Country Report
Azerbaijan upstream fiscal summary
Report summary
JV agreements in Azerbaijan became obsolete in 1998 and all current awards are under PSC terms. The BP-operated Azeri Chirag Guneshli (ACG) oil field and Shah Deniz gas-condensate field are the main PSC developments and provide the majority of production and investment. PSC terms include bonuses, fixed cost recovery, and negotiable profit oil splits based on a sliding scale ‘R-factor' system. The State oil company, SOCAR, participates directly in all contracts, typically taking a stake between 10% and 50%, and is usually carried through the exploration phase. In 2017-18, Azerbaijan awarded its first Risk Service Agreements (RSAs) for the offshore Umid-Babek and Karabakh projects. RSAs are largely similar to a typical PSC and contain cost recovery and profit sharing mechanisms.
Table of contents
- Basis
- Licence terms
- Governmentequity participation
-
Fiscal terms
- Bonuses, rentals and fees
- Indirect taxes
- Royalty
- PSC production sharing
- Ring fencing
- PSC cost recovery
- Base
- Rate (cost recovery ceiling)
- Recoverable costs
- Unrecovered costs
- Excess cost recovery
- PSC profit sharing
- Base
- Rate
- Payment schedule
- Corporate income tax
- Base
- Rate
- Fiscal treatment of decommissioning costs
- Product pricing
- Summary of modelled terms
- Recent history of fiscal changes
- Stability provisions
- Split of the barrel and share of profit
- Effective royalty rate and maximum government share
- Progressivity
- Fiscal deterrence
Tables and charts
This report includes 21 images and tables including:
- Timeline
- Timeline detail
- Split of the barrel - oil
- Split of the barrel - gas
- Share of profit - oil
- Share of profit - gas
- Effective royalty rate - onshore , oil and gas
- Effective royalty rate - shelf/deepwater , oil and gas
- Maximum government share – onshore, oil and gas
- Maximum government share – shelf/deepwater, oil and gas
- State share versus pre-share IRR - oil
- State share versus pre-share IRR - gas
- Investor IRR versus pre-share IRR - oil
- Investor IRR versus pre-share IRR - gas
- Bonuses, rentals and fees
- Indirect taxes
- Cost recovery ceiling - offshore
- Cost recovery ceiling
- Profit share rates
- Profit share rates
- Assumed terms by location - oil and gas
What's included
This report contains:
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