SOCAR was established in September 1992 with the merger of Azerbaijans two state Oil companies, Azerineft and Azneftkimiya. SOCAR and its many subsidiaries are responsible for the production of oil and Natural Gas in Azerbaijan, for operation of the countrys two refineries, for running the countrys Pipeline system (except BTC), and for managing the countrys oil and natural gas imports and exports. Although government ministries handle exploration and production agreements with foreign companies, SOCAR is party to all of the international consortia developing new oil and gas projects in Azerbaijan. The company does not have effective control over output levels and the state is reorganizing the company to create greater operating and fiscal efficiency. Since 2003, SOCAR has owned the oil it produces; previously, SOCAR relinquished ownership once the oil had been sent to processing facilities. The restructuring also involved transferring some of the non oil-producing businesses to the Ministry for Economic Development. Further restructuring of SOCAR is likely in upcoming months as the company implements recommendations of an international consulting consortium that was funded by an EBRD grant. The company (not including subsidiaries) employs 60,000 people and is headed by Abdullayev Rovnag, who was formerly head of Socars Azerneftyanag refinery. The former head of SOCAR, Natik Aliyev (no relation to President Ilham Aliyev), was appointed Minister of Energy in December 2005. Almost half of SOCARs oil production in recent months came from the offshore field shallow-water Guneshli, known in the Soviet era as the 28th of April Field, and located 60 miles off Azerbaijans AbsheronPeninsula. Shallow water Guneshli first came online in 1981, but was developed only to a maximum water depth of 400 feet due to technological constraints. Recently, production levels have been falling as equipment is in disrepair and the structure is losing Reservoir pressure. Residual reserves at the field are estimated at 1.3 billion barrels of oil according to Interfax, a news service. As a result, in August 2002 SOCAR began efforts to independently rehabilitate shallow-water Guneshli by adding new production platforms. By the fall of 2004, SOCAR announced the recommissioning of several new wells with improved production capacities, but by 2005 Guneshlis stock of wells had only increased by six, and the company plans to complete only three new wells during the first half of 2006 due to material shortages. SOCAR also operates 40 other older fields (both on- and off-shore), many of which are considered to be in similar disrepair and have been artificially stimulated for years using water injection. Press reports indicate that inefficiencies from aging equipment and largely depleted reservoirs have caused the cost of production of SOCARs onshore Crude Oil to reach $15-$17 per Barrel.