SOFAZ assets rose to US$25.8bn at the end of the first quarter of 2011, an increase of 59% year on year. Since the end of 2010 SOFAZ revenue grew robustly, and reached over Manat3.2bn in the first three months of 2011. At almost Manat3.08bn, the largest source of revenue was from the sale of profit oil and gas. SOFAZ also received Manat16.3m in dividends generated from its share in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline.

Continuing a long-running trend, SOFAZ's greatest expenditure in the first quarter of 2011 was the transfer of Manat1.3bn to the state budget. Although transfers in the first quarter are only modestly higher than the year-earlier level, they will increase more sharply in the later part of the year, as in previous years. The Economist Intelligence Unit forecasts that oil prices will average US$108.5/b in 2011. High oil prices will go some way towards mitigating the government's decision to increase transfers to the state budget to Manat9.2bn in 2011, up from its earlier target of almost Manat6.5bn, in the short term. Nevertheless, as growth in oil production has steadied, the heavy drawdowns on the fund (which is supposed to "preserve oil revenue for future generations") in recent years will raise concern over the authorities' ability to ensure economic sustainability over the longer term, particularly if such sizeable drawdowns on the fund's assets were to continue.

Download the numbers in Excel