Finance Ministry told APA that incomes and expenses of state budget will be increased by AZN 600m, incomes will be raised up to AZN 17,038m, expenses – AZN 17,672m.

Extra revenues to the state budget are expected to provide by means of additional tax revenues on oil and non-oil sector of economy.

An appropriate draft law related to amendments in the state budget-2012 of Azerbaijan has been submitted by the President Ilham Aliyev to the Parliament.

Main point of the coming amendments – to complete works connected with elimination of damage inflicted as a result of the quake in northern-western area of the country, as well as to eliminate results of the large-scale disaster occurred in the territory of Sabirabad and Salyan regions of Kur-Araz rivers in 2010, to eliminate consequences of heavy rain, torrents and flood during current year in some region ad cities of the country (Saatli, Imishli, Neftchala, Hajigabul, Shirvan, Zerdab, Kurdamir, Salyan, Sabirabad, Shamakhy), prevent the supposed natural disasters and emergency situations, purchase of special vehicles and equipments for taking preventive measures, creation of additional financial provision for taking appropriate measures in landslide zones determined in several areas of Baku city, improve ecological and sanitarian situation, to implement the decree in military and security devices, and so on.

In the 1st quarter of 2012 the BP–led consortium Azerbaijan International Operation Company (AIOC) decreased oil production from contract field block Azeri-Chirag-Gunashli in the Azerbaijani sector of the Caspian Sea by 0.8% compared to the 2011 average level.

BP Azerbaijan informs that over the past quarter of 2012 the block produced on average 711,800 bpd against 717,600 bpd on average for 2011.

For the 1st half of 2011 it was produced 775,700 bpd and 823,100 bpd in 2010. As a result it was produced 8.8 million tons of oil for the 1st quarter of 2012 (64.8 million barrels) against 35.4 million tons of oil (261.9 million barrels) for 2011 and 300.4 million barrels (40.6 million tons) for 2010. In 2009 daily output at the block made 817,000 barrels on average which enabled to produce 40.3 million tons (298 million barrels).

The AIOC members are: BP (operator – 37.4%), Chevron (11.3%), SOCAR (10%), INPEX (11%), StatoilHydro (8.6%), ExxonMobil (8%), TPAO (6.7%), ITOCHU (4.3%), Hess (2.7%). The Agreement on ACG exploration and development was signed on 24 September 1994. Production of the first oil started in 1997.

abc.com

CESD: Amount of remittance was about $ 2 billion in 2011

The volume of individual money transfers from Russia and Azerbaijan made $955m in 2011. According to the Central Bank of Russia reports that the volume of individual transfers from Russia to CIS countries in 2011 reached $16.7bn which is 24% more than in 2010 ($13.5bn).

Uzbekistan with $4.9bn (28% growth) has become a leader for the volume of transfers of funds from Russia in 2011. It is followed by Ukraine – $3.1bn (+25.5%) and Tajikistan – $2.7bn (+26%).  The transfers to Kyrgyzstan made $1.4bn, Moldova-$1.6bn, Armenia-$1.2bn, Belarus-$458m, Kazakhstan-$290m, Turkmenistan-$22m last year.

CESD experts stated that amount of remittance from Russia to Azerbaijan is much higher than individual bank transfers; “The central bank data, in fact, significantly underestimate actual remittance inflows. The concern is most apparent because of sending via money transfer operators, therefore Central Bank of Russia flowing to Azerbaijan are 23 percent greater than the total amount of remittance inflows reported by the State Statistic Committee of Azerbaijan. According to Russian mass-media, amount of remittance from Russia to Azerbaijan is about $ 3 billion. Azerbaijan State Statistic Committee reported amount of remittance as $ 700 million. CESD survey, however, found that amount is remittance from Russia to Azerbaijan is as a minimum 2 times higher that the Central Bank reported amount. It means that amount of remittance is not less than $ 2 billion per year. More than 80 % of total remittances originate in Russia”.

CESD mentioned that remittance keep many families out of poverty. Remittances, however, are the hidden economy of Azerbaijan; there is no official accurate calculation.  Preliminary data indicate that the dollar remittance outflows from Russia increased of 20 percent in 2011. This shows a strong recovery after a decline in 2009. Despite the strong recover in 2011, remittances sent from Russia do still not reach the pre-crisis levels of 2008.

© CESD, 2012

Azerbaijan Produced 14,8 million ton oil and 6,0 billion cubic meters gas in the first four months of 2012. According to the State Statistical Committee 15,9 million ton and 8,4 billion cubic meters gas produce in the same period of 2011.

Oil output decreased 7,0 % in the first month of 2012, meanwhile the production in mining sphere of industry in January-April decreased by 5.3% compared to the same period of the last year.

Oil production also fell by 9.9% compared to March of the year. This year crude oil production by all producers in Azerbaijan totaled 110.16 million barrels against 338.467 million barrels in 2011, 379.224 million barrels in 2010, 375.807 million barrels in 2009 and 332.07 million barrels in 2008. In January it was produced 3.9 million tons, in February 3.539 million tons,  in March 3.847 million tons and in April- 3.468 million tons.

In 2011 the country was produced 45.37 million tons of oil that is by 11.5% less than production for 2010. In December 2011 the country was produced 3.165 million tons, and the highest production level was recorded last year in March – 4.104 million tons.

In 2010 oil production amounted to 50.8 million tons of oil, including 4.5 million tons in August (the best index for 2010). 42,5 million oil is forecasted to be produced in 2012.

© CESD, 2012

Partnership for Transparency is holding “Effective Ways to Tackle Corruption: What Makes a Difference?” workshop on May 21^st-23^rd, in Berlin, Germany. The workshop focuses on effective ways on fighting with corruption in Central and Eastern Europe. The theme of the workshop will be on cross-border lessons learned in the field of procurement and education.

Vugar Bayramov, chairman of CESD, attends the workshop as well. Dr. Bayramov will have presentation on effective ways to tackle corruption in oil sector.

The workshop program is available at here;Download the agenda here

The list of the workshop participants is available at here;Download CEE Workshop Group Lists Here

Fitch Ratings cut rating for the Azerbaijan Mortgage Fund under the Central Bank of Azerbaijan Republic (AMF) to Stable from Positive and affirmed its Long-term foreign currency and local currency ratings at ‘BBB-’, Fitch Ratings announced on May 22, 2012.

The rating action reflects the revision of Azerbaijan’s Outlook (see “Fitch Revises Azerbaijan’s Outlook to Stable; Affirms at ‘BBB-’” dated 11 May 2012 at www.fitchratings.com).

The Center’s monitoring revealed new facts

One m2 in the new office of the State Oil Fund of Azerbaijan (SOFAZ) will cost $ 9,0 thousand, and it is to be the most expensive project in Baku. These are the results of monitoring of the consumption of funds for the new construction conducted by Center for Economic and Social Development (CESD) with support from Partnership for Transparency (PTF).

According to the monitoring, the total area of the 23-storied SOFAZ building is 13,0 thousand m2. The preliminary estimated cost of the project, whose general contractor is a Belgian company NV Besix SA, is valued at 88 million manat ($ 113,0 million). Other interesting fact is that minimum number companies (only three companies) participated at the SOFAZ tender. They are Arabtec Construction LLC (UAE), N.V. Besix S.A (Belgium) and Adolf Lupp Gmbh+ CO KG (Germany).

State Oil Fund paid to İnter Art Etudes 26 million euro only for preparing construction financial documents which is several times higher than international standard costs. No explanations have been done by SOFAZ related to such huge amount payment.  There is also discrepancy at SOFAZ reports. SOFAZ has early reported only 14,0 million manat ($ 18,0 million or 14,3 million Euro) paid for preparing financial assessment then later the fund announced that 26 million euro spent for this job.

The monitoring also revealed a number of breaches of tender regulations. Moreover, it was found that in 2010, when the contractor still had not been selected, 20 million manat ($ 26 million) was allocated, of which 7 million manat ($ 9 million) was spent on a purpose not clarified.

In addition, CESD found that the remaining 13 million manat ($ 17 million) was simply “missed”.

According to Leila Aliyeva, the head of the monitoring group at the CESD, the center attempts to find answers to these questions and further monitoring will be conducted.

© CESD, 2012

Government of Azerbaijan (GoA) has failed to achieve projected economic growth forecast for the first four month of 2012. According to the State Statistic Committee Gross Domestic Product  (GDP) increased only by 0.3 % and 16,6  billion manat ($ 21,3 billion) GDP generated in this period although th GoA projected 5,7  % growth for this year.  GDP per capita was $ 6,0 thousand in the first four months of 2012.  According to State Committee inflation rate was 2,7 % in this period which officially projected 6,0 %… Download Full Report Here

The share of crude oil in Azerbaijan’s overall export made up 86.29% against 86.62% in 2011, 86.53% in 2010 and 81.57% in 2009. In the first quarter of 2012 oil export grew by 6.76% versus last year’s same term.

The State Customs Committee (SCC) informs that for Jan-Apr 2012 the country’s oil export reached 12.086 million tons (5.989 million tons in April is still the best index of the year) of oil (data of controlling and measuring appliances) and cargo custom declarations recorded only 8.36 million tons for $7.277 bn, i.e. 69.18% of overall export. This April 2.38 million tons of oil for $2.258 bn passed customs registration. Average export price of Azeri oil, according to customs statistics, still makes up $870.29 per ton in 2012, including $947.27 per ton in Apri.

For Jan-Apr 2012 it was carried 9.527 million tons via Baku-Tbilisi-Ceyhan (BTC) named after Heydar Aliyev, 1.46 million tons via Baku-Supsa pipeline, 648,981 tons via Baku-Novorossiysk pipeline and 348,555 tons by rail via Baku-Batumi route.

Over 2011 the country’s oil export reached 37.45 million tons of oil (data of controlling and measuring appliances) and cargo custom declarations recorded only 27.825 million tons for $22.911 bn, i.e. 74.3% of overall export. Average export price of Azeri oil, according to customs statistics, made up $823.39 per ton in 2011.

Over 2011 the country’s oil export reached 37.45 million tons of oil (data of controlling and measuring appliances) and cargo custom declarations recorded only 27.825 million tons for $22.911 bn, i.e. 74.3% of overall export. Average export price of Azeri oil, according to customs statistics, made up $823.39 per ton in 2011.

In 2011 it was carried 30.658 million tons via Baku-Tbilisi-Ceyhan (BTC) named after Heydar Aliyev, 3.812 million tons via Baku-Supsa pipeline, 1.996 million tons via Baku-Novorossiysk pipeline and 982.801 tons by rail via Baku-Batumi route.

In 2010 the country exported 31.86 million tons of crude oil for $18.45 million versus 27.829 million tons for $11.989 million in 2009.

By 1 January 2011 the pipelines pumped (data of controlling and measuring appliances) 4.414 million tons of oil (including 3.066 million tons in December) against 41.29 million tons in 2009 and carried 1.24 million tons (70,626 tons) by rail against 1.399 million tons.

It was pumped 2.247 million tons out of the total transportation via Baku-Novorossiysk oil pipeline in 2010 (against 2.48 million tons in 2009), 35.18 million tons (34.57 million tons) via BTC, 3.985 million tons (4.235 million tons) via Baku-Supsa oil pipeline.

In 2008 the average export price of Azerbaijani oil reached $565.67 per ton (including $373.89 per ton in December of that year), in 2009 – $430.83 per ton ($547.66 per ton in December), in 2010 – $579.19 per ton ($630.18 per ton). In 2011 the average export price was $683.65 per ton.

For Jan-Apr 2012 overall export from Azerbaijan totaled $8.4 bn.

Azerbaijan’s sovereign-credit grade outlook was cut by Fitch Ratings because the Caspian Sea nation raised spending as oil output declined.

Fitch lowered its outlook to stable from positive, reaffirming its BBB- rating, the lowest investment grade and on a par with Iceland, Latvia and Croatia. Moody’s Investors Service and Standard & Poor’s have both assigned Azerbaijan their minimum investment ratings.

“The general government increased spending by more than expected in 2011 and oil production fell unexpectedly sharply,” Charles Seville, director of Fitch’s sovereign team, said today in an e-mailed statement from London. “At the same time, the agency recognizes that the sovereign balance sheet continues to strengthen, and that the general government is running substantial surpluses.”

Azerbaijan is the former Soviet Union’s third-largest oil producer, with foreign companies such as BP Plc among investors in its energy industry. Output decreased to 45.6 million tons last year from 51 million tons in 2010.

While production stabilized in the first quarter from the previous three months, it won’t recover to its 2010 peak of 1 million barrels a day before 2014, Fitch said. Output is more volatile than in other oil-producing nations with similar credit grades such as Russia and Kazakhstan, both rated BBB, it added.

A political shock, either domestic or external, may put downward pressure on Azerbaijan’s ratings, Fitch said, adding that “extra-parliamentary opposition to the government, although minor, has been on an upswing.”

Fitch cut SOCAR’s rating as well

Azerenerji’s ratings are aligned with the Republic of Azerbaijan (‘BBB-’/Stable/’F3′) reflecting strong legal, strategic and operational ties with the government of Azerbaijan. At YE11 87.1% of the company’s debt was guaranteed by the government.

Fitch previously de-aligned the ratings of SOCAR from those of Azerbaijan at a hypothetical sovereign rating level above ‘BBB-’, largely due to the relatively insignificant direct government guarantees for SOCAR’s debt. At the current ‘BBB-’ sovereign rating level, Fitch assesses government ties with SOCAR as strong. Fitch continues to view SOCAR’s standalone business and financial profile as commensurate with the ‘BB’ rating category.

The rating actions are as follows.

OJSC Azerenerji (Azerenerji):
Long-term foreign currency IDR: affirmed at ‘BBB-’; Outlook revised to Stable from Positive
Short-term foreign currency IDR: affirmed at ‘F3′

State Oil Company of the Azerbaijan Republic (SOCAR):

Long-term foreign currency IDR: affirmed at ‘BBB-’; Stable Outlook
Short-term foreign currency IDR: affirmed at ‘F3′;
Senior unsecured rating: affirmed at ‘BBB-’