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SOFAZ budget for 2014 to be reviewed

14 March 2014 [14:25] - TODAY.AZ
The 2014 budget of the State Oil Fund of Azerbaijan (SOFAZ) will be revised, due to the formation of a closed joint stock company for effective management of the Shah Deniz projects and gas deliveries to Europe, SOFAZ CEO, Shahmar Movsumov told journalists on March 12.

In February, Azerbaijani President Ilham Aliyev signed a decree on establishment of a closed joint-stock company for effective management of the projects within the second phase of the Shah Deniz gas and condensate field's development, expansion of the South Caucasus Pipeline, Trans Anatolian Gas Pipeline (TANAP) and Trans Adriatic Pipeline (TAP).

Given the proposals from the state commission, the State Oil Company of Azerbaijan Republic (SOCAR) will create a closed joint stock company (51 percent state-owned and 49 percent owned by SOCAR) with an authorized capital of $100 million, for effective management of these projects.

SOCAR should also ensure the transfer of shares in projects to the newly created closed joint stock company (CJSC).

SOFAZ was instructed to provide an equity financing for the CJSC, which is under direct state ownership.

SOFAZ head said the fund plans to allocate $51 million in 2014 for formation of the CJSC, and with regard to this the SOFAZ expenditure budget should be reconsidered.

"We consider this placement as an investment, because these funds will be returned to the SOFAZ," Movsumov said.

He said the company's total expenditures will amount to $5 billion. In turn, some $2-$2.5 billion will be allocated from SOFAZ over five years as part of the company's activity.

"We expect that the SOFAZ investments will be fully repaid prior to 2023-2024," the fund's head said.

On December 17, 2013 a final investment decision was made on the second phase of Azerbaijani Shah Deniz offshore gas and condensate field's development. The gas from this field will first go to the European markets.

The gas to be produced within the second phase of the field's development will be exported to Turkey and to European markets by means of expanding the South Caucasus Pipeline and constructing the Trans-Anatolian Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP).

The partners on development of the Shah Deniz field include such companies as the State Oil Company of Azerbaijan Republic (SOCAR) with a 16.7 percent share, BP (28.8 percent), Norway's Statoil (15.5 percent), Iran's NICO (10 percent), the French Total (10 percent), Russia's Lukoil (10 percent) and Turkish TPAO (nine percent).


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