Rise in oil prices increases profit tax payments from contract companies in Azerbaijan

Oil&Gas Materials 31 January 2012 20:52 (UTC +04:00)

Azerbaijan, Baku, Jan.30 / Trend I.Khalilova /

The Azerbaijani government specifies payments from profit tax to the Azerbaijani state budget from the Azerbaijan international operating company (AIOC) in 2011, which amounted to 1.315 billion manat, the country's government told Trend on Monday. The rest of the money for the fourth quarter was received by the state budget in Jan, 2012.

"Payments for the last quarter of 2011 amounted to 291 million manat, accordingly, total Payments from the AIOC in 2011 amounted to 1.315 billion manat (not counting the remainder for the fourth quarter of 2010, which amounted to 236.4 million manat)," the government said.

In connection with continuing rise in oil prices and as a result of correction of forecast of the state budget for 2011, plan on payments from tax profit for the AIOC was increased from 600 million manat to 1.05 billion manat. Oil price forecast was also increased from $60 to $80 per barrel.

Average price for Azeri Light oil was $114.2 per barrel in 2011.

The AIOC is operator on the development of large block of 'Azeri-Chirag-Guneshli' Azerbaijani fields where Azeri Light oil is produces.

In the first quarter of 2011 payments from the AIOC amounted to 404.6 million manat with average oil price at $106.8 per barrel, in second - 360.6 million manat with oil price at $95.5 and third - 506.8 million manat.

Favourable state of the world oil market allows for long time to keep price of Azerbaijani oil at over 40 per cent higher that set in the state budget for 2011.

That's why even with the decrease of oil and gas production Azerbaijan received more revenues from their sale than expected to receive. Only in the first quarter of 2011 additional revenues of the Azerbaijani State Oil Fund amounted to 976.4 million manat against expected 193.5 million manat. As result of this, the fund's assets increased by $10 billion last year.

Payments of the AIOC on the profit tax amounted to 741.1 million manat in 2010 against expected 650 million manat and to 513.2 million manat in 2010 against expected 1.23 billion manat with oil price forecast at $45 per barrel. Proceeds decreased by 76.1 per cent, or by over 1.636 billion manat compared to 2008. Payments from the contract companies exceeded 2.5 billion manat as of 2007.

Decrease of forecast on payments from tax profit from the AIOC (initial forecast was at 600 million manat) accounted to implementation of 6 billion Chirag oil project till 2013, however rise in oil prices allows to increase payments to the budget. Forecast of payments from the AIOC is 810 million manat in 2012.

Under the project's implementation (until the end of ACG contract in 2024) it is planned to produce over 300 million barrels of oil.

Participants of the project to develop Azeri-Chirag-Guneshli are: BP (operator - 35.83 percent), Chevron (11.27 percent), Inpex (10.96 percent), AzACG (11.6 percent), Statoil (8.56 percent), Exxon (8 percent), TPAO (6.75 percent), Itocu (4.3 percent) and Hess (2.72 percent).

Volumes of oil production in Azerbaijan are estimated to be about 46 million tons in 2012 against 45.4 million tons in 2011.

Volumes of gas production are estimated to be about 28.3 billion cubic meters in 2012 against 25.7 billion cubic meters in 2011.

The official exchange rate is 0.7864 AZN to $1 on Jan.31.