Favorable situation in world oil market allows AIOC to master 73 percent of annual income tax forecast
Azerbaijan, Baku, Aug. 4 / Trend I. Khalilova /
The revenues to the Azerbaijani state budget for the tax on profits from the Azerbaijan International Operating Company (AIOC), hit 360.6 million manat in the second quarter, the government said.
AIOC is the operator developing a large block of Azerbaijani Azeri-Chirag-Guneshli fields, where Azeri Light oil is extracted.
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 favorable situation in the world oil market has allowed Azerbaijan to retain oil costs at above 80 percent for an extensive period, compared to the price set by the state budget for 2011 at $60 per barrel.
While reducing the oil and gas volumes, Azerbaijan received more funds from sales than was expected. SOFAZ's additional revenues amounted to 976.4 million manat in the first quarter of 2011, compared to the planned 193.5 million manat.
As the state budget has already received 765.2 million manat for two quarters, the government does not exclude the probability of exceeding the actual revenue forecast.
On Aug.1, the price of AZERI LT CIF Augusta was $119.84 per barrel or $0.09 per barrel more, compared to the previous day's price, according to the State Oil Company of Azerbaijan (SOCAR), which has produced Light Oil since 1997.
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 and to the Georgian port of Batumi by railway.
AZERI LT FOB Ceyhan oil price was $119.02 per barrel, or $0.09 per barrel higher than the previous day's price.
Azerbaijan exports URALS oil from the Novorossiysk port, which is delivered via the Baku-Novorossiysk pipeline. The high quality Azerbaijani oil, including Azeri Light, is blended with other oil brands in the Russian pipeline system and is sold from the Novorossiysk Port as URAL.
The price of URALS (EX-NOVO) was $113.41 per barrel, or $0.35 per barrel higher than the previous price.
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 600 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.