3.125
%
Uncertain
95
mm boe
40
%
While state companies continue to dominate oil & gas, the country continues to open its hydrocarbon industry up, creating opportunities for smaller companies, especially in the rehabilitation of old fields. The PSC regime has proven to be stable and a key benefit for attracting investment, and is likely to continue to flourish.
May 28, 2021
Caspian
mm bbl
bcf
Southwestern Asia, bordering the Caspian Sea, between Iran and Russia, with a small European portion north of the Caucasus range.
PSC/PSA
Azerbaijan’s fiscal regime consists of a combination of production sharing agreements (PSAs) and host government agreements (HGAs). In addition, the Law on Application of Special Economic Regime for Export-Oriented Oil and Gas Operations (the Law) came into force on 17 April 2009. The Law applies to export-oriented oil and gas operations carried out by contractors, as well as by subcontractors, as defined in the Law.
Since 2017, the inflation rate has stabilised and stood at 2.6% in 2019. The double devaluations of 2015 hit the banking sector hard. Eleven of 42 banks closed since, while some banks continued to struggle with high levels of non-performing loans. Since April 2020, the Central Bank revoked the licenses of four banks and overall, the number of banks fell to 26, and there are plans to privatise the largest state owned bank. The dollarisation level of deposits remains high (62% in 2019). The country had 2.2% growth in 2019, which is expected to decelerate to -3% in 2020, according to the World Bank. Over the medium term, GDP growth will remain largely dependent on developments in the oil and gas sectors. The 2020 drop in the oil price has reinvigorated the government’s attempts at structural reforms and trying to revive the non-oil sector.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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