Extractive Industries Transparency Summary Report 2016
General Information: In accordance with the Decree No. 1315 of the President of the Republic of Azerbaijan, dated 5 April 2017 on Additional Measures to Inc rease Transparency and Accountability in the Extractive Industries, the implementation of transparency and accountability standards in the extractive industry of the country is sus tained on the basis of the following internati onal principles: 4
Extractive Industries Transparency Summary Report 2016 01 05 Management of revenues generated from natural resources for increased welfare of country citizens and national interests shall be the sovereign power of state; Increase of transparency should be achieved with strict compliance with contracts and laws; 02 06 Introduction of lean practices for use of re venues generated from natural resources is a key enabler for poverty reduction and sustai nable economic development; All efforts should be taken to strengthen transparency, as well as public finance mana gement and accountability in public and priva te institutions involved in extractive industry; 03 07 Transparency and accountability standards should be promoted in the performance of government bodies, private sector and social relations; Financial transparency standards of the country should be applicable to all companies operating in extractive industry; 04 08 The state should be accountable to citizens for management of revenues generated from extractive industries; All stakeholders including public bodies, com panies operating in extractive industry, interna tional organizations, financial institutions, inves tors and non-governmental organizations should participate in introduction of transparency. 5
1 2 3 Exploration Drilling Development and exploration of oil and gas fields 4 Oil and gas exploration 6
Extractive Industries Transparency Summary Report 2016 Graph of the process from exploration to transportation Collection and transportation 5of oil and gas 7
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Extractive Industries Transparency Summary Report 2016 Map of the oil, gas, gold and silver fields Gold and Silver fields Oil Gas Condensate fields Oil fields Gas Gas condensate fields 9
Novorossiysk RUSSIA georgia Supsa turkey Erzurum Ceyhan
Extractive Industries Transparency Summary Report 2016 BAkU-tbilisi-ceyhan oil pipeline BAkU-tbilisi-Erzurum gas pipeline BAkU-supsa oil pipeline BAkU-novorossiysk oil pipeline Tbilisi azerbaijan Baku Sangachal Map of the pipelines
The share of the export in extractive industry Name of the product Cruide oil Volume (thsd tonnes) Amount, million USD 20 901,3 6 504,5 12
Extractive Industries Transparency Summary Report 2016 Volume of exported crude oil and natural gas * Name of the product Natural gas Volume (thsd m 3 ) Amount, million USD 6 754,6 970,7 * Note: Taking into account the volume and value of exported crude oil and natural gas, which has been completed in the customs bodies during the reporting period. 13
Volume of exported crude oil and natural gas * Name of the product Cruide oil Volume (thsd tonnes) 35 030,3 Amount, million USD 10 308,26 Name of the product Natural gas Volume (thsd m 3 ) 8 049,1 Amount, million USD 1 142,07 * Note: Considering the volume and statistical valuation of crude oil and natural gas exported in the customs authorities during the reporting period, but not fully completed by customs clearance. 14
Extractive Industries Transparency Summary Report 2016 Number of active Production Sharing Agreements 18 15
Revenue streams as an amount, from the extractive companies involved in EIT, to the government Extractive companies Revenue stream (as an amount) (USD mln.) Monetary inflow from oil Monetary inflow from gas Bonus Transit fee Acreage fee Abşeron Investment Limited 1,4 - - - - Azen Oil Company B.V. 5,7 - - - - Azerbaijan (ACG) Limited - - - 0,6 - Azerbaijan (Shah Deniz) Limited - 6,4 - - - Bahar Energy Limited 0,2 0,4 - - - BP Exploration (Azerbaijan) Limited - 18,4 0,01 - - BP Exploration (Caspian Sea) Limited - - - 1,8 - BP Shafag-Asiman Limited - - - - 2,1 CNPC 0,3 - - - - Commonwealth Exxon Azerbaijan Limited - - - 0,4 - ENGİE E AND P ABSHERON B.V Ali-Bayramli Neft LLC Fortunamate Assets Limited 0,3 - - - - Inpex Southwest Caspian Sea, Ltd. - - - 0,5 - Itochu Oil Exploration (Azerbaijan) Inc. - - - 0,2 - Karasu Development Company Kura Valley Development Company LTD Gobustan Neft LLC Lukoil Overseas Shah Deniz - 6,4 0,01 - - Naftiran Intertrade Co (NICO) Limited - 6,4 0,01 - - 16
Extractive Industries Transparency Summary Report 2016 (mln. USD) (mln. AZN) (mln. AZN) Profit tax Royalty VAT Property tax Land tax Price changes - - - 1,3 - - 18,9 - - - - - - - - - - - 94,4 - - - - - 0,5 - - - - - 19,2 - - - - - 1,0 - - 1,0 - - 44,7 - - 13,0 - - - - - - - - - - - - - - - - - Other taxes 17
Revenue streams as an amount, from the extractive companies involved in EIT, to the government CONTINUE Extractive companies Revenue stream (as an amount) (USD mln.) Monetary inflow from oil Monetary inflow from gas Bonus Transit fee Neftchala Investments Limited 0,4 - - - - Novatis Oil F.Z.E. 3,1 - - - - ONGC Videsh Limited - - - 0,1 - Petronas Azerbaijan Shah Deniz S.A.R.L - 9,9 0,01 - - Petro-Hong-Kong Pirsaat Oil R.V. Investment Group Services Salyan Neft LLC 0,6 - - - - SGC Upstream LLC - 4,3 - - - Statoil Apsheron A.S - - - 0,4 - Chevron Khazar, Ltd. - - - 0,6 - Shirvan Investment Limited 4,5 - - - - Total E & P Absheron B.V Türkiye Petrolleri Anonim Ortaqlığı - - - 0,3 - Türkish Petroleum Overseas Company Ltd - 12,2 0,01 - - UGE-LANCER PTE.LTD 8,0 - - - - Zenith Aran Oil Company Limited SOCAR SOFAZ - - - 6,4 - Azergold CJSC AzGerneft Acreage fee total 24,5 64,4 0,05 11,3 2,1 18
Extractive Industries Transparency Summary Report 2016 (mln. USD) (mln. AZN) (mln. AZN) Profit tax Royalty VAT Property tax Land tax Price changes Other taxes - - - - - - 11,4 - - - - - - - - - - - - - - - - - 10,6 - - 23,8 - - 0,2 - - - - - 17,3 - - - - - 1,5 - - - - - - 4,8 108,7 68,4 73,8 31,1 104,9 70,0 - - - - - - - 0,3-258,8 5,1 108,7 68,4 73,8 31,1 104,9 70,0 19
Revenue Streams made in kind from the extractive companies involved in EIT, to the government Extractive companies Revenue stream (in kind) (mln. barrels) (thsd. m³) (thsd. m³) Crude oil Natural gas Associated gas Abşeron Investment Limited - - 33 067,7 Azen Oil Company B.V. - - 2 398,2 Azerbaijan (ACG) Limited 14,8 - - Azerbaijan (Shah Deniz) Limited - - - Bahar Energy Limited - 18 949,5 2 758,1 BP Exploration (Azerbaijan) Limited - - - BP Exploration (Caspian Sea) Limited 45,6-2 762 555,2 BP Shafag-Asiman Limited - - - CNPC - - 9 629,4 Commonwealth - - - Exxon Azerbaijan Limited 10,2 - - ENGİE E AND P ABSHERON B.V - - - Ali-Bayramli Neft LLC - - - Fortunamate Assets Limited - - 9 629,4 Inpex Southwest Caspian Sea, Ltd. 13,9 - - Itochu Oil Exploration (Azerbaijan) Inc. 5,5 - - Karasu Development Company - - 630,2 Kura Valley Development Company LTD - - - Gobustan Neft LLC - - - Lukoil Overseas Shah Deniz - - - 20
Extractive Industries Transparency Summary Report 2016 (thsd. ounses) Gold Silver Gold concentrate Silver concentrate Copper concentrate 21
Revenue Streams made in kind from the extractive companies involved in EIT, to the government CONTINUE Extractive companies Revenue stream (in kind) (mln. barrels) (thsd. m³) (thsd. m³) Crude oil Natural gas Associated gas Naftiran Intertrade Co (NICO) Limited - - - Neftchala Investments Limited - - - Novatis Oil F.Z.E. - - 4 585,1 ONGC Videsh Limited 3,5 - - Petronas Azerbaijan Shah Deniz S.A.R.L - - - Petro-Hong-Kong Pirsaat Oil - - - R.V. Investment Group Services - - - Salyan Neft LLC - - 19 258,8 SGC Upstream LLC - - - Statoil Apsheron A.S 10,9 - - Chevron Khazar, Ltd. 14,4 - - Shirvan Investment Limited - - 7 077,0 Total E & P Absheron B.V - - - Türkiye Petrolleri Anonim Ortaqlığı 8,6 - - Türkish Petroleum Overseas Company Ltd - - - UGE-LANCER PTE.LTD - - 8 680,7 Zenith Aran Oil Company Limited - - - SOCAR - - - SOFAZ - - - Azergold CJSC - - - total 127,4 18 949,5 2 860 269,8 22
Extractive Industries Transparency Summary Report 2016 (thsd. ounses) Gold Silver Gold concentrate Silver concentrate Copper concentrate 7,8 1,4 0,2 0,4 16,3 7,8 1,4 0,2 0,4 16,3 23
GDP total and per capita Per Capita: 6,3 thsd Total: 60,4 billion GDP PRODUCTION STRUCTURE 69,3% 30,7% Extractive industry Other industries 24
Extractive Industries Transparency Summary Report 2016 Area structure of GDP 7,6% 1,8% 5,6% 6,8% 37,2% 17,8% 2,4% 10,2% 10,6% Industry Construction Trading, maintenance of transportaions Placement of tourists and public catering Social and other services Transportation and storage Information and communication Taxes on product and export Agriculture, foresty and fishing 25
Revenues and expenses of the state budget 17,5 17,7 Revenues billion manat Expenses billion manat 26
Extractive Industries Transparency Summary Report 2016 Total extractive production Oil production (including condensates), million tonnes Gas production, million m 3 1508 39 491 13 952 15 379 Offshore Onshore associated gas natural gas total total total 1,895 320 1,947 Gold production, kg (production of main products) Silver production, kg (production of main products) Copper ores and concentrates, tonnes (the main production) 27
Employment structure Economically active population 5 012,7 thsd people Structure of general employment 0,8% 7,2% 5,1% 6,0% 14,7% 7,9% 3,9% 18,1% 36,3% Agriculture, forestry and fishing Mining industry Construction Processing industry Public administration and defence: social security Trading, maintenance of transportations Education Human healty and social work activities Other 28
Extractive Industries Transparency Summary Report 2016 Financial indicators of SOCAR in 2014-2016, million (manats) 3,830 3,254 4,518 1,851 1,485 1,394 1,496 1,617 1,802 General benefit Budget payments Share capital 2014 2015 2016 29
SOCAR s share in oil production 20% 20% 20% 80% 80% 80% 2014 2015 2016 Together with foreign companies Socar 30
Extractive Industries Transparency Summary Report 2016 SOCAR s share in gas production 24% 24% 21% 76% 76% 79% 2014 2015 2016 Together with foreign companies Socar 31
The income sources of SOFAZ 8 320,0 1 068,8 18,0 0,1 3,3 - Proceeds from the sale of profit oil and gas Revenue from managing the funds Payments on transit fees Bonus payments Acreage fees Other revenue and receipts Sources Amount, million manat total: 9 410,2 million manat 32
Extractive Industries Transparency Summary Report 2016 The structure of expenditures of SOFAZ 7 615,0 90,0 70,0 66,2 20,1 31,6 331,8 797,4 Transfers to state budget Improvement of social conditions of refugees and internally displaced persons Samur Apsheron irrigation system The administrative expenses of Oil Fund Education of Azerbaijani youth abroad New Baku-Tbilisi-Kars railway construction project Financing of the participating interest of the Republic of Azerbiajan on Construction of Star Oil Refinery Project in Turkey Republic Financing of the participating interest of the Republic of Azerbaijan in South Gas Corridor projects Sources Amount, million manat total: 9 022,1 million manat 33
Main facts According to the Decree of the President of the Republic of Azerbaijan, dated 5 April 2017, on additional measures to increase transparency and accountability in extractive industry, the Extractive Industries Transparency (EIT) Commission was established to ensure transparency and accountability in the extractive industry of Azerbaijan. The EIT Commission held five meetings during the 2017 with the participation of representatives of civil society, international organizations and extractive companies. The EIT Commission also met privately with civil society representatives and with the chief executives of the companiesş The EIT Commission signed an Agreement document on cooperation between the Commission and local and foreign companies operating in the extractive industries of Azerbaijan. All extractive companies joined the EIT process. On December 8, 2017 the EIT Commission published the first consolidated EIT Report for the year 2016. * Note: Fore more detailed information please refer to 2016 EIT Report