Baku, Azerbaijan, Oct.11
By Emil Ismayilov - Trend:
Despite the decline in world oil prices, the budget of the State Oil Fund of Azerbaijan (SOFAR) in 2014 will be fulfilled without a deficit, the State Oil Fund told Trend Oct.10.
The world market price of oil has been falling for several months in a row. The price of oil on the world market may fall to $85 per barrel in a couple of months, according to experts.
The fund's budget parameters for 2014 are formed from the basis of the oil price of $100 per barrel.
"Given the fact that the average price of oil in January-September this year stood at $109, then the budget of the fund will be deficit-free and obligations to the state budget will be fully implemented regardless of the oil prices, which will be observed in the following months," the fund said.
Reduction of the cost of oil is due to the increase of the volume of oil supplies of the United States to the world market since the spring of 2014, which takes place against the backdrop of events in Ukraine. At the same time the United States and Europe lifted international sanctions against Iran for the supply of energy. This process (decline in oil prices) especially accelerated in summer. Only for the last 3 months the price has decreased by about 10-15 percent, as shown by the International Organization of the Petroleum Exporting Countries (OPEC).
This week, the price of AZERI LT CIF Augusta was less than $94 per barrel, while AZERI LT FOB Ceyhan oil price was about $92 per barrel (+/-).
Azeri Light oil is produced from the Azeri-Chirag-Gunashli offshore fields. It is directly delivered to the Turkish port of Ceyhan via the Baku-Tbilisi-Ceyhan main export oil pipeline, to the Georgian port of Supsa via the Baku-Supsa pipeline.
Azerbaijan also exports URALS oil from the Novorossiysk port, which is delivered via the Baku-Novorossiysk pipeline.
The price of URALS (EX-NOVO) was less than $89 per barrel this week.
SOFAZ was established in 1999 with assets worth $271 million.
Under the provision of the State Oil Fund, the funds may be used for the construction and reconstruction of strategically important infrastructure projects, as well as for solving of important national problems.
The fund's main goals include accumulating resources and placing of the assets abroad in order to minimize any negative affect on Azerbaijan's economy (by the phenomenon known as 'Dutch disease'), promoting resource accumulation for future generations, and supporting current social and economic processes in Azerbaijan.
As of July 1, 2014, the assets of SOFAZ increased by 4.86 percent amounted to about $37.622 billion compared to early 2014 (about $35.877 billion).