Caspian Energy Journal Caspian European Club
Friday, 15 September 2017 15:30

We still have a big work to do at ACG – Khoshbakht Yusifzade Featured

 Today, 23 years later, the role of the contract of the century in the modern history, global energy security, building of the multipolar world, competitiveness of the economies of the region’s countries and in development of the world oil market cannot be underestimated. 

Back in 1994 a small but a very strong state rose from the ashes like a Phoenix bird, against the background of the traitorous, mean, inhuman and barbarous occupation of its lands by the neighbor state, destroyed economy, challenging geopolitical environment and absence of any certain signs of prospects. It happened on 20 September 1994 when the Contract of the Century was signed with 13 companies, representing 7 countries, under the leadership of All-National Leader Heydar Aliyev. Azerbaijan’s precedent served as a catalyst of global world economic processes. “We put interests of the country – interests of the state above all”, All-National Leader Heydar Aliyev said at the ceremony of signing of the contract of the century.

Since the signing of the first PSA in 1994, ACG has benefited from $33bn of investment, producing around 440 million tonnes of oil, and delivering directly more than $125bn of net profit to our country.

“We thought that the project would end in 30 years, but today we see that everything is still ahead”, Tim Eggar, participant of the signing ceremony of 1994, says (1994 UK Minister of Energy).

As President of Azerbaijan Ilham Aliyev noted, “a new contract of the century signed today is a historical event”.

UK Minister of State Alan Duncan called the new agreement on development of Azeri-Chirag-Guneshli fields a historical event, noting that it would form the basis of the bilateral cooperation.

 The new contract is effective until the end of 2049. The terms of the new contract will take effect following their ratification by the Parliament (Milli Majlis) of the Republic of Azerbaijan, which will enable us to maximize the economic benefits for our country from ACG over the next 32 years. The terms of the new contract reflect the growing financial and technological potential of Azerbaijan and SOCAR.

After the signing of the Azeri-Chirag-Guneshli project, foreign investors will invest $3.6bln as bonuses in Azerbaijan. SOCAR’s share will make 25%. Azerbaijan’s profit oil share will reach 75%.

During the signing of the Contract of the Century the output from the ACG fields was expected to comprise 511 million tonnes of oil, but the results have exceeded expectations. At present, 500 million tonnes of oil still remain untapped at the Azeri-Chyrag-Gunashli fields. 

According to the current psa, ACG project partners got a right to develop oil horizons just till the Pereriv formation. The capacity of Nadkirmakin and Podkirmakin formations, which lie deeper, exceeds the capacity of the developed horizons.

The signing of the new oil agreement will help to stabilize oil production at ACG which declined for the last 5 years, as well as to increase production of gas, recoverable reserves of which also make about 300bcm in. “The initial non-recovered ACG reserves are estimated at 500mln tonnes, but I believe that it is not a final figure. It can increase at least by 10% and even more, bearing in mind the attraction of new production technologies into the project. I am confident that in this block of fields there is still a big work to do in future” SOCAR First Vice President Khoshbakht Yusifzade said at the agreement signing ceremony.

Oil production schedule in Azerbaijan (2010-2016)



Key phases of the contract of the century

September 20, 1994 (Baku) – Official ceremony of signing of the Agreement on the Exploration, Development and Production Sharing of Azeri-Chirag-Deepwater Gunashli (ACG) fields.

January 24, 1995 (Baku) – The first session of the Managing Committee of the Azerbaijan International Operating Company (AIOC) on “ACG”.

January 18, 1996 (Moscow) – Signing of the bilateral agreement between the governments of Azerbaijan and the Russian Federation (RF) on transportation of early oil from ACG fields via the territory of Russia through Baku-Novorossiysk route.

March 8, 1996 (Tbilisi) – The intergovernmental agreement on transportation of Azerbaijani oil through the territory of Georgia via the Baku-Supsa route signed.

November 12, 1997 (Baku) – Official ceremony dedicated to production of the first oil from the Chirag-1 platform within framework of the ACG development project.

October 29, 1998 (Ankara) – President Heydar Aliyev of Azerbaijan, President Eduard Shevarnadze of Georgia, President Nursultan Nazarbayev of Kazakhstan, President Islam Karimov of Uzbekistan and President Suleyman Demirel of Turkey sign the Ankara Declaration regulating transportation of Caspian energy resources, in particular Azerbaijani oil to international markets via the Baku-Tbilisi-Ceyhan route.

November 18, 1999 (Istanbul) – Signing of the Istanbul Declaration on achieving of agreement by the workgroups of Azerbaijan, Georgia and Turkey on Baku-Tbilisi-Ceyhan (BTC) Main Export Pipeline Project.

October 17, 2000 (Baku) – Signing of two Agreements between the government of Azerbaijan as the owner of transit territory and the project shareholders; and the Agreement on Financing and Cooperation for Designing and Detailed Engineering of BTC MEP.

February 13, 2005 (Baku) – Commencement of oil production from Central Azeri.

December 30 2005 (Baku) – Oil production from Western Azeri starts.

June 16, 2006 (Almaty) – Azerbaijan’s President Ilham Aliyev and Kazakhstan’s President Nursultan Nazarbayev sign a joint agreement on support and cooperation in transportation Kazakhstan’s oil to the world markets through the Caspian Sea and Azerbaijan’s territory by means of the Baku-Tbilisi-Ceyhan oil pipeline.

July 13, 2006 (Adana) – Official inauguration of the Turkish section of the Baku-Tbilisi-Ceyhan export oil pipeline, new sea export terminal Ceyhan and the entire pipeline system of BTC.

October 21, 2006 (Baku) – Commencement of oil production from Eastern Azeri.

April 2008 (Baku) – Commencement of oil production at Gunashli field.

November 12, 2012 (Baku) – 15 years pass since the commencement of oil production at Azeri-Chyrag-Guneshli fields. 2.1 bln barrels of oil produced at ACG throughout this period. Baku-Tbilisi-Ceyhan pipeline exports about 1.6 bln barrels of oil. 

April 15,  2013  (Baku) – Azerbaijani International Operating Company (AIOC) announces that deepwater jacket built within the framework of erection of West Chyrag platform for Chirag Oil Project (COP) has been shipped from Baku Deep Water Jackets Factory to the point of installation. 

January 29, 2014 – Commencement of production at west Chirag. 


Caspian Energy

Read 1338 times