COUNTRY OVERVIEW

Bounded by the Caspian Sea to the east and the Greater Caucasus mountain range to the north, the Republic of Azerbaijan has a total land area of 86,600 sq.km. Sharing borders with Georgia, Russia, Turkey, Iran and Armenia, Azerbaijan has long been the centre of the region’s oil industry.

With a population of about 9 million, Azerbaijan enjoys a young demographic profile with some 23.8 percent of the population under 15 years old and only 9.3 percent of retirement age.

As a crossroads of tribal migration and military campaigns, Azerbaijan underwent a series of invasions and was part of several larger jurisdictions such Arab Caliphate, Seljuk Turks, Persian Sephavids and Tsarist and Soviet Russia. Azerbaijan was a part of the Russian Empire from the early 19th century to 1918, an independent democratic state from 1918 to 1920 as the region’s first, albeit short-lived, secular democracy, and a part of the Soviet Union from 1922 to 1991, when Azerbaijan proclaimed its independence on October 18. On November 12, 1995, the constitution of the independent Azerbaijan was adopted and received nationwide support in a national referendum.

SOCIAL OVERVIEW

During late 1980s and early 1990s, Azerbaijan endured the collapse of the Soviet Union, with economic downfall, and a devastating war against neighboring Armenia. The impact of this economic downfall was severe; in 1995 GDP was only 42 percent of its 1990 pre-independence level.

Unemployment was endemic: out of a total population of 8 million, approximately on million Azerbaijanis were refugees and internally displaced people who had fled the areas occupied by Armenian forces and another 2 million had left the country, mainly for Russia, to find works.

This situation changed with the “Contract of the Century”, which not only provided massive oil revenues for the government, but also offered an opportunity to a large part of the Azerbaijani private sector to rebuild itself by working with the world major oil and gas service companies.

Particular commitment has been given to the development of various sectors of Azerbaijani economy to guarantee economic stability and the implementation of major projects in various areas, including transportation, agriculture, industry, education and social services.

Nowadays, the 4.3 million workforce is still mainly occupied in agriculture (38%) but the percentage of occupation in the industry and construction (13%) is increasing thanks to more than a dozen oil production-sharing agreements (PSAs) with international Companies and rising employment and further development of Azerbaijani resources by foreign companies.

The population is evenly distributed between urban and rural areas, with 53.9% residing in towns and cities.

Azerbaijan is a positive model of peaceful co-existence of religious communities.

Although predominantly Muslim (93% of population), the country traditionally counts various ethnic groups, religions, and cultural traditions (mainly Russian Orthodox 2.5 %, Armenian Orthodox Church 2.3%, Catholic Church).

ECONOMY AND ENERGY OVERVIEW

Azerbaijan has been famed for its oil springs and natural gas sources since ancient times. Baku is the oldest oil field in the world. The very first industrial oil production operation was implemented in Azerbaijan and at the dawn of the 19th Century, Azerbaijan became the largest oil country in the world. The country has important oil reserves and a significant agricultural potential based on a wide variety of 9 climatic zones.

Since 1994, the State Oil Company of Azerbaijan Republic (SOCAR) has signed 28 Production Sharing Agreements (PSA) with the first signed for development of Azeri-Chiraq -Guneshli (ACG) field in September 1994- so called “Contract of the Century” – , covering an offshore contract area of 432 square kilometers. The ACG field occurred the third place among the world’s 20 largest oil fields.

The daily oil production from the ACG filed exceeds 900,000 barrels. Within the next 30 years, Azerbaijani oil production is expected to surpass the total number of barrels produced for the past 130 years.

Azerbaijan plays the role of a strong gas exporter that has recently joined the world energy market. The Shah Deniz (SD) Production Sharing Agreement (PSA) was signed in October 1996, covering an offshore contract area of approximately 800 sq km. Major gas volumes produced from Shah Deniz and other successful development fields are being exported to Europe.

All these contracts help to ensure the rapid growth of new investments into Azerbaijan.

Nowadays, Azerbaijan, with annual growth exceeding 10% since 2000, is considered to be a very reliable host country for the stable export of oil and gas produced in Central Asia to world markets. In 2009 Azerbaijan’s gross domestic product increased by 9.3.%, with growth in 2010 estimated at 9.8%.

Connecting South Easter Europe with the vast regions of growing importance such as central Asia and the Caspian Sea, Azerbaijan has the largest and the fastest growing economy in the South Caucasus.

ENVIRONMENTAL ASPECTS

Nowadays, Azerbaijan faces serious environmental challenges. Soil throughout the region has been contaminated by DDT and toxic defoliants used in cotton production during the Soviet era. Over-fishing by poachers is threatening the survival of Caspian sturgeon stocks source of most of the world’s supply of caviar.

Furthermore. Caspian petroleum and petrochemicals industries also have contributed to current air and water pollution problems.

While oil is welfare, nature is life. The age of environmental problems in Azerbaijan is equal to the history of oil production Use of primitive technologies in production storage, transportation and refinery of oil in the late XIX and early XX centuries caused pollution of lands, lakes and small ponds due to oil and sludge water. With the production of oil by ‘open fountain’ method onshore and offshore Caspian Sea, waste water and drilling fluids, streamed into the sea for nearly 60 years, have negatively impacted the environment. Old and corroded metal constructions settled down on the sea bed have become another pollution source.

From exploration to transportation and refining, Azerbaijan’s Caspian Sea oil production endangers the environment.

The actives associated with the oil industry can harm biological processes, with significant environmental and economic repercussion. To this end, Azerbaijan Government has taken action against environmental problems accumulated over many years and has implemented a national environmental program.

In 1996 Azerbaijan Government adopted the Regulations for Conducting Environmental Impact Assessment in the Republic of Azerbaijan (UNDP/State Environmental Committee, 1996). According to the Environmental Protection Law, an EIA study is now compulsory for all projects having a potential impact on the environment. In addition, the Environmental protection Law, adopted in 1999, states the main principles for nature preservation, determines objectives for environmental monitoring and establishes the ‘ecological insurance’ for dangerous activities. The national Environmental Plan, approved in 2003, covers all existing environmental problems.

Up to 2010, the area preserved by the State has increased from 478,00 ha to 876, 200 ha, tha is more than 10% of the total land of Azerbaijan. Forest restoration and tree-planting works covered 70,000 ha of land area. Large projects on renovation of the central sewage system, upgrading of sewage disposal plants and construction of new plants are being implemented.

Azerbaijan also actively participates in an oil industry program, called the “Caspian Environmental Program’, jointly established in 1998 by Caspian basin countries and international organizations (UNDP, UNEP, World Bank, UE Action Aid and GEF). The goal of the program is the development of joint efforts and cooperation of coastal countries for the improvement of the environmental situation of the Caspian Sea and its coastal ecosystems.

In accordance with the decree of the President of Azerbaijan Republic to improve environmental situation in Absheron Peninsula signed on September 28, 2006, a state ecological Program (SEP) has been implemented which includes comprehensive measures focusing on cleanup and remediation of more than 10,000 ha of oil polluted lands nearby Baku city and on Absheron peninsula Program implementation includes the participation of SOCAR and various Ministries.

BOS Shelf have been conducting operations in Azerbaijan for more than ten years now. Maximizing local content, in terms of employment and suppliers, has been one of the fundamental features of BOS Shelf sustainability and operational business philosophy in Azerbaijan. This focuses on the development of enduring relationships with local and national companies, clients and suppliers, having beneficial effects on BOS Shelf projects’ costs and diminishing the overall risk profile.

This sustainable business approach of company working effectively with local suppliers and subcontractors provides significant social benefits to the country and greatly contributes to the development of local communities, mainly by offering employment opportunities. BOS Shelf is committed to a close and fruitful cooperation with local communities and authorities in achieving the objective of creating a long term value in the region.

SUSTAINABILITY PERFORMANCE

People Management

Managing human resources according to a code of ethics has the benefit of demonstrating fare staff management, integrity, openness and honesty, by developing an atmosphere of trust throughout the organization which is an important motivation factor for employees. This combination of principled management and committed staff leads to innovation and increasing productivity within the company.

BOS Shelf’s employment strategy is preferably addressed to the employment and training of local personnel, who will gradually substitute expatriates. Training is a key element within the business culture, as it creates a significant competitive advantage for company by

  • Enhancing the development of key personnel;
  • Meeting local content targets;
  • Meeting HSE standards and enhancing the company’s safety culture;
  • Providing projects with know-how and skills required for operations;
  • Being successful in bids with major projects.

Local Content supports;

  • Meeting the requirements of local government and authorities in order to support the economic development of local communities in Azerbaijan;
  • Reducing structural costs and increasing business;
  • Bridging the skills gap- essential for company’s business to be sustainable.

BOS Shelf has always been committed to train local personnel to the standards required for the projects, in line with customer’s requirements and the market. To comply with these requirements, BOS Shelf’s Training Officers, in coordination with the Operations Manager and supervision establishes training programs tailored to cover different disciplines including welding, fitting, rigging, construction and inspection. After completion of the training period, all successful trainees receive a certificate of competence. Moreover, the capabilities and skills of the local personnel are further promoted with continuous technical programs and trainings. During the years of top activity, BOS Shelf involved 400 employees annually in training programs, amounting up to more than 85,000 training hours per annum. All departments were involved in these activities which included managerial, technical trainings, technology and languages.

The company is mainly committed to technically train its employees according to international standards, therefore training programs includes improvement and development of qualifications for riggers, welders and fitters, in specialized training schools created and operated at the BOS Shelf yard.

  1. One Welding Training Center with a yearly capacity of training up to 360 welders.
  2.  One Fitter Training Center with a yearly capacity of training up to 900 Junior Fitters.
  3. One fully equipped Training Room with multimedia devices.
  4. 60 Training modules available for staff and workforce qualification and permanent improvement.
SAFETY

“Where safety leads to Quality”
Slogan of BOS Shelf

BOS Shelf deems that people are its most important asset and hence Health and Safety issues have always been on paramount importance within all its business activities. As a result, BOS shelf has been fully committed to the HSE matters at each level of responsibility, since the very beginning of its operations.

An HSE management system has been developed to create a safe and healthy working environment, not only by complying with the health and safety legislation, but also to act responsibly in preventing injuries, illnesses, damages and losses resulting from activities during the field operations.

HEALTH

BOS Shelf provide medical coverage for all its employees. The Site Clinic is present in the Fabrication yard, equipped with all necessary equipment, ambulance and medicine, and provides coverage and assistance during 24 hours. BOS Shelf also organize and perform first aid trainings, drills and exercises.

ENVIRONMENT

BOS Shelf have set up environmental programs fully in line with the company’s standards, Azerbaijani legislation and the Clients’ environmental requirements.

BOS Shelf fully aware of its responsibility towards society for preserving the environment, have expressed in their HSE Policy its commitment to achieve the highest standards for the protection and conservation of the environment. The Environmental Management System of BOS shelf has been certified by a third party according to the international standard ISO 14001;2004 ‘Environmental Management System’.

Waste Management

BOS Shelf strategy on waste management is the reduction of waste generation through prevention, minimization and re-use. BOS Shelf has developed Waste management Programs that employ the following key waste management measures;

  • management of waste types according to the waste management hierarchy;
  • use of approved waste contractors;
  • training of all personnel on waste prevention / minimization / reuse and segregation opportunities;
  • reviews waste activities on a regular basis, in order to identify any new and / or additional waste prevention/ minimization / reuse opportunities and
  • monitoring the workforce compliance with waste reduction strategies.

In particular, key personnel at site have been provided with training courses focusing on waste classification according to legislation and the waste types generated by the project; segregation and use of color-coding and correct types of waste skips; waste minimization rationale and strategies.

All subcontractors are required to comply with the Waste Management Program and are trained to reach these objectives. No non-conformance reports have been received during last 5 years of BOS Shelf operations which represents an important and successful achievement for BOS Shelf company in Azerbaijan.

FUTURE CHALLENGES

Combining an experienced multi-national management team and a well trained workforce of around 3,000 people, with an international organization and support, particularly in Engineering and Procurement, BOS Shelf has the capacity and capability to successfully undertake EPIC Projects for the Oil and Gas Industry. This allows the company to play major roles in the biggest contracts in Azerbaijan as well as in other regions of the Caspian Sea. BOS Shelf is now working to promote its capabilities both at national and international level, by offering real project advantages to all potential Clients.

The capability to perform large scale projects is underpinned by the evidence of past achievements, which includes on-time and within budget delivery of Jackets and Topsides for international clients.

BOS Shelf strategy will continue to focus on the improvement and upgrading of the employees’ skills and education, particularly local employees, through an intensive training and educational program. Besides, Safety remains a primary goal for BOS Shelf, and ‘zero injuries’ will remain the main target.

In this context, the most important responsibility for the company is guaranteeing a safe and healthy daily return of each employee back home.

Following the strategy of the company to actively participate in the community where it operates, the company is fully committed to create a long-term value and continue achieving high targets in a nearest future.