Azerbaijan, Baku / Trend / The Coalition of non-governmental Organizations (NGO) at the Extractive Initiatve Transparancy Initiative (EITI) has publicized a report which notes a rise in capital expenses reducing the country's income.
Over the first 6 months of 2006 the beginning of oil production and the increase of oil revenue as compared to 2005, led to an increase in the sum of oil revenue.
Over the first 6 months of 2005 the share of oil revenue comprised 4.3mln barrels,over the first half-year of 2006 the sum doubled and made up 8,779mln barrels. Howoever, the coalition urges that this rise could be higher.
At present 30% of oil revenue fell on Azerbaijan, 70% on contractors. The rise in capital expenses leads to a rise in the share of oil revenue or 30% against 70% and 55% against 45%.
During this period oil lifted by the Azerbaijan International Operating Company (AIOC) to the volume of 8,779mln barrels was presented to the government as profit (approximately 12% of oil production), while SOFAR indicated this sum as $414.3mln.
More than half of the oil output was used to settle capital and exploitation expenses, whilst the balance 20.5mln barrels were the contractor's profit.
At the time of signing of the agreement, total expenses on the Azeri-Chirag-Guneshli projects (ACG) should not exceed $8bln, whilst now the expenses constitute over $14bln. Experts have explained this rise with the sudden increase in expenses for the repair of machines and equipment.