Development trends in the Azerbaijan oil and gas sector: Achievements and challenges

This article is study of Azerbaijan oil and gas industry. It illustrates the business climate, the impact of this sector on Azerbaijan's economy including role of SOFAZ and highlights recent developments in the energy production and the main concepts of Azeri PSAs (2009). Meanwhile, the article establishes the government policy by indentifying several factors that influenced to attract foreign investment to oil and gas sector and examines significant challenges that still remain for further development of the country's oil industry.

► In this study, we review the oil and gas sector in Azerbaijan and describe the main government policies for attracting foreign investment to the sector.
► We showed that providing a predictable legislative and regulatory framework and attractive conditions for oil contracting encourages foreign investment inflows to the country.
► Issues such as the lack of independent regulatory institutions, rehabilitation of oil refineries and resolution of the legal status of the Caspian Sea remain major challenges for further development of the oil and gas industries.