A significant step to implement the Extractive Industries Transparency Initiative (EITI) in the Republic of Azerbaijan was taken on November 24, 2004. The governmental Committee on EITI, foreign and local extractive industry companies (oil and gas) and the NGOsâ€^TM Coalition for Increasing Transpareny in Extractive Industries signed a Memorandum of Understanding (MOU) for realization of the mechanism on implementation of EITI in the Republic of Azerbaijan, the first time the iniatitive has been effected in the world.

The mechanism, which was prepared by the Committee on EITI duly established following the instruction by President Ilham Aliyev of Azerbaijan for the implementation of the obligations undertaken by the government of Azerbaijan during the June 17, 2004 Conference in London, envisages the following:

• After the signing of the MOU, the Committee and the foreign and local companies will prepare reports containing data on the payments/allocations received by the government of the Republic of Azerbaijan from foreign and local oil and gas production companies and made by the foreign and local companies engaged in extractive industries
• An internationally recognized audit company operating in the Republic of Azerbaijan shall be assigned to review and collate the reports submitted by the government and the foreign and local companies
• Reports will be submitted twice a year (semiannually and annually) and delivered directly to the audit company
• The Parties to the MOU shall establish a Selection Group for the purpose of selecting an audit company through a competitive bidding process. The audit companyâ€^TMs findings will be submitted to all Parties
• The Parties to the MOU will publish a joint press release regarding the EITI Committeeâ€^TMs report and the auditorâ€^TMs report

20 foreign and local extractive (oil and gas) industry companies, including State Oil Company of the Republic of Azerbaijan, Exxon, Statoil, Total, Lukoil, Unocal, Shell, Devon Energy have signed the MOU.

In his opening address and presentation at the ceremony, Samir Sharifov, Chairman of the governmental Committee on EITI, emphasized that by signing the MOU, Azerbaijan was, for the first time anywhere in the world, introducing a practical mechanism for EITI implementation that might be used in other resource-rich countries.

Mr. Laurie Bristow, the UK Ambassador to Azerbaijan, pointed out in his address that the MOU opened the way for the compilation and publishing of the first set of reports on Azerbaijan's oil revenues and emphasized that Azerbaijan might be one of the first countries in the world to implement such an initiative.

Mr. Sabit Bagirov, speaking on behalf of the NGO Coalition for Increasing Transparency in Extractive Industries, noted that the signing of the MOU was a significant step towards transparency in Azerbaijan.

In his address at the ceremony, BP Azerbaijan President Mr. David Woodward, said that the Government of Azerbaijan had taken significant steps to increase transparency.

Mr. Natig Aliyev, President of SOCAR, Mr. Basil Zavoyko, Resident Representative of IMF in Azerbaijan, Mr. Ahmed Cehani, Resident Representative of World Bank and Mr. Raymond Conway, Resident Representative of EBRD in Azerbaijan also addressed those at the ceremony.

Heads of the foreign and local extractive industry companies, delegates from the diplomatic corps and international organizations, parliament and governmental bodies and the NGOs were also represented at the event.