The Contract Of The Century’ Celebrates 26th Anniversary
It has been 26 years since Azerbaijan took a crucial step toward progress with “the contract of the century”, a strategic agreement which changed the course of the nation’s history. On September 20, 1994, the government of Azerbaijan, led by former President Heydar Aliyev, and 11 foreign companies, including BP, Amoco, Unocal, and Statoil, agreed to develop the largest oilfield in the Azerbaijan sector of the Caspian basin — Azeri-Chirag-Guneshli.
Сaspian News reports in its article ‘The Contract Of The Century’ Celebrates 26th Anniversary that signed only three years after the collapse of the Soviet Union, the production sharing agreement became Azerbaijan’s first major investment from Western multinationals and completely transformed the country’s economy.
“Influential countries of the world and giant companies were attracted to our country,” Azerbaijan’s Vice Premier Ali Ahmadov said in his remarks made at a video conference dedicated to “the contract of the century” held on Friday.
“The greatest significance of this project is the inflow of large financial resources to Azerbaijan, the development of the economy, the increase in the well-being of people, and the renewal of local infrastructure at the expense of these resources,” he added.
Located on the western edge of the Caspian Sea, Azerbaijan is rich in oil and natural gas. According to data compiled by the US government, the Caspian country's proven oil reserves are estimated to be seven billion barrels or about one billion metric tons, placing it 18th globally and ahead of Mexico, India, Norway, Sudan and the European Union.
The Azeri-Chirag-Guneshli oilfield, discovered in the early 1970s, is still the largest in the Azerbaijan sector of the Caspian Sea. It comprises series of individual “reservoir horizons” located 2,000–3,500 meters beneath the seabed and is tapped through six production platforms – Chirag 1, Central Azeri, West Azeri, East Azeri, Deepwater Gunashli, and West Chirag. The bloc also includes two process, gas compression, water injection and utilities platforms.
More than 50 percent of Azerbaijan’s state budget revenues come from oil sales — and ACG’s output has brought Azerbaijan nearly $146 billion in revenues from 2001 to 2020. Since 1994, the field absorbed around $43 billion of investments.
On 26 December 2019, the ACG produced the 500 millionth tonne of oil, according to a press release issued by BP. “As well as achieving this major production milestone, delivering huge profit to the country and to its shareholders and opening major sustainable development opportunities in local communities, ACG has turned the Caspian into one of the leading energy producing areas and technologically most advanced oil and gas development regions of the world,” said Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey.
In 2017, the government of Azerbaijan and the consortium of oil companies managing the field renegotiated the agreement, which now extends to 2050 and allows for more profitable terms and conditions for Azerbaijan. In accordance with the renewed document, Azerbaijan will receive a $3.6 billion bonus from the international partner companies on the project. In addition, the state-owned oil company SOCAR now holds a 25 percent stake, up from just 11.6 percent, while Azerbaijan’s direct share in profitable oil amounts to 75 percent.
In 2001, former President Heydar Aliyev signed a decree on a new professional holiday, Day of the Oil Worker. Since then the Oil Worker’s day is September 20, which has been celebrated annually. Azerbaijani President Ilham Aliyev has already congratulated Azerbaijani oil workers on the occasion, stressing the importance of their work for the country. “I would like to congratulate the oil workers on the upcoming professional holiday and wish them new successes. Oil workers have always enjoyed great respect in Azerbaijan. This is the case today as well and the work of oil workers is a real heroism,” President Aliyev said while addressing the foundation-stone laying ceremony for offshore operations at the Absheron oilfield that took place on September 20.