Terminology

Acreage fees - payable to the State Oil Company of the Republic of Azerbaijan by the foreign investors for use of the contract areas in connection with the development of hydrocarbon resources.

Audit - is an evaluation of a person, organization, system, process, enterprise, project or product audits in accounting, but similar concepts also exist in project management, quality management, and for energy conservation. An unbiased examination and evaluation of the financial statements of an organization. It can be done internally (by employees of the organization) or externally (by an outside firm).

Bank - juridical person, having exclusive authority for complex banking operations, namely to attract deposits of legal entities and individuals to accomodate raised funds on its behalf and at its costonterms of repayability, chargeability, and promptness, and also to open and keep banking accounts of individuals and incorporated entities.

Bonus payments - the fees payable by foreign oil companies to State Oil Company of Azerbaijan Republic or other relevant authorities of the Republic of Azerbaijan due to signing of oil contract and its implementation.

Budget deficit - A budget deficit occurs when an entity spends more money than it earns.

Dividend - are payments made by a corporation to its shareholders. It is the portion of corporate profits paid out to shareholders. When a corporation makes a profit or surplus, that money can be re-invested in the business.

VAT (Value Added Tax) - tax on the estimated market value added to a product or material at each stage of its manufacture or distribution, and ultimately passed on to the consumer.

Income tax - an income tax is a tax levied on the income of individuals or businesses.

Production Sharing Agreement - The Production Sharing Agreement (PSA) is a form of agreement relations in the emerging market economies. It was first put into practice in 1966 in Nigeria, and disseminated later in Egypt, Syria and other countries. The PSA conditions are usually determined by national legislation. According to PSAs, the government gets a part of profit oil as a product along with tax or other payments.

Rentals - payments to the Oil Fund by foreign companies for state property used on a contractual basis.

Loan - a certain amount of money lent for a certain period of time (subject to extension) bearing interest (commission fees), with or without collateral, subject to repayment as per the underlying contract.

Royalty - An amount of money paid to the owner of a resource-bearing property by a mining company in exchange for the right to extract and sell the resource. This compensation is usually proportional to the quality and quantity of the extracted resource.

Profit - economic profit, or profit, is the positive difference between a firm's total revenues and its opportunity costs.

Profit oil - the Republic of Azerbaijan’s share of proceeds from the sale of crude oil under the Production Sharing Agreements.

Correspondent bank - Bank which handles the local leg of a business transactions and associated documents, as an agent of a bank in another city or country. Also called agent bank.

The proceeds from assets delivered by investors - fixed assets, movable property and other assets submitted to the Oil Fund, under the PSAs, export pipeline contracts and related covenants.

Tariff - conducts state regulation of prices.

Transit fees - charges for using Baku-Supsa export oil pipeline to transport oil across the territory of the Republic of Azerbaijan.

Loss - is the negative difference between a firm's total revenue and its opportunity costs.