Azerbaijan: In-kind payments larger than cash

EITI Report for 2011 published.

Azerbaijan’s EITI Report for 2011 reveals that a majority of the country’s revenue from natural resources were received in-kind: the companies have paid the government with physical volumes of oil, gas, gold and silver instead of cash.

According to the report, the government of Azerbaijan collected approximately US$ 3 billion in cash revenues, yet the in-kind payments were worth more. The payments in oil barrels alone are three times larger than Azerbaijan's total consumption of oil: 181mn vs 61mn barrels of oil.

Stakeholders are using this data to press for greater transparency and accountability in how these resources are traded and utilised.The report breaks down the payments by commodity (oil, gas, gold and silver), but does not break down the payments company-by-company.

The report was approved by the multi-stakeholder group on 5 June 2012, and is available at the SOFAZ website. The EITI NGO coalition in Azerbaijan will present its opinion on the report later in June.

Reconciled in kind payments and government revenues

 

Company payments

Government receipts

 
barrels of oil equivalent
thousand m3
barrels of oil equivalent
thousand m3

Crude oil

181 100 000

 

181 100 000

 

Associated gas

 

3 406 420 800

 

3 406 420 800

Natrual gas

 

6 805 500

 

6 805 500

Monetization of in kind government revenues(*) 

Figures in barrels and US$

barrels of oil equivalent

Referential price, US$

Estimated total value, million US$ 

Crude oil

181 100 000

111.20

20 138.32

Gas

22 185 971

27.8

 616 

Sub-total (A)

  

20 755.08

Monetary inflows reported (B)

  

3 041.72

Total  (A+B)

  

23 796.81

*)The estimate was calculated by the EITI International Secretariat based on: 

  • associated and natural gas were converted to an oil equivalent of 22 185 917 barrels (1 million cubic meters equals to 6 500 barrels of oil equivalent;  
  • referential price of UK Brent Dtd oil which was equal to the price of Azeri light oil for 2011 (OPEC Spot crude oil prices); and, 
  • it was assumed that gas prices were 25% of the oil price.