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From a political point of view, the Contract of the Century was the doctrine of Azerbaijan`s salvation and development

Interview with  President of the State Oil Company of the Republic of Azerbaijan Rovnag Abdullayev

Q: We mark the 20th anniversary of the signing of the Contract of the Century. How would you assess the importance of this grandiose project launched by national leader Heydar Aliyev?

A: The Agreement was signed in Gulustan Palace in Baku on September 20, 1994 which was later named as the Contract of the Century due to its tremendous importance. Production Sharing Agreement related to the development of “Azeri – Chirag - Guneshli” deepwater oil fields has been reflected on 400 pages and 4 languages. 13 companies (Amoco, BP, McDermott, Unocal, SOCAR, LukOil, Statoil, Exxon, TPAO, Pennzoil, Itochu, Ramco, Delta) from 8 countries (Azerbaijan, USA, Great-Britain, Russia, Turkey, Norway, Japan, Saudi Arabia) have participated in signing of the Contract of the Century. This Contract has paved the way towards to the signature of other 26 contracts with 41 oil companies from 19 countries.

After the signature of the Contract of the Century, the parties to this document have established working structures – the Steering Committee, Azerbaijan International Operating Company (AIOC) and the Consulting Council. They have initiated its activities as they have been granted with legal competencies at the basis of the Special Decree signed by the President of Azerbaijan on December 2, 1994.

The speech made by national leader Heydar Aliyev at the signing ceremony of the Contract of the Century on September 20, 1994 is a meaningful historic document which enables us to use the language of political analysis and not just of the political interests. It reflects many principal key points and sound thinking laid in the core of intentions and decisions made by head of the Azerbaijani State. The national leader recalled to the participants the importance of the past – the history of Baku oil industries which is known by principal achievements and useful consequences.

Q: The new oil strategy ensured Azerbaijan`s state independence. We would like you to highlight the role played by the oil strategy in ensuring our country`s economic independence.

A: The Contract of the Century has made the history as the first comprehensive economic decision taken by national leader Heydar Aliyev which has defined the main priority in the policy of his Presidential administration – the oil strategy. But even under those times, the significance of the Contract of the Century was not limited to the expected financial profits. Early 90-ies, Azerbaijan has started to get out gradually from the catastrophic situation at the basis of national leader Heydar Aliyev’s project as well as the complexity of unnamed reasons which were always present in his policies and were seen by his wise supporters. In those years, the Azerbaijani State had to inherit the historical Azerbaijani statehood by assuming full responsibility not only for its own short period of existence, but also all experience of the Azerbaijani history. In this light, the Contract of the Century of the Century became the quintessence philosophy which united the consistent ideas of those times and values laid down in the heart of the Heydar Aliyev policy – to serve for the sake of people’s wellbeing.

Q: What can you say about the activity of the Baku-Tbilisi-Ceyhan pipeline, an artery which carries Azerbaijani oil to the West, and, in general, about the work done under the Contract of the Century?

A: The Baku-Tbilisi-Ceyhan Main Export Oil Pipeline has been carrying out transportation of the Azeri oil from the Caspian Sea to the Ceyhan Port of Turkey, and from there to European markets via the Mediterranean Sea. The BTC pipeline was built during the period from second quarter of 2003 to April 2005. The pipeline is 1,768 km long. Diameter of the pipeline is 46/42/34 inches. Throughput capacity of the pipeline is one million barrel a day.

Objects of the BTC pipeline include eight pump stations – two in Azerbaijan (including Sangachal), two in Georgia and four in Turkey, three scraper-launching stations (one in Azerbaijan, two in Turkey). Filling the BTC pipeline with oil started on May 6, 2005, and the first oil tanker filled with the oil transported through this line was shipped on June 4, 2006.

On 11 August, BTC celebrated the loading  of the 2 billionth barrel of oil at the Ceyhan terminal in Turkey.

The 1,768km BTC pipeline became operational in June 2006. Since that time BTC has carried a total of about 2 billion barrels (263 million tonnes) of crude oil loaded on 2580 tankers and sent to world markets. 

During the first half of 2014, BTC exported approximately 134 million barrels (17.8 million tonnes) of crude oil loaded on 185 tankers at Ceyhan.

The BTC pipeline currently carries mainly ACG oil and Shah Deniz condensate from Azerbaijan. In addition, crude oil from Turkmenistan continues to be transported via BTC. Starting October 2013, we have resumed transportation of some volumes of Tengiz crude oil through the BTC pipeline. In addition, in February 2014, the direction of flow through the SOCAR-operated Northern Route Export Pipeline (NREP) was successfully reversed.  This was a result of a collaborative effort by BP and SOCAR to activate some facilities along NREP. Commercial agreements were finalised which allowed NREP volumes to be exported via BTC.

Concerning what has been done under the Contract of the Century, I would like to briefly highlight the Azeri-Chirag-Gunashli project.

During the first half of 2014, ACG marked a major milestone by starting production from the Chirag Oil Project (COP). First Oil from the West Chirag platform was achieved on 28 January from one of the pre-drilled wells. Since that time West Chirag production has been increasing to its current level of over 50,000 barrels per day from four wells. Production will continue to increase through 2014 as the other pre-drilled wells are brought on-line.

Total ACG production during the first half was on average 656,100 barrels per day (b/d) (118.8 million barrels or approximately 16 million tonnes in total) from the Chirag, Central Azeri, West Azeri, East Azeri, Deepwater Gunashli and West Chirag platforms.

At the end of the first half of 2014, a total of 81 oil wells were producing, while 36 wells were used for injection in the ACG field.

Q: As we know, gas factor also plays an immense role in ensuring Azerbaijan`s energy security. What can you say of the country`s international position as a gas producer?

A: The signing of the Contract of the Century dramatically boosted the production of gas in Azerbaijan. It grew to 29.5 billion cubic metres of gas last year from 5.6 billion cubic metres in 2004.

During the first half of 2014, the Shah Deniz field continued to provide reliable deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC) and Turkey (to BOTAS and the BTC company).

During the first six months of 2014, the field produced 4.75 billion standard cubic metres (about 168 billion cubic feet) of gas and about 1.12 million tonnes (9 million barrels) of condensate or about 26.2 million cubic metres of gas per day (over 926.4 million standard cubic feet per day) and 49,757 barrels per day of condensate.

Since the start of Shah Deniz production in late 2006 until the end of the second quarter 2014, about 52.7bcm (1,861 billion standard cubic feet) of Shah Deniz gas, and about 108.5 million barrels (over 13.6 million tonnes) of Shah Deniz condensate has been produced.

Last December marked the signing of the final investment decision on Shah Deniz-2, which was described by President Ilham Aliyev as “The deal of the 21st century”.

In his speech at the signing ceremony the distinguished Mr. President said: “Shah Deniz-2 is one of the world's largest energy projects. This project is for energy security and diversification of energy. Greater cooperation between states and companies participating in this historic project will be ensured.” “We are only at the beginning of an ambitious project, which can be implemented through joint efforts. Today, I congratulate the people of Azerbaijan on this historic day. This project will ensure the long-term sustainable economic development of our country. At the same time, I express my gratitude to the Shah Deniz consortium for the efforts related to Azerbaijan. In particular, I express my gratitude to the two leaders of Azerbaijan's energy sector - SOCAR and BP, which are strategic partners. Between BP and SOCAR there is 20-year experience of cooperation. The agreements that we will sign will allow us to extend this cooperation by 40 years and longer.”

Q: What about the progress in gasification process?

A: In 2009-2014 a total of 691 residential areas across the country were supplied with gas for the first time. Currently, 90.4% of the entire territory of the country is gasified. In Baku, this figure is 99.1%, while in the regions it is 84.3%.

Work to supply the country with gas is carried out under the state program for the socio-economic development of the regions.

Special attention is paid to increasing the profitability of Bahar, 8 March, Gunashli and Bulla-deniz gas-condensate fields. 

The work to install gas-meters in the country is 100% completed.