Contracting companies in Azerbaijan provide 66 percent of annual forecast for profit tax

Azerbaijan, Baku, Aug. 18 / Trend I.Khalilova /

Proceeds from profit tax expense in the Azerbaijani State Budget from Azerbaijan International Operating Company (AIOC) in the second quarter of 2012 amounted to 423.5 million manat, the country's government told Trend on Saturday.

AIOC is the operator to develop the large block of Azeri-Chirag-Guneshli Azerbaijani fields, where Azeri Light oil is produced.

"Because of high oil prices, state revenue from contractor companies exceeded expectations, even in spite of the decline in oil production in the country. During the second quarter the average price on Azeri Light oil was $120 per barrel, though the price forecast of oil in the state budget was set at $80 per barrel of oil," the source said.

In the first quarter, the average price on Azeri Light oil was $113 per barrel, while revenues from contracting companies have reached 420 million manat compared to expectations of 200 million manat.

Tax profit allocations through the AIOC in the first half of 2012 amounted to 843.5 million manat, exceeding initial revenue forecast for the full 2012, which was set at 810 million manat.

As a result of the adjustment of the Azerbaijani State Budget for 2012, forecast for oil price in the second half of the year increased from $80 to $100 dollars per barrel. Accordingly, the revenue forecast for the AIOC increased by 470 million manat to 1.28 billion manat.

Over the past year the company has paid to the state budget 1.315 billion manat (with an average price of $114.2 per barrel).

AIOC allocations for profit tax in 2010 amounted to 741.1 million manat, in 2009 - 513.2 million manat, in 2008 - 2.149 billion manat, in 2007 - more than 2.5 billion manat.

The favorable situation in the world oil market allows for quite a long time to keep the price of Azerbaijani oil to the level of more than 40 percent above the price. Therefore, even with a reduction in oil production [in the first half the decline was 6.8 percent, according to State Statistics Committee], Azerbaijan got from selling more than expected to receive.

According to forecasts, in 2012 Azerbaijan expects to produce about 45 million tons of oil (900,000 barrels per day). In the first half of the year Azerbaijan produced 22.16 million tons of oil and condensate.

In 2011, Azerbaijan produced 45.37 million tons compared to 50.83 million tons in 2010. The bulk of oil in the country falls to the Azeri-Chirag-Guneshli block of oil and gas fields and Shah Deniz gas condensate field, which are developed in cooperation with foreign partners.

Gas production this year is projected at 27-28 billion cubic meters. Gas production in January-June this year in the country amounted to 8.84 billion cubic meters, which is 8.2 percent more than the same period last year.

In 2011, the country produced 25.7 billion cubic meters of gas compared to 26.23 billion cubic meters in 2010.

ACG participating interests are: BP (operator - 35.8%), Chevron (11.3%), SOCAR (11.6%), INPEX (11%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), ITOCHU (4.3%), Hess (2.7%).

The official exchange rate is 0.7854 AZN to $1 on Aug. 18.

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