Azerbaijan expects $1.1 bln in profit tax from Shah Deniz and ACG shareholders in 2025

BAKU. Jan 14 (Interfax) - Azerbaijan's authorities expect the federal budget to receive 1.95 billion manat ($1.147 billion) in profit tax from oil and gas companies developing the Shah Deniz and Azeri-Chirag-Gunashli (ACG) fields under production sharing agreements in 2025, the Finance Ministry told Interfax.

"It is expected that ACG shareholders will pay 450 million manat (around $265 million) in profit tax to the federal budget of Azerbaijan in 2025, at an average oil price of $70 per barrel," the Finance Ministry representative said. Profit tax payments from Shah Deniz project shareholders are expected to be 1.5 billion manat (over $882 million) this year, at an average gas price of $242 per 1,000 cubic meters, he also said.

Oil and gas companies operating in Azerbaijan under PSA pay profit tax in January, April, July and October, four times per year, based on actual oil and gas prices on global markets. Azerbaijan's authorities expect 2.58 billion manat in profit tax from the shareholders of Shah Deniz and ACG at 1.93 billion manat and 650 million manat, respectively, for 2024. They paid profit tax totaling 1.57 billion manat ($925.8 million) to the federal budget in January-June 2024.

The contract to develop the Azeri, Chirag and Gunashli deep-water fields was signed in 1994. The contract was originally set to expire in 2024, though a new contract was signed in September 2017 that lasts until 2050.

Currently, the share in the project of UK BP plc is 30.37%; the State Oil Company of the Azerbaijan Republic (SOCAR) has 31.655%; Hungary's MOL owns 9.57%; U.S. ExxonMobil owns 6.79%; India's ONGC Videsh has 2.925%; Japan's Inpex Corp. owns 9.31% and Itochu Oil has 3.65%; and Turkey's TPAO owns 5.73%.

The contract to develop the Shah Deniz field was signed in 1996. The parties' shareholding in the contract is currently BP (operator) at 29.99%, Lukoil at 19.99%, TPAO at 19%, Azerbaijan's Cenub Qaz Dehlizi at 16.02%, Iran's NICO at 10%, and Hungary's MVM at 5%.

The official exchange rate as on January 14, 2024, is 1.7 manat/$1.