Oil exec expects no fallout from global financial crisis
The tumbling of financial markets worldwide will have no impact on
the revenues of Azerbaijan`s State Oil Fund (SOFAR) and the
projection on earnings will even be exceeded, SOFAR`s executive
director has said.
Shahmar Movsumov said that, although the crisis has dealt a major blow to the budgets of many countries, Azerbaijan`s currency reserves are far from being affected by such risks. He emphasized that, in the wake of the crisis, many major companies and financial groups, which have been in business for 100 to 150 years, are facing tension, and some of them are on the brink of bankruptcy, but these developments have had no impact upon Azerbaijan`s assets.
"Azerbaijan`s oil fund, as always, is exercising a very conservative approach in managing its assets, and we are placing funds in highly-rated securities. The demand for them rises at a time of crises, and they start appreciating. Even if it sounds bad, SOFAR is benefitting from this."
According to Movsumov, the fall in crude prices on world markets below $100 a barrel has justified the conservative approach in drafting the Fund`s budget. Whereas the oil price was set at $50 a barrel in drafting the state budget in 2007, it was envisioned at $70 this year.
Movsumov said SOFAR`s revenues will increase 30% to reach $13 billion by the end of 2008.
He said the recent explosion on the Turkish section of the BTC pipeline pumping crude to world markets has affected the fund`s revenues.
"If the accident had not taken place, the incoming funds would have reached as much as $14 billion," he said, adding that the figure is expected to further hit $18 billion in 2009.
The pipeline had been shut for two weeks after an August 6 explosion on its section in Turkey`s Erzinjan province ignited a fire. Oil was being transported in limited bulk and intermittently during this period. An estimated 20,000 tons of crude was lost as a result of the blaze. The conduit has been repaired and is again operating.
The assets of the Oil Fund quadrupled in January-August to reach $10.216bn, due to the expanding operation and exports of the country`s hydrocarbons.
Fifty percent of SOFAR`s assets are kept in US dollars, while 40 percent are in euros and five percent in pounds. Other currencies account for the rest of the amount.
Shahmar Movsumov said that, although the crisis has dealt a major blow to the budgets of many countries, Azerbaijan`s currency reserves are far from being affected by such risks. He emphasized that, in the wake of the crisis, many major companies and financial groups, which have been in business for 100 to 150 years, are facing tension, and some of them are on the brink of bankruptcy, but these developments have had no impact upon Azerbaijan`s assets.
"Azerbaijan`s oil fund, as always, is exercising a very conservative approach in managing its assets, and we are placing funds in highly-rated securities. The demand for them rises at a time of crises, and they start appreciating. Even if it sounds bad, SOFAR is benefitting from this."
According to Movsumov, the fall in crude prices on world markets below $100 a barrel has justified the conservative approach in drafting the Fund`s budget. Whereas the oil price was set at $50 a barrel in drafting the state budget in 2007, it was envisioned at $70 this year.
Movsumov said SOFAR`s revenues will increase 30% to reach $13 billion by the end of 2008.
He said the recent explosion on the Turkish section of the BTC pipeline pumping crude to world markets has affected the fund`s revenues.
"If the accident had not taken place, the incoming funds would have reached as much as $14 billion," he said, adding that the figure is expected to further hit $18 billion in 2009.
The pipeline had been shut for two weeks after an August 6 explosion on its section in Turkey`s Erzinjan province ignited a fire. Oil was being transported in limited bulk and intermittently during this period. An estimated 20,000 tons of crude was lost as a result of the blaze. The conduit has been repaired and is again operating.
The assets of the Oil Fund quadrupled in January-August to reach $10.216bn, due to the expanding operation and exports of the country`s hydrocarbons.
Fifty percent of SOFAR`s assets are kept in US dollars, while 40 percent are in euros and five percent in pounds. Other currencies account for the rest of the amount.
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