24 years pass since the signing of Contract of the Century

  20 September 2018    Read: 3550
24 years pass since the signing of Contract of the Century

The foundation we laid with the contract of the century 
creates favorable conditions for the strengthening of the 
state sovereignty of independent Azerbaijan, the development 
and happy life of the people of the country in the 21st century. 
I believe that the 21st century will be the happiest period for 
the independent state of Azerbaijan. 
Heydar Aliyev

Heydar Aliyev's return to the government by the request of the people in 1993 laid the foundation for the important changes in the political and economic life of Azerbaijan. Heydar Aliyev who managed to avert the great disasters in Azerbaijan initiated the conduction of measures for the economic growth of the country as well. Vice President of SOCAR Ilham Aliyev has been involved in the process of negotiations since the very beginning and he became the most active participant in the said process. He adhered to the following brief and strong idea in his activity: "Our objective is not only to produce oil, to transport it and get incomes. We must use the oil, political, economic and other incomes to ensure the interests and welfare of the people.

The numerous meetings and negotiations in which he participated were conducted under the said slogan. Certainly, a number of difficulties and obstacles also existed. The last stages pf the negotiations related to the contract of the century in Istanbul and Huston in spring and summer of 1994 were the hardest ones. Sometimes the crisis occurred and the negotiations reached suspension due to the non-acceptance of definite provisions. Ilham Aliyev recalles the following: "We said the foreign companies: You protect interests of different companies and we protect the interests of the Azerbaijani people. If you do a mistake it will affect only a project of your company but in case we do a mistake that will cause harm to the people of Azerbaijan. On other words we must not do mistakes". Despite all the difficulties the contract was worked out in conformity with the national interests of Azerbaijan.

A production sharing agreement on the joint development of deep water reserves of Azeri, Chyrag and Guneshli was signed at the Gulistan Palace in Baku September 20, 1994. The contract was called the contract of the century due to its historical, political and international importance and was reflected in 400 pages and 4 languages. It included 13 leading oil companies (AMOCO, BP, McDermott, UNOCAL, SOCAR, LUKOIL, Statoil, Exxon, Turkish Petrol, Pensoil, Itochu, Remco, Delta) from 8 countries of the world (Azerbaijan, USA, Great Britain, Russia, Turkey, Norway, Japan and Saudi Arabia). Thus the new oil strategy and its doctrine was initiated successfully. The contract of the century was ratified by the Milli Medjlis of the Republic of Azerbaijan and came into effect on December 12, 1994. Oil reserves proposed to be produced at the initial stage amounted to 511 million tons yet the indicator reached the level of 730 million tons and due to that the investments in the development of the field amounted to USD 11.5 billion with Azerbaijan accounting for 80% and investors-for 20% of all finds.

The International Operating company was established in the first days of the contract of the century and started its conjoint activity with SOCAR in accordance with its ratified program. Later the contract promoted the signing of 26 contacts with 41 oil companies from 19 countries of the world. The contract of the century was included into the list of the largest documents concluded in the world for the volume of hydrocarbon reserves and investments. USD 57.6 out of 64 billion stipulated for the development of oil industry in Azerbaijan went for the assimilation of the offshore fields and conduction of exploration on the prospective structures.

Significant changes occurred in the economics of Azerbaijan since the commencement of the contract of the century and great works were carried out. First of all in frames of the project of oil production Chyrag-1 was restored in accordance with the modern standards in 1995 and the upper module of the said plant was modernized and equipped with new technologies for the drilling of richer wells. The new drilling plant enabled to drill horizontal plants. The wells A-18 (with the depth of 550 meters), A-19 (with the depth of over 6300 meters) drilled with the maximal propensity started operating with the high production of oil. This plant accounted for 19 wells drilled (15 oil wells and 4 water pumping wells).

The first tanker load of Azeri profit oil sailed to the world in December of 1999 and the number of such tankers (with 5.16 million tons) reached 39 as of January 1, 2005. The currency received from the sales of oil went to the State Oil Fund of the Republic of Azerbaijan established by national leader of the Azerbaijani people Heydar Aliyev and serves the people of the country. The Azeri section of an oil pipeline extending to 231 to the north and 720 mm in diameter was restored and constructed and the first Azeri oil was transported to the port of Novorossiysk (Russia) on October 25, 1997. The Baku-Supsa export pipeline extending to 837 kilometers to the west and 530 mm in diameter was constructed and commissioned on April 17, 1999. Both pipelines had transported 48.7 million tons of oil to the global markets by January 1, 2005. The country produced 9 million tons in 1997 and 15.3 million tons in 2003.

The sailing drilling plant Dede Gorgud (former Caspmorneft) was restored and modernized for drilling of the deep water test wells in the Caspian Sea. The plant is capable of drilling 7620 meters in the depth of 50-475 meters. Another plant Istiglal (former Shelf-5) was repaired and modernized and enabled to drill the wells of 7620 meters in the depth of 50-700 meters. 6 test wells were drilled as the result of the works carried out in Azeri-Chyrag-Guneshli fields by means of the modernized drilling plants and thus oil reserves increased by 30%. These plants operated successfully on the Shahdeniz and Azeri-Chyrag-Guneshli fields within the Caspian Drilling Company established in 1996. Great achievements were reached in the sphere of technique and technology by the help of the plant "Leader" named after Heydar Aliyev and constructed for Azerbaijan by foreign companies.

Presidents of USA, Turkey, Azerbaijan, Georgia, Kazakhstan and Turkmenistan signed an intergovernmental contract on the establishment of the main export pipeline Baku-Tbilisi-Ceyhan at the OSCE summit held in Istanbul, Turkey November of 1999. The The foundation stone of Baku-Tbilisi-Ceyhan pipeline was laid with participation of national leader of Azerbaijan Heydar Aliyev, Turkey and Georgia at Sangachal terminal in Baku September 18, 2002 and its construction was initiated. The Azerbaijan and Georgian sections of BTC were united in October of 2004.

In the future BTC will not only promote the access of Azeri oil to the global markets but will turn to the major pipeline of the Silk Road and Turkic countries.

The selection of the direction of the pipeline was the result of the great policy of Heydar Aliyev and the pipeline will join the oil pipelines system as the artery of the world

This head oil pipeline has an important technical, economic and political role. Thus, it will promote the establishment of the new relations of Azerbaijan, the reestablishment of relations of the Azerbaijani people and will cause the strengthening and development of the foreign policy of Azerbaijan.

The future prospects of oil production in Azerbaijan are connected with the program of the full-scale development of two more fields included into the Contract of the Century. The Central Azeri oil was produced within the first stage of the program in 2005. 12 wells were drilled by means of the sailing drilling plant Dede Gorgud for the purpose.

Two plants will be installed for the drilling, production and other technological works in the Central Azeri in accordance with project of Phase 1. It is planned to drill 48 major and 46 subsidiary wells for production of oil. The installation of two platforms and drilling of 48 wells are planned in the west and east parts of Azeri on the basis of the second phase. 4 well were drilled in Eastern Azeri, 1 in Western Azeri and the second is to be drilled (2004).

The project of the third phase is the last stage in the full-scale development of the Azeri-Chyrag-Guneshli fields. Therefore it was planned to conduct the joint development of the deep water Guneshli field and western Chyrag, to establish two platforms (drilling and technological works) and at the same time to drill 24 wells in the drilling platforms.


More about: Contract-of-Century