"Contract of Century" returns former oil glory to Azerbaijan

"Contract of Century" returns former oil glory to Azerbaijan

Azerbaijan, Baku, Sept. 20 / Trend /

Azerbaijan has always been among the world leading oil and gas producing countries for over one and a half century-long history of world hydrocarbon production. The country's achievements are significant and undeniable. Drilling of the world's first well in the Bibiheybat field in 1846 and creating of the Oil Rocks in the Caspian Sea are the Azerbaijani oil workers' significant achievements.

However, signing of production sharing agreement (PSA) on the Azeri-Chirag-Guneshli fields on Sept. 20, 1994, which is rightfully called the "Contract of the Century", can be considered the peak of achievements in the Azerbaijani oil industry.

The signing of this contract has become a crown of Azerbaijani National Leader Heydar Aliyev's oil strategy, which is successfully continued by President Ilham Aliyev. This contract is one of main tools, strengthening the independence of the nation.

This year, Azerbaijan will celebrate the 15th anniversary of the "Contract of the Century" on Sept. 20, which is also celebrated as the Day of Oil Workers in Azerbaijan for many years.

Addressing the opening ceremony of the Baku-Tbilisi-Ceyhan on July 13, 2006, Azerbaijani President Ilham Aliyev said: "The "Contract of the Century" has triggered a large oil policy in Azerbaijan. Azerbaijan's new oil strategy, initiated by Azerbaijani President Heydar Aliyev enabled us to achieve all goals by using our opportunities.

The President also said that "[...] the first time in the history, Azerbaijan has invited foreign investors to its section of the Caspian Sea. Before, foreign companies had never worked in the Caspian Sea."

The sides to the production sharing agreement on the Azeri-Chirag-Gunashli fields are BP (operator- 34.14 percent), ChevronTexaco (10.2 percent), SOCAR (10 percent), INPEX (10 percent), Statoil Hydro (8.56 percent), ExxonMobil (8.01 percent), TPAO (6.75 percent), Devon (5.63 percent), Itochu (3.92 percent) and Delta Hess (2.72 percent). Required investments total $20 billion. The agreement covers 30 years.

Under the contract, oil production in the Azeri-Chirag-Guneshli fields increased gradually by commissioning new fields. Production in the Chirag field began in 1997, in the Central Azeri in early 2005, in the Western Azeri in early 2006, and East Azeri in late 2006. Production at the deep-water portion of the Guneshli field was launched in mid-2008.

In the first half of this year, production from the platforms of Chirag, Central, West, East Azeri and deep-water Guneshli was about 146 million barrels (about 20 million tons) of Azeri Light oil.

From June 4, 2006 to the end of July, 2009 the Ceyhan port has shipped more than 820 tankers with Azeri Light oil, which was produced from the Azeri-Chirag-Guneshli fields. Thus, this pipeline has transported over 650 million barrels of Azerbaijani oil (over 87 million tons) to world markets.

Currently, the Azeri-Chirag-Guneshli field occupies the third place among the world's 20 largest oil fields, according to rating of the American Consulting Association IHS CERA (Cambridge Energy Research Associates).
Currently, the daily oil production from the ACG field exceeds 900,000 barrels.
The "Contract of the Century" has laid a particular foundation for the development of various sectors of Azerbaijani economy, guaranteed stability of economy and the implementation of major projects in various areas, including transportation, agriculture, industry, education, social and etc.
Currently, the revenues obtained from oil and gas projects in Azerbaijan are accumulated in the State Oil Fund. These funds are intended for future generations, as well as for use in important infrastructure and social projects.
Despite the considerable development of the energy sector, the Azerbaijani economy's non-oil sector, including agriculture and high-tech, is also continuing to grow rapidly.
Azerbaijan is continuing its successful development, which was founded by Azerbaijani National Leader Heydar Aliyev, and continued by President Ilham Aliyev. We can confidently state the "Contract of the Century" signed in September 1994 is one of guarantors for the sustainable progress in different fields of political, economic, and social life of Azerbaijan.

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