25 years pass since signing of the Contract of Century

25 years pass since signing of the Contract of Century
  • Clock-gray 00:01
  • calendar-gray 20 September 2019

25 years pass since the signing of the Contract of Century, APA-Economics reports.

The Agreement “On the joint development of the ‘Azeri’, ‘Chirag’ and deep-water ‘Guneshli’ oil fields in the Azerbaijani sector of the Caspian Sea and production sharing” between the State Oil Company of the Azerbaijan Republic (SOCAR) and prominent world companies was signed in Baku, at the Gulustan Palace, on 20 September 1994.

On August 16, 2001, national leader of the Azerbaijani people Heydar Aliyev had signed a decree under which September 20 is marked as the Day of Oilmen in Azerbaijan.

The Contract 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).

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.

After the "Contract of the Century" 34 more agreements were signed with foreign companies.

The country produced 9 million tons in 1997 and 15.3 million tons in 2003.

On February 18, 1996, an agreement was signed on transporting Azerbaijani oil to the Black Sea port of Novorossiysk through the territory of Russia. Azerbaijan has been transporting its oil to the world markets through the Baku-Novorossiysk pipeline since 1997.

However, there was a need for a new pipeline to export oil produced under the Contract of the Century. That is why the National Leader Heydar Aliyev initiated the construction of a new oil pipeline. In spite of various political, economic and external barriers, the foundation of the Baku-Tbilisi-Ceyhan (BTC) main export pipeline was laid in 2002 with the participation of Heydar Aliyev. In May 2006, Azerbaijani oil was delivered to the Ceyhan port via the BTC pipeline. At present, BTC is a project that is of great importance not only in the republic and region, but also internationally.

The annual capacity of the pipeline is 50 million tons, which can be increased to 60 million tons in the future. The pipeline buried along its entire length is 1768km in total length: 443km in Azerbaijan, 249km in Georgia, and 1,076km in Turkey  The Azerbaijan and Georgia sections of the pipeline are operated by BP on behalf of its shareholders in BTC Co. while the Turkish section is operated by BOTAS International Limited (BIL).

BTC Co. shareholders are: BP (30.1 percent), AzBTC (25 percent), Chevron (8.9 percent), Statoil (8.71 percent), ТРАО (6.53 percent), Eni (5 percent), Total (5 percent), Itochu (3.4 percent), Inpex (2.5 percent), ExxonMobil (2.5 percent) and ONGC (2.36 percent).

At present, Azerbaijan's oil and oil products are exported to 30 countries of the world, including USA, China, Great Britain, Germany, France, Italy, Spain, India, Indonesia, South Korea, Thailand and Brazil and gas to Georgia, Turkey, Russia, Iran and Greece.

On September 14, 2017, the amended and restated Azeri-Chirag-Gunashli Production Sharing Agreement was signed in Baku. This marked a new stage in the development of Azeri-Chirag-Gunashli field. The new agreement was signed by officials of the Azerbaijani government, SOCAR, BP, Chevron, IMPEX, Statoil, ExxonMobil, TP, ITOCHU and ONGC Videsh companies. Under the amended and stated agreement, which was extended until 2050, BP remained the operator of the project, while SOCAR`s shares increased from 11 to 25 per cent and Azerbaijan's direct share in profitable oil amounted to 75 per cent. Subsequent to the new contract, SOCAR and its co-venturers also agreed to progress engineering development work to evaluate an additional production platform in the ACG contract area.

The ACG shareholders are BP - 30.37 percent, SOCAR - 25 percent, Chevron - 9.57 percent, Inpex - 9.31 percent, Equinor - 7.27 percent, ExxonMobil - 6.79 percent , TPAO - 5.73 percent, Itochu - 3.65 percent and ONGC Videsh Ltd. (OVL) - 2.31 percent. The project operator is BP Exploration (Caspian Sea) Ltd.

In total, from November 1997 to September 1, 2019, $ 492 million was paid from ACG. tons of oil, of which 287 mln. tons of oil fell to share of Azerbaijan's oil. During this period, ACG received $ 161 billion. cubic meters of natural gas.

Note that the Contract of the Century is of great economic and social importance for Azerbaijan. The Contract of the Century has an exceptional role in strengthening Azerbaijan's independence and occupying its worthy place among the world's states.

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