Oil&Gas Materials 20 September 2005 13:27 (UTC +04:00)

Azerbaijan marks the Day of Oilmen and the 11th anniversary of the signing of the �Contract of Century’ concluded for the development of the Azeri-Chirag-Gunashli fields. The Day of Oilmen was set in 2001 at the decree by Azerbaijani President Heydar Aliyev. The �Contract of Century’ signed on 20 September 1994, put an end to active assimilation of oil and gas resources in the Azerbaijani section of the Caspian Sea.

The participants in the agreement, which founded the Azerbaijan International Operating Company (РђIOC), were US companies Amoco, McDermott, Unocal, Pennzoil, Exxon, British companies BP and Ramco, the Norwegian Statoil, the Russian LUKoil, the Turkish TPAO and Delta Oil of Saudi Arabia. Further the list of participant-companies underwent changes, the shares were re-distributed and re-purchased in the contract. McDermott left the contract, while the Japanese Itochu entered the AIOC, two oil giants - BP and Amoco merged. The U.S. Mobile entered the AIOC through uniting with Exxon, a participant in the contract, Besides, Devon Energy (former Pennzoil) appeared in the list of shareholders, the British Ramco left it in 2000, trough purchase of its share (2,0825%) to the Saudi-American alliance Delta Hess at $150m. Later the Russian LUKOIL also sold its 10% stake to Inpex of Japan.

ACG Participating Interests are: BP (operator вЂ" 34,1%), Unocal (10,2%), SOCAR (10%), INPEX (10%), Statoil (8,6%), ExxonMobil (8%), TPAO (6.8%), Devon (5,6%), ITOCHU (3,9%), Amerada Hess (2,7%).

Over the past 10 years 4 Presidents have managed the AIOC: Terry Davis, John Prichard, John Legat, and the current David Woodward.

In compliance with the intergovernmental agreement between Azerbaijan and Russia, in November 1997 the first oil ran via the Baku-Novorossiysk pipeline to the Black Sea port of Novorossiysk for further export to world markets.

An only then the export pipeline was unofficially named �northern route’. Under the first stage called �Early Oil Production Project’, Chirg-1 platform was built in Chirag field, which still produces oil.

Besides, the Sangachal terminal was built in line with the world standards and put into exploitation.

The Italian Saipem built subsea pipelines: 24-inch oil pipeline up to Sangachal terminal and 12-inch gas pipeline up to gas compression station in Oil Rocks. In 2005 the AIOC started the oil production fro the Central Azeri field.

In April 1999 a terminal in the Georgian port of Supsa and the Baku-Supsa oil pipeline were put into exploitation. By this way AIOC became an owner of the second export pipeline, which was named �western route’.

On 18 September 2002 the construction of the Baku-Tbilisi-Ceyhan (BTC) was set up in Sangachal, while on 25 May 2005 the first oil ran via the pipeline.

The BTC with an annual discharge capacity of 50 million tons will be mainly used for the transportation of oil produced from the ACG contract area. In the first stage the capacity of the pipeline will be used only in the volume of oil to be extracted from the Central Azeri and Chirag platforms. Under Phase 1 the AIOC intends to produce 18.7 million tons of oil a year. 7 million tons more will be produced from the Chirag field. Thus, Azerbaijan in the initial phase will be able to export to world markets 25 million tons of oil a year.

Then, infrastructure of the pipeline will be increased following the rise of production. By 2009 the production from the ACG will increase to 1 million barrels of oil a day at the expense of commencement of the Deepwater Gunashli field.