NGOs assess energy sector transparency
The Coalition of Public Unions on the Extractive
Industries Transparency Initiative (EITI) has released its regular
report on payments made to the government by companies operating in
Azerbaijan`s energy sector. This is the ninth such report and it
covers the first six months of 2008.
Coalition experts concluded that the reporting period overlaps in time with a very important stage. Thus, it is this period that saw a change in the proportions of the division of oil profits between the state and foreign energy companies in the historic 1994 agreement on tapping Azerbaijan`s major Azeri-Chirag-Gunashli (ACG) fields in the Caspian Sea, which is referred to as the Contract of the Century. Thus, whereas the state companies proportion was 30:70 in 2003-2007, it changed to 45:55 beginning in 2008, and made up 80:20 in the second quarter of last year.
In addition to that, contributions from the development of the country`s major offshore gas-condensate field Shahdaniz gradually increased in the first half of 2008.
It is remarkable that due to these factors, overall transfers to the state from the oil and gas sector companies surged in comparison with the same period in the previous year. Thus, whereas Azerbaijan`s share in the production of profit oil from the ACG contract area was around 30.3 million barrels in the first six months of 2007, the figure more than doubled in the first half of 2008 to hit 65.7 million barrels.
At the same time, the report shows a tendency for a decreasing share of foreign oil and gas companies in the output of oil profits and their payments to the state reduced accordingly. Whereas they transferred some 1.942 billion manats ($2.4 billion) in profit taxes to Azerbaijan in January-June 2007, the indicator made up 1.296bn manats ($1.6bn) during the same period of 2008.
Coalition experts concluded that the reporting period overlaps in time with a very important stage. Thus, it is this period that saw a change in the proportions of the division of oil profits between the state and foreign energy companies in the historic 1994 agreement on tapping Azerbaijan`s major Azeri-Chirag-Gunashli (ACG) fields in the Caspian Sea, which is referred to as the Contract of the Century. Thus, whereas the state companies proportion was 30:70 in 2003-2007, it changed to 45:55 beginning in 2008, and made up 80:20 in the second quarter of last year.
In addition to that, contributions from the development of the country`s major offshore gas-condensate field Shahdaniz gradually increased in the first half of 2008.
It is remarkable that due to these factors, overall transfers to the state from the oil and gas sector companies surged in comparison with the same period in the previous year. Thus, whereas Azerbaijan`s share in the production of profit oil from the ACG contract area was around 30.3 million barrels in the first six months of 2007, the figure more than doubled in the first half of 2008 to hit 65.7 million barrels.
At the same time, the report shows a tendency for a decreasing share of foreign oil and gas companies in the output of oil profits and their payments to the state reduced accordingly. Whereas they transferred some 1.942 billion manats ($2.4 billion) in profit taxes to Azerbaijan in January-June 2007, the indicator made up 1.296bn manats ($1.6bn) during the same period of 2008.
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