Based on the results of the current year, the State Oil Fund of the Republic of Azerbaijan (SOFAR) expects income from the sale of profitable oil and gas in the amount of 19 billion 972 million manats ($11.75 billion at the current exchange rate), Bahruz Bahramov, Advisor to the SOFAZ Executive Director, informed about this.
Due to high prices for energy resources in world markets, in January-September, the Fund received income from the sale of profitable oil and gas in the amount of 15 billion 106.2 million manats. Bahramov also said that in the draft budget of SOFAZ for 2023, revenues are estimated at 8 billion 999 million manats, and expenditures amount to 11 billion 392 million manats. These indicators are predicted based on the price of one barrel of oil at $50 per barrel.
Speaking about the investment strategy of the State Oil Fund, Bahramov said that in addition to the goals of collecting and managing oil and gas revenues for both current and future generations, one of the main goals of the Fund is to ensure macroeconomic stability, as well as reduce the negative impact of economic shocks on the country’s economy, that is, to act as a “safety cushion” during economic instability in foreign markets.
As for the structure of the Fund’s investment portfolio by types of assets, bonds and money market instruments make up 63 percent of the portfolio, shares – 18.7 percent, real estate – 6.3 percent, investments in gold – 12 percent (101.8 tons).
The currency structure of the SOFAZ investment portfolio is distributed as follows: 70.8 percent – US dollars, 19 percent – euros, 4.7 percent – pounds sterling, the rest (5.5 percent) – Australian dollars, Turkish lira, Russian rubles, Chinese yuan, Japanese yen, and other currencies.
“Based on the credit rating, 69.9 percent of the portfolio of bonds and money market instruments are invested in instruments with a rating of AAA, and the rest is invested in instruments with a credit rating of AA (16.7 percent), A (10 percent), BBB (2, 6 percent). Only 0.8% of this portfolio is invested in non-investment grade instruments,” Bahramov said.
As for investments in shares, Bahramov emphasized that the Fund has formed a portfolio covering more than 1,600 companies in 14 currencies in 23 developed countries.
“I would also like to note that since 2012 SOFAZ has been investing in various types of real estate in a number of developed countries in North America, Europe, and the Asia-Pacific region. Through direct, joint, and stock investments, SOFAZ has already invested in more than 500 real estate objects invested in the object,” he said.
The adviser also said that the current economic and geopolitical realities create a certain pressure on the Fund’s assets.
“The investment portfolio of our Fund, as well as the portfolio of other institutional investors, is affected by the consequences of COVID-19, the unstable situation in the energy market, inflation, economic and geopolitical changes.
He recalled that at the end of the third quarter of this year, the assets of the Azerbaijan Oil Fund exceeded $45 billion 386.4 million
Source: Turan News Agency