Azerbaijan’s state oil fund SOFAZ, which accumulates and manages the energy-rich country’s oil and gas revenues, has revealed its revenues and expenditures for the period of January-December 2015.
The Fund reported on March 1 that during the reported period, its budget revenues exceeded 7.721 billion manats ($4.898 billion), while budget expenditures constituted 9.188 billion manats ($5.829 billion). SOFAZ’s revenues around 7.386 billion manats ($4.685 billion) were received from the implementation of oil and gas agreements, including about 7.37 billion manats ($4.68 billion) from the sale of profit oil and gas, 2.2 million manats ($1.4 million) as acreage fees, 2.1 million manats ($1.332 million) as bonus payments and 11.6 million manats ($7.36 million) as transit payments.
The revenues from managing assets of the Fund for January-December 2015 amounted to 335.6 million manats ($212.89 million). Last year, SOFAZ transferred some 8.13 billion manats ($5.16 billion) to the state budget. SOFAZ’s administrative and operational expenses for the reporting period were 27.9 million manats ($17.7 million).
As of January 1, 2016, the assets of SOFAZ have dropped by 9.5 percent compared to January 1, 2015 and stood at $33.574 billion. SOFAZ’s total investment portfolio amounted to $33.45 million as of January 1, 2016, or 99.6 percent of total assets. The Fund went on to add that as of 2015, some 47.7 percent of its total investment portfolio, was concentrated in the USD ($15.96 billion).
Some 35.3 percent of the Fund’s total investment portfolio is concentrated in euro (10.79 billion euros), 5.2 percent – in British pounds (1.17 billion pounds), 1.6 percent – in Japanese yen (63.95 billion yen), 1.4 percent – in Chinese yuan (3.04 billion yuan), 1.1 percent – in Turkish lira, 0.6 percent – in Australian dollars, 1.5 percent – in Russian rubles, 1.4 percent – in Korean won, 1.2 percent – in other foreign currencies.
The remainder of the portfolio (3.1 percent, or $1.04 million) is concentrated in gold. The Fund further reported that in 2015, some 72.9 percent of its investment portfolio was invested in financial tools for up to five years. Around 30.76 percent of SOFAZ’s investment portfolio is placed in securities for a one-year period, 26.21 percent for one to three years, 15.96 percent for three to five years and 9.19 percent for more than five years. Some 17.89 percent is kept in real estate, assets and gold.
SOFAZ assets are partially placed in securities, tools of the monetary market such as deposits and bank accounts. Some 79.4 percent of the investment portfolio is placed in bonds. Around 14.29 percent accounted for the securities with ‘AAA’ ratings, 27.49 percent in ‘AA’, 30.59 percent in ‘A’, and 27.63 percent in ‘BBB’. SOFAZ assets cannot be placed in securities with a lesser investment rating.
Currently, 13.2 percent of SOFAZ investment portfolio is placed in bonds of agencies and international organizations, 8 percent – sovereign debt securities, 20.8 percent – financial bonds, 44.2 percent – corporate bonds, 8.5 percent – short term commercial securities, 1 percent – guaranteed bonds. Around 7 percent of the investment portfolio is placed in deposits and monetary market tools, gold – 3.1 percent, real estate- 4.6 percent, assets – 7.7 percent, investments in the projects – 2.5 percent.
The assets of the investment fund were placed as follows: 58.46 percent in European countries, 21.51 percent in North America, 3.57 percent in Australia, 11.92 percent in the Asia-Pacific Ocean region, 0.92 percent in the Middle East, 0.27 percent in South America, 3.34 percent in international financial organizations, Africa – 0.01 percent.
SOFAZ was established in 1999 with assets of $271 million. Based on SOFAZ’s regulations, its funds may be used for the construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems. The main goals of the State Oil Fund include accumulation of resources and the placement of the fund’s assets abroad in order to minimize the negative affect on the economy, the prevention of “Dutch disease” to some extent, promotion of resource accumulation for future generations and support of current social and economic processes in Azerbaijan.