Azerbaijan loses up to $20 million a day: will be budget sequester?
Baku, Fineko/abc.az. Azerbaijan’s losses have reached approximately $20 million a day due to recent fall in world oil prices.
Yesterday the price of Brent crude in London fell by $3.46 and set at around $89.23 a barrel – for already about 2 years this oil has not been traded below $90.
The American market, where the active dumping has been conducted for the same couple of years, has reacted immediately: the price of WTI fell by $3.25 to $78.2, and the negative arbitrage with Brent, comfortable for American manufacturers, has been kept.
It is unclear how much cheap oil will help solve the debt problems of the eurozone or the U.S., but the budget of Azerbaijan in an explicit loss. Today, oil is traded in the world not only below the increased oil price forecast set by the budget of Azerbaijan for 2012 ($100 per barrel), but also lower than the previous budget forecast ($80). The situation is slightly brightened by the fact that Azeri oil is traded with a premium to Brent, which can reach $3.2 per barrel (the record registered in August 2011). However, the results of yesterday’s trading show that today Azeri oil could cost up to $92.43.
Prior to the forecast increase and falls in world prices it was traded in 2012 at $115 per barrel, and in case of keeping the world prices at yesterday’s level the average price of Azeri oil in 2012 may be valued at up to $103.72, with keeping a record premium, the amount of which reduces when price falls. As a result, the actual quotation of Azeri oil may be around $90-91 per barrel that amid falling oil production and exports leads to a loss of Azerbaijan’s export earnings to $20 million a day.
The real loss for the Azerbaijan’s budget will begin when the price of Brent will fall below $83-82 per barrel - and then the indicator of the average export price of Azeri oil in 2012 will fall below $100 a barrel. It will not cause default or crisis, as Azerbaijan’s budget has reserves (articles financing of which may be delayed) up to AZN 4.5 billion or nearly a quarter of all planned expenditures. As a rule, it is usually investment articles, there will hardly appear a need of budget sequester, just because of the "tender procedures, slowness of contractors or non-readiness of feasibility study" (various reasons can be thought), the Ministry of Finance will not “dumbly allocate" money and there will be no necessity to apply to Milli Majlis (parliament) with new budget amendments.
Even drop in world oil prices to $ 50 per barrel expected by some analysts, in case it can occur now, is unable to provoke the curtailment of the state budget of Azerbaijan in 2012. Even in this case, the average export price of Azeri oil will be as much as $82.5 per barrel on average for the year, and this year the country was going with export price of $80 for a "barrel".
Copyright ABC.az All rights reserved.
Link for FINEKO Analytic & Informational Agency and ABC.AZ is obliged using the websites material.
ru / en