Rising oil prices affects increase in AIOC's tax revenues to Azerbaijan's state budget

Oil&Gas Materials 27 April 2011 18:44 (UTC +04:00)

Azerbaijan, Baku, April 27 / Trend I. Khalilova /

The revenues to the Azerbaijani state budget for the tax on profits from the Azerbaijan International Operating Company (AIOC), exceeded 400 million manat in the first quarter, the government said.

AIOC is the operator developing a large block of Azerbaijani Azeri-Chirag-Guneshli fields, where Azeri Light oil is extracted.

"About 58 million manat were transferred to the state budget due to the balance from last year, while the remaining funds are received from the proceeds for the first two months of 2011," the government said.
Rising oil prices affected the increase in revenues from oil contractor companies, as the transferred tranches to the state budget were calculated from the oil price at $ 60 per barrel. The average price in December last year and January-February 2011 amounted to $95.5. The average oil price has already reached $106.8 in the first quarter.
"The actual income to the budget exceed the projected deduction," a government source said. "Taking into account the growth in oil revenues, the initial forecast for the AIOC, fixed for the current year to the amount of 600 million manat, is planned to be increased up to one billion manat within the forecasts of the budget-2011".
In 2010, AIOC's transfers were 741.1 million manat against the forecast of 650 million manat.
In 2009, remittances to the state budget in profit tax amounted to 513.2 million manat compared to the forecast of 1.23 billion manat (oil price was set at $45 per barrel). Remittances decreased by 76.1 percent or 1,636.2 million manat compared to 2008. In 2007, revenue from contractor companies exceeded 2.5 billion manat.
Decreasing in the forecast deductions on income tax for the AIOC in 2011 was explained by realizing a six billion Chirag oil project until 2013. But rising oil prices can increase the revenue to the state budget.
In total, 300 million barrels of oil are expected to be produced under the project (until the end of the contract on ACG in 2024).
ACG participating interests are: BP (operator - 37. 4 percent), Chevron (11.3 percent), SOCAR (10 percent), INPEX (11 percent), Statoil (8.6 percent), ExxonMobil (8 percent), TPAO (6.7 percent), ITOCHU (4.3 percent), Hess (2.7 percent).
In 2011, the volume of oil production is projected at 51.5 million tons per year. Of this amount, 43 million tons will fall to Azeri Light from the Azeri-Chirag-Gunashli and 8.5 million tons will be extracted by SOCAR in the onshore and offshore fields at its own expense.
Gas production in 2011 is projected to increase to 29 billion cubic meters, 18 billion cubic meters of which will be sold.
The official exchange rate is 0.7914 manat to $1.