Today marks 30 years since the signing of the “Contract of the Century.”
Oku.Az Please note that September 20 is the anniversary of the Production Sharing Agreement (“Contract of the Century”) for the development of the “Azeri-Chirag-Deep Solar” (ACG) field block located in the national sector of the Caspian Sea in Azerbaijan and the professional holiday of workers working in the oil and gas field – the Oilman’s Day is recorded as
The celebration of this day as a professional holiday was formalized by the decree of the national leader of the Azerbaijani people, Heydar Aliyev, on August 16, 2001.
On September 20, 1994, the State Oil Company of Azerbaijan (SOCAR) and 11 foreign oil companies from six countries signed an agreement in Baku to celebrate this day as a professional holiday for oil workers on the joint development of ACG and distribution of oil produced in the form of shares related to the signing of the contract.
The GCA agreement, initially signed for a period of 30 years, was adopted by the National Assembly on 12 December 1994 and entered into force on 14 December 1994. The agreement was the first major investment by Western multinationals in any country of the former Soviet Union and is known as the “Deal of the Century”.
After the ratification of the agreement, the Azerbaijan International Operating Company (IOC) was established to implement the agreement on behalf of foreign shareholders cooperating with SOCAR and the Azerbaijani government. Initially, “Pennzoil” organized 11 large foreign oil companies (BP, Amoco, Unocal, LUKoil, Statoil, Exxon, etc.) representing six countries, i.e. Great Britain, the United States, Russia, Norway, Turkey and Saudi Arabia. “McDermott”, “Ramco” and “Delta Nimir”).
Since June 1999, BP has been the operator of ABE.
Currently, the shareholdings in ACG are as follows: bp (30.37%), SOCAR (25%), MOL (9.57%), “Inpex” (9.31%), “Equinor” (7.27%), “ExxonMobil” (6.79%), TPAO (5.73%), “Itochu” (3.65%), “ONGC Videsh Limited” (OVL) (2.31%).
The ACG oil field is located in the Azerbaijani sector of the Caspian Sea, approximately 100 km east of Baku. The ACG megastructure includes Balakhani VIII and X, as well as the Upper and Lower Fasila formations, located at a depth of 2,000 to 3,500 m under the Caspian Sea.
The development of the field was carried out in several stages: production from the Chirag field started in 1997 within the framework of the Primary Oil Project (IPP). After that, in early 2005, the Azeri Phase 1 project started – production at Central Azeri. The next second phase included the Western Azeri and Eastern Azeri platforms. Production there started in December 2005 and late 2006, respectively. As part of the third phase of the ACG field development, production from the Deepwater Guneshli platform started in April 2008. Following those phases, the Chirag Oil Project continued, which includes the Western Chirag platform. First oil was obtained from that platform on January 28, 2014. The last project related to the development of the ACG field is the Central-Eastern Azeri project. This project was sanctioned in 2019 and involves the construction of a production platform. This project is currently in the implementation phase and the first oil production is expected in 2023.
Considering the successful development of the ACG field, the Government of Azerbaijan and ACG partners signed an amended and restated agreement on September 14, 2017, extending the duration of the ACG agreement until mid-century.
The new agreement allows the government and investors to maximize the economic viability of the ACG for Azerbaijan and businesses over the next 30 years and invest more than $40 billion in this world-class field.
