Oil-producing Azerbaijan is considering whether to begin investing in publicly traded shares abroad with cash from its $16 billion rainy-day oil fund, a senior fund official said on Tuesday. State oil fund chief investment officer Israfil Mammadov told Reuters the fund's current investment in equity was "much less than one percent" of its total size, but that could soon change under a long-term strategy to diversify assets.
Mammadov said the decision, still under discussion at the fund, was also driven by the global financial crisis. He declined to say when a decision might be taken or to provide further details. The oil fund holds revenues from oil contracts, oil and gas sales, transit fees and other revenues, and has been used to top up the budget after it was hit by declining energy prices last year.
The bulk of the fund is held in sovereign paper. Assets of the fund rose by 33 percent to $14.9 billion by the end of 2009 from $11.2 billion in 2008. "We will end this year with a profit, but it's difficult to say exactly how big it will be as there are a lot of uncertainties across the world," Mammadov said.
In an interview with Reuters this week, the International Monetary Fund recommended the Azeri government retain any surplus of revenue from the fund, even if crude prices exceed government forecasts this year. Azerbaijan's 2010 budget is based on an oil price of $45 per barrel, well below the current price on world markets of around $85.