Oil Funds expenses to be reduced next year, says Azerbaijani Finance Minister

During the period of rapid development of oil production Azerbaijan derived a good profit from oil export and transferred these incomes to the Oil Fund. But more than half of these oil revenues were spent for various strategic and important projects and the country’s development, Azerbaijani Finance Minister Samir Sharifov said at the Economic Forum in Istanbul.

Minister said that till now the biggest item of expenses in the Oil Fund is transfers to the state budget. These funds are spent to implement various projects, but number of the projects will be gradually reduced. Sharifov also added that “for this reason in the future expenses of the Oil Fund are expected to be reduced.”

By July 1, 2014 assets of the Oil Fund totaled $37.6 billion. In the coming 3-4 years the Fund’s expenses are expected to be high (probably budget deficit), because the Fund  will  make half of the earnings of the state budget and it will also help SOCAR to implement Shah Deniz-2 project and Southern  Gas Project as well as build a new floating drilling rig.

The oil price goes down at the world markets and the volume of export within the production sharing agreements (PSA) is declining as well. In this situation the amount of earnings of the Fund declines as well. During 8 months 2014 the Oil Fund’s earnings totaled a little bit more than $10.1 billion. During a year total expenses of the Fund are planned to be $13.5 billion 10.59 billion AZN).—0-