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Century’s Contract’s 14 th Anniversary & Transparency Initiative in Oil and Gas Industry. Gubad Bayramov EITI Azerbaijan NGO Coalition September 19, 2008. Talking about…. Role of oil in the whole economy ; Public opinion on this ; CSO concerns on : Risks in depositing oil revenues ; - PowerPoint PPT Presentation
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Century’s Contract’s 14th Anniversary & Transparency
Initiative in Oil and Gas Industry
Gubad BayramovEITI Azerbaijan NGO Coalition
September 19, 2008
Talking about…
1. Role of oil in the whole economy;
2. Public opinion on this;
3. CSO concerns on:
I. Risks in depositing oil revenues;
II.II. Outcomes of absence of disaggregated Outcomes of absence of disaggregated reportingreporting;;
III.III. Conflicting moments in profit share schemeConflicting moments in profit share scheme
Volume Oil Production (million of tones)
2000
14
2002
15,3
2003
15,4
2004
15,5
2005
22,2
2006
32,3
2007
41,7
2008 2009 2010 2011
Total production,
Mln. ton
52.131 61.011 63.395 62.804
AIOC 43.381 52.311 54.745 54.204
SOCAR 8.750 8.700 8.650 8.600
oil production in 2008/11
Source: MOED
2010-2020- what’s next in this tendency?
• Staring from 2010 oil production in Azerbaijan will start decreasing.
• If the volume of production in 2009 will be 420 million barrels, in 2010 this figure will be 410 and in 2015 even 250 million barrels. 2020 figures will be 110 million barrels.
Volume of incomes, millions of barrels
2005 2006 2007
Total incomes 2.736 3.676 5. 914
Total expenditures 2.617 3. 673 5.748
Years 2001 2002 2003 2004 2005 2006 2007 2008
State Oil Fund incomes (mln. AZN)
222 294,8 363,98 322,86 660 985,9 1886,2 10 144,7
State Oil Fund expenditures (mln. AZN)
0,812 86,8 236,02 147,24 233 981,3 1061,2 4, 380 8
Azerbaijan Oil Production
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Millio
n T
on
s
Old Oil Early Oil ACG Phase 1 ACG Phase 2 ACG Phase 3 Shah Deniz Condensate New Oil
Oil factor in industry, figures of last 3 years
58,860,3
50,5
80,6
0102030405060708090
100
ÜDM Dövlətbüdcəsi
İnvestisiyalar İxrac
2005
2006
2007
Survey results among 500 people (financial support of Norway
embassy)
Accessibility information on oil revenues
12%
67%
5%
16%
obtain sufficient information
obtain some information
cannot obtain any information
are not interested in the process
Sources for access to information
8.28%
4.16%
4.16%
4.16%
12.40%
66.84%
Other sources
inofficial structures
internet
radio
newpapers
TV
Do people feel oil revenue impacts in their lives?
• Only 33.28% of respondents mentioned more or less impacts from oil revenues in their lives. 16.64% of them mentioned about positive impacts, the other 16.64% mentioned on little impact. 55.08% stated that the impact is felt through huge construction works only. And 12.48% told they did not have any feeling of an oil country, oil revenues and their spending.
To what extend efficient oil expenditures are?
• 8.3% of respondents thought they were efficient. 41.6% were partially satisfied, while 24.96% expressed great concern and dissatisfaction on oil revenue spending. 21.8% told they had no information on this data and 4.16% were totally not interested in the ongoing process.
Whom should oil revenue management be relied to?
• 87.36% wanted only official structures deal with this. 45.76% of them relied on president only. 29.12% of respondents mentioned State Oil Fund, 12.48% Parliament and 12.48% government.
• 8.32% mentioned NGOs and 4.16% political parties.
Coalition’s activities plan for 2008
• Establishing transparency and accountability assessment of oil companies;
• Advocating on disaggregated reporting by companies;
• Law on State Oil Fund;
• Recommendations on efficiency of oil revenue spending;
• Investigation on non-oil/gas EITI in Azerbaijan;
• EITI assessment in Azerbaijan and report.
Concerning issuesConcerning issues
I. Impacts of international financial crisis
• Bear Stearns
• Societe Generale
• Fannie Mae
• Freddie Mac
• Lehman Brothers
Regions with oil money deposits
Regions Million USD Share %
Europe 1,473.49 44,57
America 1,631 49,37
Asia 138,09 4,18
Others 62,25 1,88
State Oil Fund partners
• Barclays Bank Plc (UK) • BNP Paribas (France) • Deutsche Bank (Germany) • Dresdner Bank (Germany) • JP Morgan Bank (US) • HSBC (UK) • Royal Bank of Skotland (UK) • UBS AG (UK) • Hypovereinsbank AG (Germany)
Depositing Oil Money
• 75.5% of State Oil Fund actives are deposited into securities. According to the information of April 1, the amount of this deposits is around 2.5 billion USD.
• According to April 1 information, 244.3 million USD was given to management. 45.1% of this is held by WB, 34.45% to Deutche Asses Management, 20.45% to Clariden Leu.
• Annual income rate of State Oil Fund is less than 4%.
II. Company Attitude towards Disaggregated Reporting
• Companies that agree:
• 1) Middle east petroleum
• 2) Binagadi oil company
• 3) BP
• 4) Shell
• 5) Statoil-Hydro
II. Company Attitude towards Disaggregated Reporting
Companies agreed under condition (if all companies agree) :
• 1) Hess (ACG) Limited
• 2) SOCAR
Hasn’t replied yet:
• 1) Lukoil
II. Company Attitude towards Disaggregated Reporting
Disagreeing companies:• 1) Karasu operating company• 2) Petro-HongKong-Pirsaat Oil Limited• 3) Azgerneft• 4) Commonwealth• 5) Itochu oil exploration (Azerbaijan) Inc.• 6) ExxonMobil• 7) Devon• 8) Chevron• 9) Total• 10) Rafi Oil FZE• 11) Shirvan Oil• 12) Anshad petrol• 13) Apşeron Operating
III. Profit share scheme
Share of Azerbaijan Share of subcontracors
30 70
55 45
80 20
According to information above, share of Azerbaijan Government in 2003-07 was 30%, in first half of 2008 55% and in the second 80%№ dnf\5\1 -929 August 13, 2008
Zero balance dateOperational expenses Capital expenses Total expenses
1995 140
1996 416
1997 619
1998 131 467 598
1999 107 212 319
2000 91 158 249
2001 81 248 329
2002 88 1172 1260
2003 90 2104 2194
2004 90 2491 2781
2005 154 2711 2865
2006 234 2477 2711
2007 445 2822 3267
2008 (forecast) 611 1926 2537
Final 2122 16788 20285
CSO calculations
Incomes from oil revenue sell
Incomes from oil revenue sell (in natural mean),
mln barrels
Oil export of AIOC (mln bar)
Capex+opexmln $
Share of Azerbaijan from oil sell
(%-lə)
20071675 mln. AZN
$1970 mln30,349 217,2 3267 13,9
2006896,6 mln. AZN
$1005,4 mln19,03 155,1 2711 12,3
2005542,6 mln. AZN
$579,9 mln14,3 97,6 2865 14,6
2004258,9 mln. AZN
$263,8 mln6,7 50,6 2781 13,2
2003173,8 mln. AZN
$176,9 mln6,6 47,3 2194 13,9
Thanks a lot!
44 Jafar Jabbarly, Caspian Plaza 3, Baku, Azerbaijan AZ1065
Phones: (+99412) 437 13 20Fax: (+99412) 437 32 40web-site: www.eiti-az.orge-mail: [email protected]