SOCAR unveils transformational reforms carried out in the past years

Baku. 19 January. REPORT.AZ/ The State Oil Company of Azerbaijan (SOCAR) has been applying corporate standards as well as rules and regulations on sustainable development, fight against corruption, better transparency, risk management, procurement operations management and other areas, the company stated in response to Report’s inquiry about the reforms carried out at SOCAR over the past years (measures on optimization of organizational structure, management, and production).

“Guided by President of Azerbaijan Ilham Aliyev's instruction to become an international oil and gas company, SOCAR has taken significant steps in this direction since 2007 and has developed cooperation with the world’s leading auditing and consulting companies, projecting extensive experience. With most of the major goals already achieved, SOCAR is currently functioning as an influential transnational company. The company receiving a greater share of revenues for Azerbaijan from the international markets, represents our country as a global brand. Reforms, aimed at achieving this goal, were launched back in 2008. The SAP’s Enterprise Resource Planning (ERP) system for digital transformation and International Financial Reporting Standards (IFRS) on business resources management were introduced for the first time at SOCAR. Key elements of corporate management were applied, company’s management structure was duly overhauled and independent, collegial management structures (risk management committee, audit committee, procurement committee, personnel management committee, information security, etc) were created in the company in line with the best practices of the multinational oil and gas companies.”

It was noted that corporate standards as well as rules and regulations on sustainable development, crackdown on corruption, increased transparency, risk management, procurement operations management and other spheres were applied at SOCAR. The company mentioned that projects aimed at raising efficiency and effectiveness of operations as well as cost optimization at SOCAR’s main manufacturing plants were launched in 2012 jointly with the one of the world’s leading auditing companies - Ernst&Young (EY). Moreover, a number of structures incorporated by SOCAR shifted from three to two-tier management system and other measures to reduce cost were taken. The main goal of these projects is to identify issues with business processes at the enterprises, increase effectiveness and efficiency of operations in the areas of production, technology, personnel, procurement, transport and contract works, and cost reduction.

"These measures resulted in an efficiency increase which saved over AZN 128.7 mln annually. In addition, those steps achieved companywide personnel performance boost by 27%. In the beginning of 2016, SOCAR, jointly with EY, launched a project on stabilization of material resources designed to ensure the timely and flawless satisfaction of demand for material resources, efficient use of circulating capital, and to determine the optimal level of the inventory. The project of Transformation of Human Resource Management processes has been implemented in SOCAR since 2015. The best international practices in planning workforce hiring and adaptation, training and development, career promotion, employee incentives and other processes were applied through SAP’s ERP system as part of this project. In 2018, SOCAR joined the International Association of Oil & Gas Producers (IOGP) and started its vigorous activity within this international body with the goal of developing partnership with international oil and gas companies, remaining in compliance with the production standards agreed between the parties and taking part in determination of these standards. The reforms carried out by SOCAR for it to become a more influential global company are regularly inspected by the biggest rating companies. As a result, in 2018 Ernst & Young rated SOCAR as a ‘strong company’ on corporate management system."