Page 13 - FSUOGM Week 25 2022

FSUOGM POLICY FSUOGM

Shah Deniz project will start paying

Azerbaijani income tax

AZERBAIJAN THE Azerbaijani authorities expect the state gas prices on world markets, the Azerbaijani
budget to receive income tax on profits from government has decided that the participants in
Shah Deniz is the oil and gas companies operating in the country the Shah Deniz project can start paying income
country's largest gas under PSA (production sharing agreement) con- tax to the country's state budget. In this regard,
field. tracts in the amount of AZN2.67bn (~$1.57bn) revenues from them in 2022 are expected at the
in 2022. This number equals the money that will level of AZN1.61bn.
be allocated for the reconstruction and restora- According to government materials, the
tion of the Karabakh region following its recon- average price for Azeri Light oil in January-May
quest. According to the draft amendments to 2022 was $106.3 per barrel, while the forecast
the state budget for 2022, these revenues will be for the current year was $50 per barrel. Oil and
generated from two sources. gas companies operating in Azerbaijan under
The forecast for revenues from contractors PSA contracts in 2021 paid income tax in the
operating in the oil and gas sector is increasing. amount of AZN1.044bn (+73% from 2020) to
Initially, the forecast for them was AZN630mn. the state budget. The average oil price in 2021
Given the high oil prices on world markets, the was $71.6 per barrel, while Azerbaijan's budget
Azerbaijani authorities are increasing the base for 2021 was prepared from an oil price of $45
oil price in the state budget for 2022 from $50 per barrel.
to $70 per barrel. In this regard, the forecast for Oil and gas companies operating in Azerbai-
the payment of taxes for contractors operating jan under PSA contracts pay income tax four
under the PSA is increased by AZN430mn or by times a year: in January, April, July and October.
68.3% - up to AZN1.06bn. They pay income tax based on actual oil prices
The second source is income tax payments on world markets. Azerbaijan has signed over 30
from contracting companies operating under PSA contracts for the development of oil and gas
the Shah Deniz project. Taking into account high fields since independence. ™

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