Weekly economic review (Dec.22-26)
SOCAR announces losses with oil price at $60 per barrel
The losses of SOCAR (The State Oil Company of Azerbaijan Republic) can reach about 400 million AZN, if the prices for oil in 2015 remain at the level of $60 per barrel, SOCAR Vice President for Economic Affairs Suleyman Gasimov said at a press conference.
He said that SOCAR doesn't feel a strong impact from the fall of world oil prices due to the fact that the most part of oil and gas extracted by the State Oil Company is directed to ensure the country's domestic demand and is sold at a fixed price set by the state.
"If the price for oil on the world markets remains at the level of $60 per barrel, while the price set by the state budget of Azerbaijan is $90, the losses of the State Oil Company from this difference are expected to reach 400 million AZN, according to the calculations of our experts," he said. "That's a big difference for the State Oil Company, but not a serious one. These losses may be covered by regulation of other costs."
Gasimov said that the average prime cost of oil extracted by SOCAR is about 90-100 AZN per metric ton, and it is about $15 per barrel if converted to barrels. Export volumes of the company are very small, and the extracted oil is mainly directed at providing domestic needs, he said.
Speaking about the impact of oil prices on revenues of SOCAR within the framework of the equity share in the PSA-contracts, Gasimov said that this percentage was low.
"If the annual dividends from the development project of the Azeri-Chirag-Guneshli block accounted for approximately $300-400 million, this figure can be reduced by about a half," said vice-president of SOCAR. "We are not afraid of it much from this point of view."
In addition, he said that the realization of the projects goes on and financing of projects within the framework of the Southern Gas Corridor will be provided.
It is reported that February futures for Brent oil on the London ICE Futures Exchange fell at the closure by $1.45 (2.3 percent) - to $60.24 per barrel.
Futures price for WTI oil for February at the auction of the New York Mercantile Exchange fell on the results of Dec.24 by $1.28 (2.24 percent) - to $55.84 per barrel.
It is also reported that since the beginning of the year, the world oil prices fell more than by 43 percent.