ECONOMY
The Contract of the Century - one of landmark agreements in Azerbaijan's history, national strategy for success
Baku, September 20, AZERTAC
September 20, 1994 marks a historic day for Azerbaijan when a national strategy developed by the government was crowned with the signing of a ground-breaking Production Sharing Agreement (PSA).
28 years ago, on this very day in 1994, under the leadership of national leader Heydar Aliyev, one of the landmark agreements in Azerbaijan's 20th-century history due to its political, economic and strategic importance - the Agreement on the Joint Development and Production Sharing (PSA) for the “Azeri” and “Chirag” fields and the “Gunashli” Field in the Azerbaijani Sector of the Caspian Sea - "The Contract of the Century" was signed.
The PSA agreement was signed between the State Oil Company of Azerbaijan Republic (SOCAR) and a consortium of 11 foreign oil companies from six nations for the development of an area that covered three major oil fields in the Azerbaijan sector of the Caspian Sea - Azeri, Chirag and Deepwater portion of the Gunashli field (ACG).
The ACG PSA, initially signed for 30 years and in 2017 extended until mid-century, was ratified on 12 December 1994 by the Parliament of Azerbaijan.
This PSA represents the first major investment by Western multinational companies in any country of the former Soviet Union and has become known as The Contract of the Century.
Driven by the extraordinary success of ACG’s development, the Government of Azerbaijan and the ACG partnership extended the ACG contract until mid-century by signing the amended and restated agreement on 14 September 2017.
The new contract, signed in Baku in the presence of President Ilham Aliyev in 2017, marked a new stage in Azerbaijan's oil strategy. It meant the start of a new era in the history of modern Azerbaijan, additional guarantees for the country's political and economic security, new investments, GDP growth, new jobs and improvement of social welfare.
By 2021, Azerbaijan has signed 37 "Production Sharing Agreements" with foreign oil companies.
Over the past period, Azerbaijan has become not only a supplier but also a reliable transit country. Countries on the eastern shores of the Caspian Sea transport their hydrocarbon resources to international markets through Azerbaijan. Russian companies also prefer to transport the oil produced from the Russian sector of the Caspian Sea to international markets via the Baku-Tbilisi-Ceyhan pipeline. Azerbaijan also has the largest fleet in the Caspian Sea.
Azerbaijan's greater participation in international markets further increases the country's power.
In 2020, the “Karabakh” field went down in history as the first oil field, whose initial estimated geological reserves are more than 60 million tons of oil, discovered in the years of independence.
On 21 January 2021, the Memorandum of Understanding was signed between the Government of the Republic of Azerbaijan and the Government of Turkmenistan on joint exploration and development of hydrocarbon resources of the “Dostlug” field in the Caspian Sea, which President Ilham Aliyev called a historic document, describing the Caspian as a sea of good-neighborliness, a sea of cooperation.
In accordance with the Decree signed by national leader Heydar Aliyev, who highly appreciated the selfless work of oil workers, September 20 - the day of the signing of the "Contract of the Century" is celebrated as a professional holiday of oil workers in Azerbaijan.
As President Ilham Aliyev said, “The unprecedented successes of the Contract of the Century are the result of the selfless work of our oil workers. It is thanks to them that Azerbaijan has an extensive oil industry infrastructure and is recognized in the world as an oil country.”