Summer 2003 (11.2)
Azerbaijan's Oil History
Oil Chronology since 1920 Part 2
by Mir-Yusif Mir-Babayev
This is the continuation of the Oil Chronology, Part 1: "A
Chronology Leading up to the Soviet Era" which discussed
developments in the oil industry in Azerbaijan from the 9th century
up to 1920 when the Bolsheviks seized power in Baku. Published
in Azerbaijan International, AI 10.2 (Summer 2002). Search at
The Oil industry has deep historical
roots in Azerbaijan. At the present time, more than half of the
national gross output is carried out in industrial production,
70 percent of which is concentrated in Absheron and consists
of oil and the oil refining industry. The development of other
spheres, especially chemical, electro-technical, machine building
and ferrous metallurgy is closely connected with these industries.
Since the collapse of the Soviet Union in 1991, the industrial
manufacturing spheres, related to oil are experiencing difficulties
due to broken relations in the technological spheres.
Left: Oil Rocks marked the first time that
offshore drilling had ever taken place in the world. It began
in August 1949. (Photo: Litvin)
For the first time in
the world, thermal processing of drilling chisels appeared in
machine building plants of Baku.
For the first time in the world,
Baku engineer Matvey Kapelyushnikov (1886-1959) worked out and
tested a one-stepped turbo drill with reduction gear.
The Committee on Oil Prospecting
in the Baku and Grozny regions aligned itself with the Moscow
Mining Academy, which had been established in 1918. A new oil
field called the Bay of Ilych, now known as Bayil Limani (the
Port of Bayil) opened in April.
Oil Well No. 71, which was built up on island-like woodpiles
in the Bay of Ilich, produced marine industrial oil.
For the first time in the world,
turbo drill invented by Matvey Kapelyushnikov succeeded in drilling
a well to a depth of 600 meters at Surakhani, near Baku.
Dmitry Golubyatnikov published
his work entitled, "Calculation of Oil Deposits on the Absheron
For the first time in the world, Baku engineer M.M. Skvortsov
constructed a device for the automatic movement of a chisel,
which became known as the "automatic driller".
Left: Historic signing of the "Contract
of the Century" in September 1994 for the development of
the Azeri-Chirag-Gunashil offshore oil poject. President Heydar
Aliyev at Gulustan Palace, Baku.
On July 6, the first
Electric Railway in the entire USSR began to operate, connecting
Baku's oil fields of Balakhani and Sabunchu.
A new technology in drilling was introduced in Baku: electrical
aggregates with exact control of the number of rotations came
into widespread use.
About one third of all Baku oil was being extracted by an invention
by V.G. Shukhov-the Airlift Method of Extraction of Fluid Hydrocarbon
Raw Material. This method pumped air into an oil layer under
such high pressure that, in turn, it would push oil to the surface.
Azerbaijan Scientific Research Institute on Oil Processing (named
after V.V. Kuybishev was established on October 22. [Since 1959,
it has been known as the Institute of Petro-Chemical Processes
(named after Y. G. Mammadaliyev)]. The staff was extremely instrumental
during the war effort (1941-1945) with their scientific research.
Famous inventor, scientist-engineer
Vladimir Shukhov (1853-1939) was elected as Honored Member of
the Academy of Sciences of the USSR.
Left: Celebrating "First Oil" in
November 1997. Left to right: Natig Aliyev President of SOCAR
(State Oil Company of Azerbaijan) with Azerbaijan's President,
Vladimir Shukhov and
Matvey Kapelyushnikov invented and constructed tubular cracking
("breaking up"). The process carried out by this equipment
became known in the history of oil business as "Soviet cracking"
and played a positive role in the development and gaining experience
in oil exploitation.
Electric logging and devices for the measurement of drilling's
curvature was applied for the first time in Baku.
Geophysicists from the French
firm Schlumberger introduced a method of electric exploration
in the oil fields in Surakhani.
Azerbaijan Scientific Research and Project Institute of Oil Machine
Building was established. This institute played an important
role in constructing various kinds of equipment for oil extraction
to deal with gushers and mechanized pumps. They also developed
equipment for current and major repair of oil wells and equipment
for intensification of oil development.
A new cracking-plant was built
in Baku by Vladimir Shukhov and Matvey Kapelyushnikov. The first
Reforming Process in the USSR took place in this plant. Aircraft
gasoline produced in this plant had an octane level of 90-95
as well as a low freezing temperature.
The first well at a slant (inclined hole) in the USSR was drilled
on the shore of bay of Ilych (Bayil Limani) by the rotary method.
On Artyom Island, which is now known as Pirallahi Island, the
construction of metallic devices on drilled piers for the drilling
of sea oil wells began according to a project proposed by N.
The Journal called "The
Azerbaijan Oil Industry" (former called "Oil Business")
began to publish a series of articles by famous engineer Fatulla
B. Rustambeyov. For the first time, he stated the theoretical
and practical basis of underwater oil deposit exploration and
the construction of sea oil wells in the Caspian by analyzing
both the experience of Azerbaijanis as well foreigners.
Left: One of the greatest catalysts for oil
development in Azerbaijan has been the annual Caspian Oil and
Gas Exhibition and Conference organized since at the Sports Coliseum
since 1994 by Spearhead Exhibitions (now Caspian Events) and
directed by Susan Crouch. The central exhibit shown here is for
AIOC, the 11-member consortium which is developing the Azeri-Chirag-Gunashli
(ACG) project. AIOC's booth was modeled after Atashgah, the Fire
Temple at Surakhani, which is also featured in this issue of
The first multi-stepped
direct-drive turbo drill was built by a group of Soviet engineers-
Peter Shumilov, Eyyub Taghiyev and others.
This year marked the beginning of the industrial application
of the multi-stepped turbo drill without a reducer which had
been invented by Shumilov, Taghiyev and others.
For the first time in the world, an oil well was drilled by the
electro drilling construction which was introduced by Ostrovsky,
Aleksandrov and others. Gala oil field.
For the first time in the world, the first slanted oil well in
the world was drilled to a depth of 2,000 meters in Bayil by
During this year the deepest
oil well up to that point in time in the USSR was dug at Hovsani
oil field at a depth of 3,200-3,400 meters.
Azerbaijan extracted more oil
this year-23.5 million tons per year-than at any other time in
its history. This amount comprised 71.4 percent of the total
oil extracted in the USSR that year and was determinate for the
outcome of World War II.
A method to synthesize chlorine and thus produce methane and
ethane was worked out under Yusif Mammadaliyev (1905-1961). This
facilitated the ability to obtain valuable high octane components
for aircraft gasoline.
A large machine-building plant was constructed in Baku (Kishla)
to produce oil and drilling equipment using new technologies.
The SSR Academy of Sciences of Azerbaijan was established which
consisted of four departments, two of which related to oil: the
Department of Geological, Chemical Sciences and Oil, and the
Department of Physics, Technical Sciences and Oil. Mir Asadulla
Mir Gasimov was elected the Academy's first president on March
The first large-block construction of the LAM system (Laboratory
of Airborne Methods of the USSR Academy of Sciences) in the oil
field region of Gurgani took place.
The beginning of the construction of metallic piers according
to the project of engineers B. A. Raginsky, N.S. Timofeyev, etc.
in the region of Caspian Oil Field Izberg-Izberbash (Daghistan).
Later, its analogues and more advanced piers were built in the
regions of Kurkan, Darvin, Chilov (Jiloy), Neft Dashlari (Oil
Rocks) and Peschaniy (now Gum Adasi).
Another First in the World: on August 24 the exploration at Neft
Dashlari (Oil Rocks) began in the Caspian sea along the Absheron
shelf. Construction of the steel offshore pier began. This was
the first time oil had been drilled offshore. After a month,
at 1,000 meters, they struck oil. Sometimes, Neft Dashlari is
referred to as "The Island of Seven Ships" because
during construction of the bridge-head, seven ships were lost
at sea. One of these tankers was the famous "Zoroaster",
the first tanker in the world which Ludwig Nobel had commissioned
to be built in 1877 in Sweden.
For the first time in the world, construction of hydro-technical
equipment in the open sea was carried out. The work was done
by the Scientific Research and Project Institute called "Gipromorneftegaz"
On October 31, by decree of
the Soviet Council of Ministers "on the Development of Sea
Oil Extraction in the Caspian," the largest oil union-Azmorneft-
was established in Baku.
For the first time in the world, oil tankers transported oil
from the first oil well ever drilled in the sea-Neft Dashlari
(Oil Rocks) to Baku.
Novo-Baku oil processing plant (NBNZ in Russian) was built and
put into operation where the process of catalytic cracking further
developed. The development of petro-chemistry became attached
to this plant. And the primary base for the petro-chemistry industry
was the creation of a new city, a satellite of Baku-Sumgayit
("Komsomolsk on the Caspian") which had been established
The beginning of the industrial development of Garadagh, the
richest oil and gas field. This was the basis of a new industry
for the Republic-the gas industry.
Oil scientist Eyyub Taghiyev lead a group of specialists to India
in search of industrial oil deposits. During 1958-1959 the national
oil and gas industry was established there). Taghiyev was appointed
for life as the head consultant to the Indian State Administration.
Several internal main gas pipelines were built in Azerbaijan.
Development of a new major oil and gas field began at Zira.
The completion of the construction of the great Transcaucasus
pipeline. Azerbaijan began to supply gas to the capitals of neighboring
The Lenin Prize is bestowed upon some Azerbaijanis for the complex
mastering of oil fields in the sea. The scientists and engineers
who received this honor included: V.F. Negreyev, I.P. Guliyev,
A.A. Farhadov, R.G. Hajiyeva, A.G. Khanlarova, S.A. Mehmandarov,
M.S. Trifel, B.A. Zamanov and M.I. Mammadov. (The Lenin Award
was the highest award given in the former USSR. Established in
1925, the prize was awarded every two years on the occasion of
First for Azerbaijan: The talented physicist Leo Landau (1908-1968)
from Baku was awarded the Nobel Prize in Physics for his research
on the peculiarities of helium in very low temperatures. Landau
was born in the Balakhani district of Baku. His father David
was the Head Engineer of Rothschild's Oil Company, the Caspian
Black Sea Society, which had been established in 1883.
In April, Eyyub I. Taghiyev and geologist E.A. Bakirov were sent
to Brazil to help establish the national oil industry. Their
recommendations about the development of oil fields and deep
drilling were accepted by the Brazilian specialists and the President
of Petro-Braz company.
Nikolay Beybakov from Baku was
appointed the head of the USSR State Chemistry Committee. The
following year, he became head of the State Committee of Oil
Processing Industry of the USSR Gosplan (State Plan). Beybakov
was recognized as the leading scientist and organizer of development
of the largest oil and gas regions of the USSR-Azerbaijan, Volga
and Ural (which became known as "Second Baku") as well
as Western Siberia ("the Third Baku").
Ministries for Oil Extraction and the Oil Processing Industry
were established in Azerbaijan SSR.
Famous oil worker Alovsat Garayev (1914-1988) was appointed Chief
of the Technical-Economic Management of the Ministry of Oil Extraction
Industry of the USSR. From 1965 to 1976, he also served as a
member of the Board of Minnefteprom of the USSR (abbreviation
is in Russian, in English it means Ministry of Oil Industry).
Garayev was the second Azerbaijani after Sabit Orujov to work
For the first time in the USSR:
The Special Chemical Institute of Additives was established at
the Azerbaijan Academy of Sciences on production of poly-functional
additives of complex action for motor lubricants produced from
Baku oils. First director was Ali Guliyev, an outstanding scientist,
academician for which this Institute is now named.
In May, a new oil and gas field was opened in Kursangi (Now this
project is known as "Kursangi-Karabaghli"). Oil Well
No. 26 in the second field of NPU (abbreviation is Russia, in
English it means Oil Field Office) Salyanneft used to produce
60 tons of condensate and more than 0.5 mln cubic meters of gas
per day from a depth of 2,800 meters.
A new technology was utilized
in oil processing in Azerbaijan. Equipment for selective rectification
of oils by Furfurol, where for the first time the disk capacitors
were applied instead of extraction columns. This process greatly
improved the quality of motor oil.
On January 18, the Fifth Congress of the Scientific Technical
Society (NTO in Russian) of the Oil and Gas Industry of the USSR
opened in Baku. This organization dates back to Imperial Russian
Technical Society (1866-1917) and continued its progressive traditions.
Oil engineer Asad Rustambeyov
(1911-1982) was appointed Assistant Director of AzNiburneft (abbreviation
is in Russian, in English it means, "Azerbaijan Scientific
Research Institute of Oil Drilling) of the Central Asia. He played
a significant role in the development of the Soviet oil business
in Azerbaijan, and the Russian republic of Bashkiriya (now Bashkortostan
Discovery and the beginning of the development of new oil and
gas condensate fields in the Azerbaijan sector of the Caspian:
Bahar (1968), Sangachali-Duvanni (1969), Bullamore (1975).
Extraction of the oil from the Caspian reached its highest level-12.9
Valentin Shashin (1916-1977)
from Baku was appointed Minister of the Oil Industry of the USSR.
Shashin played a great role in the harmonious development of
the Western-Siberia oil complex. Upon his initiative, the famous
oil worker Tofig Rustambeyov was appointed as Chief Engineer
(Deputy Chief) of the Drilling Management of the Ministry of
Oil Industry of the USSR.
March 28th marked the celebration of the billionth ton of oil
to be extracted from Azerbaijan.
Sabit Orujov, a Corresponding Member of the Azerbaijan Academy
of Sciences was appointed Minister of the Gas Industry of the
USSR. As an experienced leader and excellent organizer, he made
an invaluable contribution to the development of the Soviet oil
and gas industry. To this day, the most distinguished students
of Russia State University of Oil and Gas receive the Scholarship
awarded in his name-the S.A. Orujov Award.
The process of production of
platformate from Baku oil was achieved in Sumgayit Organic Semi
Products Plant. This process enabled scientists to obtain benzene-the
most important chemical raw material.
Shamil Jafarov (1929-1990) the famous constructor and organizer
of the production of oil industry equipment was appointed as
General Director of one of the first scientific-production unions
in Azerbaijan-Bakneftemash, which included Bakneftemash and the
machine-building plant named after Felix Jerjinski (Surakhani).
Azad Mirzajanzade, famous scientist and academician of Azerbaijan
SSR Academy of Sciences was awarded the I. M. Gubkin Prize for
his work titled, "Application of Non-Newton Systems in Oil
Extraction". The award was made by the President of the
Scientific Technical Society of the Oil Industry. Five years
later, Mirzajanzade was chosen as State Prize winner of the Azerbaijan
SSR for his series of work on the "Mechanics of Technological
Processes in Oil and Gas Extraction".
For the frst time in the world a stationary oil platform was
installed in deep water (84 meters).
Scientist and chemist Bahadur
Zeynalov was appointed as main specialist and Coordinator of
the USSR State Committee on Science and Technique on problems
related to producing synthetic naphthenic (petroleum) acids.
The process that worked out by direct oxidation of naphthenic
hydro carbons was patented in the U.S., Great Britain, Democratic
Republic of Germany, Romania and Japan.
Four new multi-stratum oil fields were opened in the Caspian
at a depth of 200 meters: Gunashli (1979), Chirag (1985), Azeri
(1988) and Kapaz (1989). These fields have reserves of 700 million
tons of oil and 200 billion cubic meters of gas.
For the first time in the world: Drilling took place via semi-submersible
drilling equipment at a depth of 200 meters.
On September 24-27, the head of the Soviet Union Leonid Brezhnev
(1906-1982) visited Baku for the third time to award the Lenin
Prize. On September 25, he visited the unique operating platform-the
drilling installation Shelf-2, which was designed to drill in
depths of 6,000 meters. (Brezhnev had previously visited Baku
in 1970 and 1978).
Scientist and chemist Shamil Vazirov (1942-2001) was chosen as
expert for the United Nations in North Korea where he worked
in the structure of the International group on organizing a catalytic
center. At the same time, he worked at the Polyvinilchloride
(PVC) producing process treatment plant in Khamkhin City.
Famous oil scientist and geologist Farman Salmanov was appointed
as First Deputy Minister of the USSR Ministry of Geology. Salmanov
was involved in the development of oil business in the Tumen
region and in throughout northern Russia for more than 30 years.
Mir Sayid Reza, oil scientist and Editor-in-chief of "Azerbaijan
Oil Economy", was appointed as a Member of the Commission
of Experts on Oil and Gas Problems of the High Certifying Commission
at the Council of Ministers of the USSR, where he continued as
a member until the collapse of the Soviet Union in 1991.
Kaspmornefteflot builds and commissions a unique diving vessel
which became known as the "Academician Tofig Ismayilov".
It was equipped with very modern equipment for technical and
navigational purposes, and for the system of dynamic positioning.
The Ismayilov could operate and submerge to depths of 300 meters.
A monograph by Yuri Zaytsev from Baku was published, which was
called "Theory and Practice of Gas Lift". As a result,
he was honored with the Diploma of the USSR State Committee for
People's Education and Enlightenment. At present, Zaytsev directs
projects related to the equipment for the gas wells of Orenburggasprom
and Astrakhangasprom unions.
Yevgeniy Areshev, famous oil worker from Baku, was appointed
as Deputy General Director of the state enterprise Zarubejneft
of the Ministry of Fuel and Energy of Russia. He supervised one
of the main directions of the union's activity-mastering oil
and gas resources of the Vietnam shelf.
A framework agreement on collaboration in the sphere of joint
mastering of oil fields in Azerbaijan and Russia as well as on
joint activity in a series of economic spheres which was of mutual
interest to both Russia and Azerbaijan was concluded between
the Russian Oil Company "LUKoil" and State Oil Company
of the Azerbaijan Republic "SOCAR".
On May 24-28, the First International Caspian Oil and Gas Exhibition
and Conference Incorporating Refining and Petrochemicals took
place in Baku. Since then, the event which is organized each
year by Spearhead Exhibitions (UK) [now Caspian Events] in partnership
with the Azerbaijan Chamber of Commerce and Industry, has become
the biggest international annual event in the capital, attracting
enormous international and local participation.
Azeri, Chirag and deep-water
Gunashli (ACG)-International Contract No. 1-was signed by President
Heydar Aliyev and the participating international companies on
September 20, 1994, ratified in Parliament on December 2, and
went into effect on December 12. Because of its potential reserves
estimated at 4 billion barrels of oil, this project is often
referred to as the "Contract of the Century". The projected
investment for this project is $13 billion.
A few months later in 1995,
a consortium was organized known as the Azerbaijan International
Operating Company (AIOC). Originally AIOC was comprised of 11
major international companies: BP (UK), Amoco (US), LUKoil (Russia),
Pennzoil, (now Devon of US), UNOCAL (US), STATOIL (Norway), McDermott
(US), Ramco (US), TPAO (Turkey), Delta Nimir (now Amerada Hess
of US), and SOCAR (Azerbaijan).
Since then Exxon, now ExxonMobil
(US); ITOCHU (Japan); and INPEX (Japan) have joined the consortium.
McDermott, Ramco and LUKoil have since sold their shares. AIOC's
first president was Terry Adams (UK) of British Petroleum (BP),
the company which operates the project.
On October 9, the routes for two pipelines-both the Northern
(via Russia) and Western (via Georgia)-were determined in the
AIOC Board of Directors meeting. The length of the Northern route
(Baku-Grozny-Tikhoretsk-Novorossiysk) is 1,411 km, of which 200
km cross Azerbaijan's territory. Two pump stations, with a capacity
of 80,000 barrels, were to be built along this line in both Azerbaijan
and in Russia.
The construction of the second
pipeline, known as the Western route, between Baku and Batumi
(Georgia) was scheduled to begin in March 1997. Its length was
926 km from Sangachal (Azerbaijan) to Supsa (Georgia).
Karabakh-International Oil Contract
No. 2-was signed on November 10, 1995, ratified by Parliament
on February 13, 1996 and became effective on February 23. The
PSA was signed between Pennzoil (US) LUKoil (Russia), Agip (Italy),
LUKAgip (Russia/Italy) and SOCAR (Azerbaijan). The capital investment
was identified as $1.7 billion. The predicted oil reserves were
estimated between 52 million up to 85 million tons; gas deposit-30
billion cubic meters
In February 1999, this consortium
dissolved, opting to abandon their efforts for the development
of this prospect, not finding it to be commercially viable. They
were the first consortium to do so.
Shah Deniz-International Oil Contract No. 3-was signed on June
4, 1996, ratified by Parliament on October 4, and became effective
on October 17. This Production Sharing Agreement (PSA) was between
the companies BP (UK), Statoil (Norway), LUKAgip (Russia/Italy),
Elf Aquitaine (later Total Fina Elf, and now TOTAL, of France),
OIEC (now NICO of Iran), TPAO (Turkey) and SOCAR. The value of
investment for this contract was $4 billion. Reserves of 500
billion cubic meters of gas and 100 million tons of oil were
Dan Ulduzu and Ashrafi-International Contract No. 4-was signed
on December 14th, 1996, ratified by Parliament on February 25,
1997, and became effective on March 7. The International companies
included Amoco (US), UNOCAL (US), Itochu (Japan), Delta Nimir
(Saudi Arabia) and SOCAR (Azerbaijan). The reserves of oil were
estimated at 55 million tons for Dan Ulduzu and 90 million tons
for Ashrafi. Capital investment was identified as $2 billion.
This consortium of companies, known as North Absheron Operating
Company (NAOC), closed in 1999.
Lankaran-Talysh-Contract No. 5-was signed on January 13, 1997,
in Paris in the presence of French President Jacques Chirac and
Azerbaijan President Heydar Aliyev. The contract was originally
signed by Elf Aquitaine and Total (both of France) and SOCAR
(Azerbaijan) and became effective on June 30, 1997. Later on,
Deminex (Germany), Oil Industries' Engineering & Construction-OIEC
(now NICO of Iran) and Fina (Belgium) joined the project. The
effective date of the contract is June 30, 1997. Currently TOTAL
(merger of Total, Fina and Elf) is the operator. Projected investment
is $2 billion.
Yalama / D-222-Contract No.
6-was signed on June 4, 1997 between SOCAR and LUKArco. The contract
estimated an investment of $1.5-2 billion on mastering the boundary
structure of Yalama with the anticipated deposit of 800 million
barrels of oil and 50 billion cubic meters of gas. In 2003, LUKoil
used capital from selling its share of the Azeri-Chirag-Gunashli
(ACG) project to invest in a larger share in Yalama / D-222 which
they operate. The projected investment for this project is $4
Absheron-Contract No. 7-was
signed on August 1, 1997, between Chevron and SOCAR. The ceremony
took place in the White House, Washington DC, in the presence
of Azerbaijan's President Heydar Aliyev and U.S. Vice President
The project was ratified by Parliament on November 11 and became
effective on December 5. TOTAL was an original partner to this
Production Sharing Agreement. The project is operated now by
ChevronTexaco. Estimated projected investment is $3.5 billion.
Oghuz-Contract No. 8-was signed
between Mobil and SOCAR at the White House in Washington, D.C.,
on August 1, 1997, during President Heydar Aliyev's State Visit.
This PSA was ratified by Parliament on November 7, and became
effective on December 5. Currently ExxonMobil (operator) and
SOCAR are 50 percent partners. Projected investment is $2 billion.
Nakhchivan-Contract No. 9-was
signed between Exxon and SOCAR at the White House in Washington,
D.C., on August 1, 1997, during President Heydar Aliyev's State
Visit. This PSA was ratified by Parliament on November 14, and
became effective on December 5. Currently ExxonMobil (operator)
and SOCAR are 50 percent partners. Projected investment is $2
Kurdashi-Contract No. 10-was
signed in Italy on September 26, 1997, when President Heydar
Aliyev made a State Visit to Rome. The contract was signed with
Agip as operator. Other companies who are participants in the
PSA include Mitsui (Japan), TPAO (Turkey) Repsol, and SOCAR (Azerbaijan).
Projected investment is $2.5 billion.
First Oil Day was celebrated
on November 12, 1997. This term refers to the "First Oil"
that was extracted from Chirag-1 platform, which is part of the
ACG project (Azeri-Chirag-Gunashli). First Oil was the culmination
of three years of work by the 11-company AIOC consortium.
Actually, oil began flowing
on November 7, which coincided with the 48th anniversary of the
Oil Rocks field, which was the first offshore project, not only
in Azerbaijan, but also in the world.
Celebration for the completion
of the construction of the oil terminals in Sangachal. Two pipelines-the
Northern route via Russia-and the Western route via Georgia-originate
On March 24, the first tanker load of AIOC oil, which consisted
of 80,000 tons, was lifted by AIOC's shareholders at Novorossiysk,
a Russian port city on the Black Sea. This was oil that AIOC
had produced from the Chirag-1 platform on November 7, 1997.
Gobustan-Contract No. 11-was
signed on June 2, 1998, at the Gulustan Palace in Baku on the
occasion of the 1998 Caspian Oil and Gas Exhibition. The PSA
was signed by SOCAR, Commonwealth and Union Texas. Ratification
took place in October 1998 and the contract became effective
November 27. The projected investment is $900 million. Current
partners for this onshore project include SOCAR, Commonwealth,
China National Oil and Gas Exploration and Development Corporation
(CNODC) and Fortunemate.
Inam-Contract No. 12-was signed
on July 21, 1998 a contract was signed by BP and SOCAR in Great
Britain. (Inam had been identified in 1953 using seismic methods).
The contract became effective on December 1, 1998. Shell is also
a partner in this contract. Projected investment is $3.5 billion.
Araz, Alov, and Sharg-Contract
No. 13-was signed on July 21, 1998, at 10 Downing Street in London
in the presence of British Prime Minister Tony Blair and Azerbaijan's
President Heydar Aliyev, who was on a four-day official visit
to the UK. The contract was signed between BP, Statoil and SOCAR.
Projected investment is $10 billion. Current partners are BP
as operator, SOCAR, ExxonMobil, Statoil, TPAO (Turkish Petroleum
Company), and Encana.
Muradkhanli-Contract No. 14-was
signed on July 21, 1998 at 10 Downing Street in London in the
presence of British Prime Minister Tony Blair and Azerbaijan
President Heydar Aliyev who was in the UK on an official visit.
Ramco was the operator of this onshore project. The Consortium
was dissolved in 2001.
On October 5-8, the Third International
Oil and Chemistry Conference was held dedicated to the memory
of the academicians Murtuza Naghiyev and Vahab Aliyev. Presentations
were given by representatives from the U.S., Russia, Turkey,
Iran, Ukraine, Bashkortostan and Kazakhstan.
In December, construction on
the 827 km Western pipeline route between Baku-Supsa was begun.
A year later, it was averaging 105,000 barrels per day-the equivalent
of 5 million tons a year.
Professor Nil Khayreddinov (who
was born in Baku), published"Geotechnical Pecularities of
the Development of Oil Fields in Southwest Bashkortostan"
(South Ural Mountains, Russia). In this book, he summarized the
results of investigations in the sphere of forecasting the methods
of increasing of oil recovery for major oil and gas extracting
regions of Russia.
No. 15-was signed on December 15, 1998, between Frontera Resources
Corporation and SOCAR. The agreement heralds one of the first
onshore rehabilitation, development and exploration projects
in Azerbaijan to be conducted under a production-sharing agreement.
Currently the fields are producing a combined total of approximately
4,200 barrels of oil daily. The Kursangi-Garabaghli Block is
located 100 km southwest of Baku.
Current partners in Salyan Oil consortium include, SOCAR, China
National Oil Development Company (CNODC) and Fortunemate. After
being ratified by Parliament, the project became effective April
22, 1999. Projected investment is $1 billion.
Atashgah-Contract No. 16-was
signed on December 25, 1998, between four Japanese companies
SOCAR (State Oil Company of Azerbaijan Republic) for development
of three offshore oil prospects (Yanan Tava, Atashgah and Mughan
Daniz) in the Azerbaijan sector of the Caspian Sea. The consortium
includes Japan Petroleum Exploration Corp.
(JAPEX), Teikoku, Indonesia Petroleum Ltd. (INPEX) and Itochu
and SOCAR. Projected investment is $2.5 billion.
Zafar-Mashal-Contract No. 17-was signed in Washington, D.C. on
April 27, 1999, along with two other contracts during President
Aliyev's official visit to the U.S. The contract was signed by
ExxonMobil and SOCAR. Projected Investment is $3 billion. Partners
currently include SOCAR, ExxonMobil and ConocoPhillips. The project
became effective May 8, 2000.
Lerik-Contract No. 18-was signed in Washington, D.C. on April
27, 1999, along with two other contracts during President Aliyev's
official visit to the U.S. The current operator is ExxonMobil.
Projected investment is $3 billion.
Padar-Contract No. 19-was signed in Washington, D.C. on April
27, 1999, along with two other contracts during President Aliyev's
official visit to the U.S. The original contract was signed between
Moncrief and SOCAR. The project is currently operated by Kur
Operating Company and the partners are Nations Energy and SOCAR.
Projected investment is $2 billion.
On September 21-24, the Fifth
International Baku Congress, "Energy, Ecology, Economy"
was held. More than 220 reports were made in four sections: "Ecological
Problems of the Caspian", "Ecological Problems Related
to the Northern and Western Pipelines", "Energy Conservation,
Change of Climate, Restored Sources of Energy" and "Recommendations
on Legislative and Normative Documents" (Previous symposiums
and conferences had been held in Baku in 1991, 1993, 1995 and
In November, at the Summit meeting of OSCE (Organization on the
Security and Cooperation of Europe) in Istanbul, the heads of
states from Azerbaijan, Georgia and Turkey signed an interstate
agreement to support the main export pipeline between Baku-Tbilisi-Ceyhan
(pronounced Jeyhan). This pipeline would become known as the
On December 22, the tanker Birch
loaded with 1 million barrels of Azerbaijan's first profit oil
was shipped by TotalFina from Supsa to Lavera (France).
Kalamaddin-Mishovdagh-Contract No. 20-was signed on September
12, 2000 and became effective November 22. The PSA (Production
Sharing Agreement) was initially signed between Moncrief and
SOCAR. Currently the project is being operated by Karasu Operating
Company and the partners are Nations Energy and SOCAR. Projected
investment is $1 billion.
Zigh-Hovsan-Contract No. 21-was signed on January 9, 2001 on
the occasion of the first official State Visit of President Vladimir
Putin to Azerbaijan. The PSA was signed between LUKoil and SOCAR.
Projected investment is $250 million.
Beginning in March, Dubai Oil Company of Middle East Petrol began
operating the oil terminal in Dubandi on the Absheron Peninsula.
This terminal greatly expanded transit export. Dubandi was originally
built in 1970 and is located 47 km. north of Baku.
On September 18, the Construction
Phase of the Baku-Tbilisi-Ceyhan (BTC) oil project was officially
begun. The ceremony took place at the Sangachal Terminal Expansion
area. Presidents from the three countries through which the pipeline
will cross were present: President Shevardnadze (Georgia), and
President Ahmet Necdet Sezer (Turkey) joined Azerbaijan's President
Heydar Aliyev to mark the occasion. Oil is expected to start
flowing early 2005.
In September, Isgandar Jafarov,
Doctor of Geological-Mineralogical Sciences and Academician of
Russian Academy of Natural Sciences, was appointed Senior Vice-President
of Siberian-Ural Oil, Gas and Chemical Company. Previously, he
held the position of Director of Geology and Development Department
of the Tumen Oil Company.
Ion Iliesku, President of Romania
paid an official two-day visit to Baku on October 29. He expressed
Romania's willingness to transport Azerbaijan oil and gas to
Europe, as well as to acquire Caspian energy resources.
The total amount of oil extracted
from Azerbaijan's oil fields consisted of 12,686 million tons;
7,444 million tons of this was extracted by SOCAR and 5,242 million
tons by the Azeri-Chirag-Gunashli (ACG) consortium.
In February, Stage 1 Development of the Shah Deniz gas and condensate
offshore field was signed. This marked the beginning of the new
gas pipeline, South Caucasus Pipeline (SCP) which will be constructed
from Azerbaijan to the Black Sea in Georgia. The new pipeline
will be 690 km long (442 km in Azerbaijan and 248 km in Georgia)
and will use the same corridor for construction as the Baku-Tbilisi-Ceyhan
oil pipeline which extends on to Turkey. The funding shareholders
of the South Caucasus Pipeline are the same as for the Shah Deniz
PSA. They include BP as operator, Statoil, TOTAL, NICO, LUKAgip,
TPAO and SOCAR.
1. Azerbaijan International, Sherman Oaks, CA (US), 1993-2003.
Search at AZER.com.
2. Azerbaijan Oil Industry (magazine). Baku, 1995-2002.
3. Oil Industry (magazine). Moscow, 1995-2002.
4. Territory of Neftegas (magazine). Moscow, 2001-2002.
1. Balayev, S. G., Oil of the Country of Eternal Fire. Baku:
Azernashir Publishing House, 1969.
2. Lisichkin, S.M., Outstanding People of Native Oil Science
and Technique. Moscow: Nedra Publishing House, 1967.
3. Academy of Sciences of Azerbaijan SSR. Edited by H.B. Abdullayev.
Baku: Elm Publishing House,1976.
1. Mir-Babayev, M.F., "Absheron Oil: The Development of
Oil Business in Azerbaijan" in Chemistry and Technology
of Fuels and Oils, Moscow, No. 3 (1993), pp. 36-37.
2. Mir-Babayev, M.F., "Azerbaijan's
Oil History: A Chronology Leading Up to the Soviet Era-Azerbaijan
International Magazine, Sherman Oaks, CA (US) AI 10.2 (Summer
2002), pp. 34-41. Search at AZER.com.
Mir-Yusif Mir-Babayev has a
doctorate in Chemical Sciences and is a professor at the Azerbaijan
Technical University. His special interest is the early history
of Azerbaijan's oil. For Part 1 of this series, see "Azerbaijan's
Oil History, A Chronology Leading up to the Soviet Era"
in AI 10.2 (Summer 2002). Search at AZER.com. Contact M.F. Mir-Babayev:
firstname.lastname@example.org or email@example.com.
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