Azerbaijan, Baku / Trend corr I. Khalilova / Developing forecasts for the 2008 public budget will depend on defining taxation peculiarities of the Azerbaijani International Operating Company (AIOC), which is developing the Azeri-Chirag-Guneshli field, Azerbaijani Deputy Finance Minister, Azer Bayramov, has reported. "The situation depends on the price for oil in the first half of the year. Therefore, the position of the government on taxation of AIOC will be evident in the beginning of August," he said.
Changes in the tax system provide for changes in division of profit of oil that is in the coefficients of the R-factor. Today, oil profits are divided in the ration of 30% (transferred to the State Oil Company of Azerbaijan Republic - SOCAR) to 70% (divided among contractor companies). However, the ratio can change to 55% and 45% or even to 80% and 20%, Bayramov noted.
Given the rise in the price of oil, repayment of foreign investments is occurring very rapidly. The main funds, therefore, are expected to be equated with zero as soon as 1 January 2008. The forecasts are related to expectations on an increase in oil price up to $80 per barrel.
Accordingly, in the first quarter of 2008, oil profits are expected to be divided with the ratio of 55% and 45% and beginning from the second and the third quarter of 2008, SOCAR will receive 80% from the profit oil and 20% will go to other contract companies included in the AIOC.