AssA-Irada,
20, September 2007

13 years have passed since the signing of the Contract of the Century with major foreign oil companies. The production sharing agreement was a milestone that paved the way for joint development of Caspian oilfelds and promoted Azerbaijan's recognition worldwide.

In 1994, Azerbaijan gained its 'economic independence', as Baku signed the first-ever document on joint development of oil fields in the Azerbaijan sector of the Caspian Sea. This was followed by the tapping of the offshore Azeri, Chirag and Gunashli fields jointly with foreign oil majors.

The 250th tanker filled with oil exported through the Baku-Tbilisi-Ceyhan (BTC) main export pipeline sailed away on September 22. 26.613 million out of the 96.683 million tons of oil extracted from the Azeri, Chirag and Gunashli fields have been exported via the BTC, the project operator BP Azerbaijan said.

At its peak, production will be 50 million tons a year, with the BTC capacity to be gradually brought to that level.

Azerbaijan's annual revenues from the Contract of the Century alone will exceed $5 billion by 2010. The same amount already received has mostly been spent. $2.017 billion has been allocated through the State Oil Fund, the body that holds proceeds from oil, under various projects this year. The funds were channeled into improving the plight of people displaced by the Upper (Nagorno) Garabagh conflict, laying a water pipe from the Oghuz-Gabala area to Baku and upgrading the Samur-Absheron canal.

Analysts say that if world crude prices do not fall below $60 a barrel, Azerbaijan will receive $200 billion in revenues from the 30-year Contract of the Century.

Investments worth $15 billion have been made in the development of the ACG field.

Talks on the development of Caspian oil fields started in the 1980s when the existing Soviet technologies did not allow extracting oil at a water depth of over 100 meters. Considering this, former Soviet Union's ministry of oil industry issued instructions on operation of the Azeri, Chirag and Gunashli fields in the Caspian Sea jointly with foreign oil companies.

The talks on the issue were suspended in 1991 when the Soviet Union collapsed but resumed after Azerbaijan got independence. Moreover, the alternatives of taking Azerbaijan's oil to the world markets were discussed.

The contract on joint development of the Azeri, Chirag and Gunashli fields was signed on September 20, 1994, despite the unstable political environment in the country and its being in a state of war.

Azerbaijan's nationwide leader Heydar Aliyev contributed greatly to the signing of the document. Despite challenges, he managed to convince the West that the terms of the contract would be implemented. The future developments proved that this was not just a promise.

Later, the late Azerbaijani President Heydar Aliyev signed a decree on celebrating September 20 as the day of oilworkers every year.