Tuesday, April 22, 2008

AIOC estimated cash flows to Azerbaijan, 2008.

Oil Price (per BBL) $100.00 $115.00
Production Costs $4.00 $4.00
Transportation Costs to Ceihan $3.00 $3.00
Gross Profit $93.00 $108.00
Cost Recovery/Depreciation $46.50 $54.00
Pre-tax profit $46.50 $54.00
SOCAR share (30%) $13.95 $16.20
AIOC share $32.55 $37.80
Azeri taxes (25%) $8.14 $9.45
After tax profit to AIOC $24.41 $28.35
Total cash flow to AIOC (cost recovery + profit) $70.91 $82.35
SOCAR share from AIOC (10%) $7.09 $8.24

Total Cash Flows to Azerbaijan (per BBL) $29.18 $33.89

Daily estimated production (2008, BBL) 800,000 800,000
Total Daily Cash Flows to Azerbaijan $23,343,000 $27,108,000
Annual estimated production (2008, BBL)292,000,000292,000,000
Total Annual Cash Flows to Azerbaijan$8,520,195,000$9,894,420,000

Note: the 800,000 barrels is per day, not annual as I had posted earlier. I have made it clear by including both daily and annual production and cash flows.

This could be (and probably is) a scary table. I am so glad that they are as corrupt as they are. Otherwise, we would be in big trouble (we probably are already).


asd said...

23-27 million per year? that's not a high amount.
with week dollar an high oil prices I would sat that is very small amount.

Am i missing some zeros?

nazarian said...

No, I don't think we are missing a decimal point.

This is my calculation of the cash flows from the Azeri, Gunashli and Chirag oil fields that goes to the Azeri government in form of payments to SOCAR and taxes collected by the Azeri government based on the data and good faith estimates I have. The production costs include the Azeri citizens who get paid which injects money into the economy and multiplies. Some of it gets taxed by the Azeri government.

There are other hydrocarbon projects going on in Azerbaijan but I don't have data to analyze them.

Garen said...

Apart from a minor mistake, this is an interesting breakdown. Thanks.

But,ha-ha ... you're definitely missing some "Zeros" ;)
Azeri oil production for 2008 is planned to be 800,000-1,000,000 bbl/day (PER DAY!)
...so I guess you should multiply that figure by 365 days (in conservative estimates)

Extracting this much oil at such a ridiculous rate, WHILE peak oil, tumbling dollar, ever rising crude prices, collapsing financial and mortgage markets, globally rising food prices etcetera etcetra, are sending shivers across the markets... is probably one of the most stupid (in the long-run) economical policies I've ever seen. But hey, they need to keep pumping the military machine, eh? ...Ilham, the watermelon-trader, has just announced 53% rise in military expenditure, while the real GDP of the country rose by only 25% (the rest was inflation 11-14% and manat appreciation)

nazarian said...

Garen, I looked at the table and you are right - I had written annual instead of daily output of 800,000. The annual estimated production is 292 million barrels of oil (365 days a year).

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