Finance Essay Example | Topics and Well Written Essays - 1250 words - 2

Finance - Essay Example SOCAR also acts as the major rights holder in the oil and gas industry. It also acts as a government mean to control the oil and gas sector in the state of Azerbaijani. Oil exploration in the Caspian sea began in the year 1992 when the Kazakhstan government announced an oil exploration project in the Caspian sea. The Caspian  Oilfields Development Project has an oil exploration scope of operation in the whole of the Azerbaijan state. The area under the project is broken down into oil fields all of which are controlled by the government through the SOCAR. The oil fields include Chirag Oil Project (COP), Azeri-Chirag-Guneshli (ACG) field, West Azeri, East Azeri, Deep water Gunashli, Baku-Tbilisi-Ceyhan (BTC), Shah Deniz, and South Caucacus Pipeline and Itochu Oil Exploration (Azerbaijan). Most of the oil fields are based in the sea region. This crude oil pipeline stretches 1,768km in length from Baku in Azerbaijan to Ceyhan, Turkey on the coast of the Mediterranean Sea by way of Tbil isi, Georgia and can handle 1.2 million barrels of oil per day. The project has a direct and immediate control of the Caspian Sea where there have been oil discoveries. The scope of operation of all the contractors is based on SOCAR grants to the Contractors the sole and exclusive right to conduct Petroleum Operations within and with respect to the Contract Area in accordance with the terms of their Contracts (including those terms set forth in Article XV of the Azerbaijan constitution) and during the term thereof. Budgeting on the Caspian oilfields development project depends fully on the current financial results and the oil developments in the area. If new wells are discovered then additional capital is required to drill the oil and gas (CEE Bankwatch, 2012, pg 43). . With first three stages as rolled out in the country’s strategic programme completed and 7  operational platforms functional, total production from Azeri-Chirag Guneshli is more than 1 million barrels (160, 000  m3) a day. As per BP's report, Chirag had 19  wells in operation with an overall production of 105,300 bbl/d (16,740  m3/d). Central Azeri had 18 wells with production of 185,800 bbl/d. West Azeri (WA) had 18  wells in operation (14 of which are oil producers and 4 - water injectors with production of 275,200 barrels per day (43,750  m3/d). East Azeri (EA) had 13  wells in operation with overall production 139,400 barrels per day (22,160  m3/d) for the first three quarters of 2009. Deep Water Gunashli had 17  wells (9  oil producers and 8  water injectors) in operation with production of 116,400 barrels per day (18,510  m3/d) of oil. Since 1995 the Government of Azerbaijan together with IMF and World Bank have implemented structural adjustment and sector oriented programmes. The oil sector has been recognized as promising in that the sources of Azerbaijani medium term development projected that at end of the millennium GDP will double based on income from the oil sector. The government budget greatly relies on oil revenues for financial soundness. On average, it makes around 50% of income in the budget. The Bp company currently holds a stake of 34.13% as a mean of the stakes in all the oil fields where it is hugely significant. The structure of the early oil and full field development projec