SOCAR comments on impact of decline in world oil prices on its revenues

SOCAR comments on impact of decline in world oil prices on its revenues

Baku, Azerbaijan, Sept.15

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It is not right to talk about the impact of the short-term decline in world oil prices on the annual rates of SOCAR (State Oil Company of Azerbaijan) revenues, the head of SOCAR Rovnag Abdullayev said Sept.15, commenting on the fall in oil prices and its impact on company earnings.

"The situation is normal and all these processes are always taken into account in the forecasts," Abdullayev said.

Last week, considering the expectations of an escalation of the conflict in the Middle East, the price of a barrel of Brent on the London Stock Exchange went down to $97.

The world market price of oil has fallen for the third consecutive month.

In a couple of months the price of oil on the world market may fall to $85 per barrel, according to experts.

Considering the events in Ukraine, in spring the United States increased their supply of oil to the world market. At the same time the international sanctions against Iran for the supply of energy resources have been removed. Therefore, the price of oil began to decline and this process accelerated in summer. In the last three months the price has decreased by about 10-15 percent, as shown by the International Organization of Oil Exporting Countries (OPEC).

The average price on AZERI LT, exported from Azerbaijan via the Ceyhan, Batumi and Supsa ports to Italian Augusta port, was $99.04 per barrel Sept.8-12, which is $3.27 less compared to the previous week.

The average price on Urals (Ex-Novo) exported from Azerbaijan via the Novorossiysk port was $95.51 per barrel, which is $3.55 per barrel more compared to the previous week.

The average price on Brent Dated was $97.2 per barrel, which is $3.46 per barrel less compared to the previous week.

Revenues from the sale of SOCAR oil in 2013 amounted to 25.32 billion AZN compared to about 10.13 billion AZN in 2012.

Oil revenues are indicated by deduction of related tax (30 percent) of the price margin arising between the world market price of oil and the domestic price regulated by the state, according to the consolidated statement of financial activities of SOCAR in the past year, audited by the Ernst & Young.

Last year, the total revenues of SOCAR amounted to 38.43 billion AZN, compared to 17.14 billion AZN in 2012.

Some 8.95 billion AZN (3.32 billion AZN in 2012) fell on the earnings from the sale of oil and 1.85 billion AZN (2.03 billion AZN in 2012) - on the petrochemical products of the total revenue volume, according to the report

SOCAR includes Azneft producing oil and gas on land and sea, Azerkimya chemical industry and Azerigas production associations. In addition, the State Oil Company has a number of processing enterprises, service enterprises, institutions involved in geophysical and drilling operations.

SOCAR is the only oil producer in Azerbaijan (it has two refineries on its balance), and also owns petrol stations in Azerbaijan, Georgia, Ukraine, Romania and Switzerland. SOCAR is a co-owner of the largest Turkish petrochemical complex Petkim and other assets in Turkey.

The official exchange rate for Sept. 15 is 0.7843 AZN / USD.

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