Azerbaijan marks 28th anniversary of Contract of Century

September 20 marks the 28th anniversary of the signing of the Production Sharing Agreement (the Contract of the Century) on the development of the Azeri-Chirag-Guneshli fields in the Azerbaijani sector of the Caspian Sea and the professional holiday of employees of the oil and gas sector - Oil Workers Day.

According to Report, this day was declared the professional day of oil industry workers in accordance with the Decree of the national leader Heydar Aliyev dated August 16, 2001.

On this day, successes achieved in this field of the industry and challenges ahead are discussed. Workers and professionals distinguished by special services and heroism are awarded honorary titles, orders, and medals under decrees and orders of the head of state.

The celebration of this day is timed to coincide with the signing of the Contract of the Century on the development of the Azeri-Chirag-Guneshli (ACG) field, signed in 1994 between the State Oil Company of Azerbaijan (SOCAR) and a consortium of 11 oil companies representing six countries. Signed for 30 years, it was ratified by the Milli Majlis on December 12, 1994, and came into force on December 14.

The Contract of the Century was the first major investment by Western multinational companies in the country of the former Soviet Union, followed by others.

After ratification, the Azerbaijan International Operating Company (AIOC) was established to implement the agreement, representing the interests of the foreign partners and working with SOCAR and the Azerbaijani government. Initially, AIOC consisted of 11 foreign oil companies (BP, Amoco, Unocal, LUKoil, Statoil, Exxon, TPAO, Pennzoil, McDermott, Ramco, Delta Nimir) representing six countries - the UK, US, Russia, Norway, Türkiye and Saudi Arabia.

Since June 1999, BP became the operator of AIOC.

ACG current participating interests are: BP (30.37 per cent), SOCAR (25.0 per cent), MOL (replaced Chevron since April 16, 2020) (9.57 per cent), INPEX (9.31 per cent), Equinor (7.27 per cent), ExxonMobil (6.79 per cent), TPAO (5.73 per cent), ITOCHU (3.65 per cent), ONGC Videsh Limited (OVL) (2.31 per cent).

The ACG oil block is located in the Azerbaijani sector of the Caspian Sea, about 100 km east of Baku. The reservoir horizons are located at depths of 2,000-3,500 m.

The field was developed in several phases: production from the Chirag field started in 1997 as part of an early oil project.

The first phase of the Azeri project started production from Central Azeri in early 2005. Phase-2 covers the development of West Azeri and East Azeri. Production started there in December 2005 and at the end of 2006 respectively.

As part of the third phase of the ACG development, production from the deepwater portion of Guneshli started in April 2008.

The next stage was the West Chirag project, with the first oil flowing from this platform on January 28, 2014. The latest ACG development project is Azeri-Central-East (ACE), which was sanctioned in April 2019 and included constructing one production platform. The ACG project is currently at the execution stage, with the first oil expected in 2023.

On September 14, 2017, the government of Azerbaijan and the partners signed an updated agreement on joint development and production sharing with ACG. The term of the agreement has been extended until mid-century.

The total investment in ACG has to date amounted to more than $43 billion, with the same amount planned to be invested in the future, over the next 30 years of development.

Thanks to ACG, Azerbaijan's role as a strategic supplier of energy resources to world markets has increased. It has produced 560.2 million tons of oil and 199 billion cubic metres of associated gas during the whole period of its exploitation (as of September 1 this year).

From 2001 till September 1 of this year, the total volume of incomes received from the development of the ACG field amounted to $159.6 billion. Taking into consideration $2.4 billion in bonus payments, total Azerbaijan's income from ACG reached $162 billion.

Since the beginning of the year, the country's revenues from the development of ACG amounted to $6 billion 629 million.