Azerbaijan’s investment rating confirmed
Moody’s confirmed Azerbaijan’s Baa3 rating on December 4, 2015, keeping the outlook stable. The rating agency cited Azerbaijan’s large reserves along with the employment of a flexible exchange rate in the light of low oil prices as supporting its rating decision. In a separate move, Standard & Poor’s removed SOCAR from CreditWatch negative and affirmed its rating at BB+ with a negative outlook.
Central Bank reserves down to US$ 6.2bn
In November 2015, Azerbaijan’s Central Bank (CBAR) reserves declined by US$ 589.0mn m/m to US$ 6.2bn, the lowest level since December 2010. Since the peak level of reserves in August 2014 (US$ 15.2bn), reserves fell 58.9%, corresponding to a US$ 8.9bn loss. However, at 4.0x months of goods and services imports, reserves are still above the threshold of 3.0x imports.
Oil and gas production down 0.9% y/y and 1.2% y/y in October 2015
Oil extraction in Azerbaijan decreased 0.9% y/y in October 2015. 10M15 oil output was down 2.3% y/y, with SOCAR’s extraction falling 1.5% y/y and others’ production falling 2.5% y/y. On a month-to-month basis, total oil production was up 1.6% in October 2015.
Gas production also fell in October 2015, decreasing 1.2% y/y, following a surge of 38.6% m/m in September 2015. 10M15 gas production is down 5.3% y/y.
Oil exports up 47.5% y/y in November 2015 due to last year’s low base
Azerbaijan exported 1.9mn tons of crude oil in November 2015 (+47.5% y/y, +5.0% m/m), slightly less than the monthly average of 2.0mn tons in 2014. Our calculations indicate that, with the monthly average BTC Ceyhan crude oil price at US$ 45.2/bbl (-43.3% y/y), export revenues in November 2015 amounted to US$ 618.8mn (-16.4% y/y).
Oil exports are down 9.3% y/y to 19.9mn tons in 11M15, corresponding to an estimated 52.2% y/y fall in US$ terms due to the falling oil prices.
