Azerbaijani Oil Export Declined by 23.7

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1 Better Research, Better Policy, Better Reform Azerbaijani Oil Export Declined by 23.7 % in April 2016 Center for Economic and Social Development (CESD) Dilara Aliyeva 115, Baku 1009 AZERBAIJAN Phone; (99412) (99412) Fax (99412) ; cesd.az@gmail.com info@cesd.az URL; Baku, May 5th, 2016

2 Azerbaijani Oil Export Declined by 23.7 % in April 2016 State Oil Company of Azerbaijan Republic (SOCAR) exported tons of crude oil from Novorossiysk port, tons from Supsa port, tons from Ceyhan port in April 2016.Generally, tons of crude oil was exported from Novorossiysk port, tons from Supsa, tons from Ceyhan port, tons from Kulevi port in January-April It should be noted here that the indices of crude oil exported by the SOCAR reflect the volumes of crude oil belonging to both State of Azerbaijan and the Company. According to the official figures Azerbaijani oil export decreased by 23.7% in April against March 2016 since oil export was 1.9 million tons in March In 2015, oil export made up million tons, when it was delivered 1.27 million tons to Novorossiysk, 2.79 million tons to Supsa, and 17.9 million tons to Ceyhan. For comparison, oil carried out the best oil export in million tons, and in June 2011 the month s peak was also registered 2.57 million. In 2011 oil transportation via pipeline Baku-Novorossiysk totaled million tons, Baku-Novorossiysk 2.65 million tons, and BTC million tons. SOCAR notes that oil exports both its own oil and oil falling on the share of the government within PSA contracts.

3 JUN-14 JUL-14 AUG-14 SEP-14 OCT-14 NOV-14 DEC-14 JAN-15 FEB-15 MAR-15 APR-15 MAY-15 JUN-15 JUL-15 AUG-15 SEP-15 OCT-15 NOV-15 DEC-15 JAN-16 FEB-16 MAR-16 APR-16 Center for Economic and Social Development (CESD) Meanwhile, SOCAR decreased drilling by 41% in April 2016 against March The SOCAR informs that if not to take into account drilling operations by joint ventures (JVs) and operating companies (OCs) in April it drilled 5,631 m versus 9,556 m in March The best indicator for the entire history of drilling was registered in July 2012 (17,414 m). At that, development drilling made up 5,631 m in March, while exploration and wildcat drilling was not carried out. For Jan-Apr of the year it was drilled 32,040 m. 14 new wells, including 4 ones in April, have been put into operation since early In 2015 the Company drilled 104,411 m, including 103,411 m of development and 1,000 m of exploration drilling. Last year the peak of drilling (12,393 m) was recorded in April. In April 2016, price for Brent crude oil in the world market was $41.48 per barrel,urals oil - $40.48 and BTC FOB Ceyhan crude oil - $ Azeri Oil Price in the World Market, $/barrel since the price dropped Source: State Oil Company of Azerbaijan Republic and CESD calculations, May 2016

4 JUN-14 JUL-14 AUG-14 SEP-14 OCT-14 NOV-14 DEC-14 JAN-15 FEB-15 MAR-15 APR-15 MAY-15 JUN-15 JUL-15 AUG-15 SEP-15 OCT-15 NOV-15 DEC-15 JAN-16 FEB-16 MAR-16 APR-16 Center for Economic and Social Development (CESD) The graph shows that Azeri oil price increased by 7.5 % in April 2016 compared with the previous month. Meanwhile, the oil price has been decreased more than 2.5 times since August Volume of Azeri crude oil export and total income from oil export since the oil price dropped Volume of export, million barrels Total İncome, with billion USD Source: State Oil Company of Azerbaijan Republic and CESD calculations, May 2016 The graph shows that oil income decreased by 16.4 % in April 2016 compared previous month due to declining of oil output in spite of the fact that the price increased by 7.5 % in the same period. In fact, total monthly income is still far behind of 2014 s summer s monthly income. If the country received only $ 460 million US in April 2016, but monthly income was $ 1.76 billion US in June It confirms that dropped oil price in the world market has dramatically decreased Azerbaijan s revenues.

5 Note that, gross income implies the currency entering to the country from sale of oil included with AIOC oil revenues. Profit after deducting costs from revenues defined the amount of oil in value. This is sharing in accordance with the production sharing funds between the Government of Azerbaijan and AIOC. CESD, 2016