Increase of oil price makes it necessary to adjust the state budget of Azerbaijan

Azerbaijan, Baku, March 28 /Trend A.Akhundov/

Increase of Azerbaijani oil price in world markets makes it necessary to revise the forecasted figures of the state budget for 2012, experts say.

Adjusting of the state budget for 2012 should be done in May and June, MP Vahid Ahmedov told Trend.

"The price of oil is defined on the level of $80 per barrel in the budget, while today its price on world markets approaching $130, so it is necessary to make changes to the budget projections for this year" Ahmedov said.

A similar opinion is shared by MP Ali Masimli.

"If the price of oil on world markets will continue to significantly exceed the forecasted in the state budget, it would be necessary to revise it in the middle of the year," Masimli told Trend.
Vahid khmedov said the price of Azerbaijani oil will continue to increase.

"The main reason for it is the political processes going on in the world, particularly processes in the Arab countries. Growth will continue till the stabilization of these processes. According to our forecasts, the price of oil shoots up to $200-220 per barrel in the next five or six months," Ahmedov said.

Ahmedov noted that such a rapid increase in prices can have both positive and negative consequences.

"This situation is favorable for Azerbaijan, as for the oil-exporting country. However, increase in oil prices also affects the value of products imported by Azerbaijan. In view of this price increase budget revenues can be expected at 18-19 billion manat this year, while they are projected at 16.438 billion manat," Ahmedov said.

Masimli said according to recent estimates, a dollar increase in oil prices brings about 19 million manat to the budget revenue.

The adjustment of the state budget isn't implemented yet, Azerbaijani Ministry of Finance told Trend. "The budget, as the primary financial plan of the State, may be amended only by the decision of the President." The ministry said.

Price of Azerbaijani light crude in the basis of CIF (port of the recipient) at the Italian port of Augusta amounted to $129.17 per barrel on March 26. According to State Oil Company of Azerbaijan (SOCAR), which, together with foreign partners, have been producing crude oil since 1997, the price of oil has risen by $0.67 per barrel on Monday compared to Friday.

Azeri Light oil is produced from the Azeri-Chirag-Gunashli offshore fields, which is developed under BP's operations. 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.

SOCAR said the price of Azerbaijani crude in the basis of FOB (port of the sender) at the Turkish port of Ceyhan on March 26 amounted to $128.19 per barrel, or $73 per barrel higher than the previous price.

Azerbaijan exports URALS oil from the Novorossiysk port, which is delivered via the Baku-Novorossiysk pipeline.

The price of URALS (EX-NOVO) was $121.82 per barrel on March 26, or $0.73 per barrel more than the previous price.

The price of Brent Dated, produced from the North Sea, was $125.85 per barrel on March 26, or $0.86 per barrel more than the previous price.

Some 73 percent of Azerbaijan's state budget revenue accounts for the proceeds which will be provided by the oil sector in 2012.

State budget revenues for 2012 are projected at 16.438 billion manat, where the share of revenues from the oil sector accounts for 12 billion manat.

In 2012, transfers from the State Oil Fund of Azerbaijan is expected to be 9.9 billion manat or 60.2 percent of total revenue of the budget.

Deductions for income tax of contracting companies working in the frame of oil and gas agreements, such as PSA, is forecasted at 810 million manat, and on consolidated taxes and other charges (excluding income tax) through SOCAR - 1 321.6 million manat.

Official exchange rate on March 28 is 0.7862 AZN/USD

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