BAKU

Azerbaijan’s State Oil Fund (SOFAZ) plans to sell $2.4 billion at currency auctions in the fourth quarter of this year to transfer manats to the country’s state budget.

The SOFAZ sovereign wealth oil fund holds proceeds from oil contracts, oil and gas sales, transit fees and other revenue. It mainly uses income from investments to pay for social spending and infrastructure projects. The Fund’s transfers to the state budget make up the bulk of its revenues. Transfers also help to keep the national currency stable.

In January-September 2021, SOFAZ sold $4.9 billion at currency auctions, down from $5.6 billion in the same period last year.

The Fund said last month that its total revenues increased to 10.445 billion manats ($6.1 billion) from 6.593 billion manats in January-September last year, while expenditures amounted to 7.328 billion manats from 9.046 billion manats at the same period last year. Revenues from the implementation of oil and gas agreements reached 8.178 billion manats,  including 7.384 billion manats received from the sale of profit oil and gas, 772 million manats as bonus payments, 6.5 million manats as transit payments and 5.3 million manats as acreage fee. The Fund’s assets rose to $44.226 million as of October 1 compared to $43.564 million at the beginning of this year and $43.289 million a year ago.

Azerbaijan mainly sells oil from its Azeri-Chirag-Guneshli (ACG) oil offshore bloc, which accounts for most of the country’s oil production, and is developed by a BP-led international consortium. Another international consortium also led by BP produces natural gas at the Shah Deniz field. Azerbaijan’s state energy firm Azerbaijan state energy firm SOCAR is a shareholder in both consortiums.

The Fund said in August that it reduced investment in bonds, foreign currencies and gold, but increased purchases of shares and real estate in the first half of 2021 in a move to adjust to market realities.

The share of bonds and currencies in its investment portfolio is currently 62.9 percent, the share of gold in the fund’s investments is 13.1 percent, the stake of shares is 17.9 percent, while the share of real estate is 6.1 percent.

The Fund said that 57.1 percent of bonds and other money market instruments, in which SOFAZ invested, have an AAA rating.

As for currency composition, 68.6 percent is in U.S. dollars, 19.9 percent – in euros and 4.9 percent in British pounds.