Profit tax forecast for ACG and Shah Deniz projects increased by 26%

Within the framework of the Production Sharing Agreements, the profit tax on the Azeri-Chirag-Gunashli (ACG) and Shah Deniz projects is predicted to be 3,367,000,000 manats ($1.98 billion) in Azerbaijan next year.

Report informs, citing the draft law "On the state budget of 2023", that this is 26.1% more than the updated forecast of the current year and 3.2 times more than the performance indicators of 2021.

The reason for the increase compared to the 2022 revised budget revenue forecast is the lack of payment in the 1st quarter of 2022 because the contractors operated with a loss in the fourth quarter of 2021 and profit tax was forecasted for each quarter of the next year.

ACG is the largest oil field block in Azerbaijan. The first production-sharing agreement for the development of the deposit block was signed on September 20, 1994. On September 14, 2017, a new deal was signed on the joint exploitation of those fields and production distribution. This agreement envisages the development of the fields until the end of 2049.

The ACG shareholders are BP (30.37%), SOCAR (25%), MOL Group (9.57% replaced Chevron on April 16, 2020), INPEX (9.31%), Equinor" (7.27%), ExxonMobil (6.79%), TPAO (5.73%), ITOCHU (3.65%), ONGC Videsh Limited (OVL) (2.31%).

The agreement on exploration, development and shared production of the promising Shah Deniz areas was signed on June 4, 1996. The production-sharing agreement was ratified on October 17, 1996.