Azernews.Az

By Aynur Jafarova

The budget revenues of Azerbaijan's state oil fund SOFAZ exceeded 6.493 billion manats in the first half of 2014.

SOFAZ's budget expenditures amounted to over 5.163 billion manats in the mentioned period

"The revenues gained from the implementation of oil and gas agreements amounted to over 6.374 billion manats, including over 6.335 billion manats from the sale of profit oil and gas," SOFAZ said on July 21.

The fund transferred over 4.883 billion manats to the state budget in the reported period.

The fund's extra-budgetary revenues related to the revaluation of foreign exchange totaled 6.5 million manats, and extra-budgetary revenues related to the price change of gold amounted to 78.1 million manats.

SOFAZ also said around 51.7 percent of its total investment portfolio was concentrated in U.S. dollars (around $19.4 billion) in the first half of 2014.

SOFAZ noted 35.4 percent of its investment portfolio is concentrated in euro (9.74 billion euro), 5.3 percent in British pounds (1.17 billion pounds), 1.2 percent in Turkish lira, 0.5 percent in Australian dollars, 1.3 percent in Russian rubles, and 1.2 percent in Korean Won.

The remaining part of the portfolio (3.4 percent, or about $1.3 million) is concentrated in gold.

Since the first quarter of 2012, the fund has started purchasing gold. The amount of the purchased gold stood at 30 tons 175 kg (970,146 ounces) as of July 1.

The assets of SOFAZ increased by 4.86 percent as of July 1, 2014 compared to early 2014 reaching to over $37.622 billion.

SOFAZ has continued its policy in the reported period to place its investment portfolio in short-term tools.

The share of funds invested for a period of up to five years covers 84.4 percent of the fund's investment portfolio in January-July 2014.

The total volume of the fund's investment portfolio amounted to around $37.55 billion, or 99.8 percent of the total volume of its assets in the reported period.

SOFAZ also noted 54.2 percent of the investment portfolio was concentrated in securities for a period of up to one year, 28.4 percent from one to three years, 1.8 percent from three to five years, 4.7 percent for a period of more than five years, and 10.9 percent in real estate, stocks, and gold.

SOFAZ, an entity that accumulates and manages Azerbaijan's oil and gas revenues, was established in 1999 with assets worth $271 million.

The main purposes of the fund are accumulation of funds and placement of assets abroad to minimize negative impacts on economy, prevention of the 'Dutch disease', ensuring savings for future generations, and maintaining the current social and economic standards in the country.

SOFAR assets are placed partly in securities, money market instruments (deposits, bank accounts).

The assets of the fund have been invested in various places: 55.18 percent of assets was invested in the European countries, 19.56 percent in North America, 12.33 percent in the Asia-Pacific region, 1.05 percent in the Middle East, 5.03 percent in South America, 6.84 percent in international financial institutions, and 0.01 percent in Africa.

According to SOFAZ's investment strategy, up to five percent of the investment portfolio may be invested in stock, up to five percent in real estate and up to five percent in gold.

Earlier SOFAZ purchased Gallery Actor, a mixed-use office and retail complex located on Pushkin Square in Moscow for $133 million, an office complex in London's West End for £177.35 million and a property in Paris for €135 million, and Pine Avenue Tower A worth $447 million in Seoul.

Singapore, Malaysia, Japan and China, as well as Australia are being considered as the countries where SOFAZ can buy more real estate.