SOFAZ publicizes its 2016 revenues
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.