shahriyar nasirov research assistant orkestra, instituto vasco de competitividad
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Analysis of Azerbaijan Oil and Gas Sector- forthcoming in Energy Policy Journal. Shahriyar Nasirov Research Assistant ORKESTRA, Instituto Vasco de Competitividad. 30 th USAEE/IAEE NORTH AMERICAN CONFERENCE October 9-12, 2011 Washington, DC. Structure. - PowerPoint PPT PresentationTRANSCRIPT
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Shahriyar Nasirov
Research Assistant ORKESTRA, Instituto Vasco de Competitividad
Analysis of Azerbaijan Oil and Gas Sector- forthcoming in Energy Policy Journal
30th USAEE/IAEE NORTH AMERICAN CONFERENCEOctober 9-12, 2011Washington, DC
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Impact of Oil and Gas sector on Economy
Production by Type of Contract: Azeri PSAs
Government Policy: Achievements and Challenges
Structure
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Impact of Oil and Gas Industry
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Impact of Oil and Gas Industry
Oil revenues allowed the government to achieve success in reducing poverty.
Transfers from SOFAZ are an important source of revenues
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State Oil Fund ( SOFAZ)
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State is represented by the State Oil Company (SOCAR)
Since then 32 PSAs have been signed between SOCAR and AIOC : 1st PSA – ACG in 1994 and 32nd PSA- Shafag Asiman
The title of the hydrocarbons remains with the state.
The State maintains management control and the contractor is responsible for the execution of petroleum operations in accordance to the terms of the contract.
The contractor is required to submit annual work programs and budgets for scrutiny and approval the State Company.
The contract is based on production sharing and not profit-sharing basis.
The contractor provides all financing and technology required for the operations and bear all the risks.
During the term of the contract, after allowance for up to a specified percentage of annual production for recovery of costs, the remaining production is split between the contractor and State.
Equipment purchased and imported by the contractor become property of the State. Service company equipment and leased equipment are exempt.
PSA: Overview
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PSA: Azerbaijan Model
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Net Back Value
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R-Factor
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RROR- Factor
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Total Transport Cost
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Government guarantee for legal protection
Country’s geostrategic objectives
Lack of strong political parties
No claiming to renegotiate existing hydrocarbon contracts as in (e.g. Russia and Kazakhstan)
Attractive fiscal regime* and elimination of several restrictions
Government policy: Main Successful Elements
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Fiscal Regime
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Energy dependency
Lack of Regulatory Legislations
SOCAR’s conflict of interests in PSAs
Legal status of the Caspian Sea
Government policy: Challenges
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Thank you !!