SOFAZ pub­li­cizes its 2016 rev­enues

Azer News - - Business - By Kamila Aliyeva

Azer­bai­jan's sov­er­eign wealth fund SOFAZ recorded de­crease in the rev­enues from the hy­dro­car­bon sales in 2016 due to the low oil prices, while there was a sig­nif­i­cant in­crease in the rev­enues from the man­age­ment of the Fund’s as­sets.

The rev­enues ob­tained from the sales of Azer­bai­jan’s share of hy­dro­car­bons, the fees paid to the coun­try for the tran­sit of oil and gas through its ter­ri­tory, bonus pay­ments, acreage fees and rev­enues from the man­age­ment of SOFAZ as­sets recorded a to­tal of 9.4 bil­lion man­ats, or $5.8 bil­lion, reads the an­nual re­port pub­lished on the web­site of SOFAZ.

The amount of SOFAZ’s rev­enue gen­er­ated from the sales of profit oil and gas in 2016 equaled to 8.3 bil­lion man­ats, or $5.189 bil­lion. In ac­cor­dance with the Pro­duc­tion Shar­ing Agree­ments that reg­u­late oil pro­duc­tion both on­shore and off­shore, 98.3 per­cent of these rev­enues came from the sale of oil and gas ex­tracted from the Az­eri-Chi­ragGuneshli and Shah­d­eniz fields, ac­cord­ing to the re­port.

Around $5.1 bil­lion was at­trib­uted to Az­eri-Chi­rag-Guneshli while $63.98 mil­lion fell for the sales of the profit gas from Shah­d­eniz, the re­port said. The re­main­ing $24.9 mil­lion was earned from the sales of oil ex­tracted from the other oil­fields.

Other rev­enues were re­ceived from bonuses paid by in­vestors for sign­ing and ful­fill­ing oil and gas con­tracts, tran­sit fees and acreage fees.

SOFAZ’s ex­pen­di­tures in 2016 were equal to 9 bil­lion man­ats ($5.4 bil­lion). The big­gest share of the to­tal ex­pen­di­tures (84.4 per­cent) ac­crued to the an­nual trans­fer to the state bud­get, fol­lowed by ex­pen­di­tures on the SOFAZ funded state projects (15.4 per­cent) and SOFAZ’s ad­min­is­tra­tive ex­penses at (0.2 per­cent).

SOFAZ plays a sig­nif­i­cant role in fi­nanc­ing so­cial and in­fra­struc­ture projects. In 2016, SOFAZ’s as­sets were in­vested in fixed in­come, equities, real es­tate and gold. SOFAZ’s rev­enues from as­set man­age­ment to­taled $688.5 mil­lion, or 1 mil­lion man­ats, ac­cord­ing to re­port.

For in­stance, last year SOFAZ has spent $43.4 mil­lion (70 mil­lion man­ats) on the re­con­struc­tion of the Sa­mur-Ab­sheron ir­ri­ga­tion sys­tem.

The project aims at cre­at­ing a re­li­able source of water sup­ply for the ci­ties of Baku and Sum­gayit, pre­vent en­ergy losses in­curred from water trans­porta­tion and use this spare ca­pac­ity to pro­duce 25 MWt of en­ergy, as well as to boost the ir­ri­ga­tion and me­lio­ra­tion ca­pac­ity of Azer­bai­jan. The project, since its ini­ti­a­tion in 2006, has been funded by SOFAZ.

SOFAZ was es­tab­lished un­der the Pres­i­den­tial De­cree, dated De­cem­ber 29, 1999, "On Es­tab­lish­ment of the State Oil Fund of the Repub­lic of Azer­bai­jan".

The main pur­pose of the es­tab­lish­ment of the Fund was to pre­serve and mul­ti­ply the in­come de­rived from oil, cre­ate an ex­cel­lent eco­nomic base, tak­ing into ac­count so­cial needs, the re­quire­ments of eco­nomic progress and de­vel­op­ment of the coun­try. Be­sides, the chal­lenge ahead is to pro­tect the coun­try's econ­omy from pos­si­ble neg­a­tive in­flu­ences caused by the growth of for­eign ex­change earn­ings and avoid­ance of dam­age to fi­nan­cial dis­ci­pline.

The to­tal vol­ume of SOFAZ in­vest­ment port­fo­lio amounted to $33.2 bil­lion as of April 1, 2017, or 99.98 per­cent of to­tal as­sets.

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