Country Report

Azerbaijan upstream fiscal summary

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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
    • Bonuses, rentals and fees
    • Indirect taxes
    • Royalty
    • PSC production sharing
    • Ring fencing
    • PSC cost recovery
    • Base
    • Rate (cost recovery ceiling)
    • 13 more item(s)...
  • 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 the following images and tables:

  • 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
  • 9 more item(s)...

What's included

This report contains:

  • Document

    Azerbaijan upstream fiscal summary

    PDF 924.87 KB