amended.

The Subsoil Law governs the exploration, use, protection, safety and supervision of the use of subsoil resources, including oil located within Azerbaijan and on the Azerbaijani sector of the Caspian Sea’s continental shelf. Under the recent Law on Licenses and Permits (176-VQ/2016) the following require permits:

  • production of gas and processing of natural gas;
  • transportation of gas;
  • distribution of gas;
  • exploration of oil and gas fields;
  • development and production from oil and gas fields;
  • processing of oil and oil products; and
  • transportation of oil and oil products by pipelines.

The Energy Law is intended to complete the legal framework for the use of subsoil resources, including oil and gas. It establishes the social, economic and legal bases of state policy for the energy sector.

Azerbaijan is a signatory and a contracting party to the Energy Charter Treaty and the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects, and is a member of the Energy Charter Conference.

What government bodies are charged with regulating the oil and gas industry and what are the extent of their powers?

Further to Presidential Decree 149/2014, the Ministry of Energy helps to implement state policy and to administer the fuel and energy sector. In addition, the State Oil Company of the Republic of Azerbaijan plays an important (in fact, on most issues a leading) role in such matters – especially in relation to the practical implementation of oil and gas projects. The State Oil Fund of Azerbaijan Republic was established in 1999 to manage Azerbaijani oil revenues.

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