Saturday December 10 2022

Glorious day of Oil Workers

20 September 2016 15:46 (UTC+04:00)
Glorious day of Oil Workers

By Nigar Abbasova

Azerbaijan, which is famous as the oil country in the entire world celebrates, Oil Workers Day - professional holiday of workers of oil and gas industry on September 20, commemorating 22nd anniversary of the signing of a landmark production sharing agreement between Azerbaijan and a consortium of foreign oil companies.

The contract, also known as the Contract of the Century due to its tremendous importance, became the first offshore PSA agreement of the country. It covered the development of three major oil fields in the Azerbaijani sector of the Caspian Sea, including Azeri (113 km), Chirag (94 km) and Deepwater portion of the Gunashli field (82 km).

The historic document could become the biggest deal ever signed by Azerbaijan on the development of its major Azeri-Chirag-Gunashli fields, thus reviving the oil and gas industry in the country and ensured further growth of the well-being and prosperity of Azerbaijani citizens, gave a powerful impetus to the development of the country's oil industry and transformed the country into a major global energy supplier.

As many as 13 companies, including Amoco, BP, McDermott, Unocal, SOCAR, Lukoil, Statoil, Exxon, Turkish petroleum, Penzoil, Itochu, Remko, Delta representing eight countries, Azerbaijan, the USA, Great Britain, Russia, Turkey, Norway, Japan, Saudi Arabia participated in the Contract of the Century.

Excursion to history

Azerbaijan has been linked with oil for centuries, while the history of the oil industry of Azerbaijan dates back to the ancient period. Medieval travelers and scholars pointed out abundant resources of oil in the country.

A turning point in oil production was reached in the 19th Century, when the country was by far the frontrunner in the world's oil and gas industry.

The world's first oil well was drilled at the Bibi-Heybat field in 1847, and turned Baku into a center of world oil trade, allowing it to exert an incredible influence on the economic development of entire Caucasus.

The country attracted world oil investors, who gained millions on this industry. The Nobel brothers were the first to invest in oil extraction in Azerbaijan, making a great contribution to the development of the oil industry by establishing the Nobel Brothers Oil Extracting Partnership in 1873. The Rothschild Company and Shell led by Samuel Markus were also involved in oil production in Azerbaijan.

Azerbaijan produced some 11.5 million tons of oil and was the world's leading oil producer in 1901. Moreover, the country produced 23.5 million tons of oil, which amounted to 71.4 percent of the Soviet Union's production in 1941, while the production guaranteed the victory of the Soviet Union in World War II and turned oil into an extremely important factor of the national economy.

The country was also the world's first offshore oil producer. Azerbaijan and the Caspian became known all over the world with the discovery of the Neft Dashlari (Oil Rocks) field 40 km offshore and 90 km from Baku on November, 1949. Later on, such fields as Gurgan-deniz, Pirallahy, and Jilov adasy were developed. The Azeri, Chirag, Kapaz, and Gunashli fields were discovered at the depth of 80 to 350 meters in the late 1970s and early 1980s.

New page in development of petroleum industry

The signing of the contract with international oil companies and its implementation was a triumphant result of the policy based on the oil strategy pursued by Heydar Aliyev, paving the way for bolstering the country's geo-political standing and economic integration.

Azerbaijan opened its doors to foreign investments, after the signing of the Contract of the Century, as oil can be profitable only when it is accompanied by an operational mechanism, while foreign investment is considered to be an essential component of that mechanism. The agreement boosted the confidence of the world's leading countries in Azerbaijan, encouraged oil companies to invest in the country and increased the prestige of Azerbaijan in the international arena.

The contract proved to be a benchmark of the new economy of independent Azerbaijan, its energy security and economic stability.

The Azeri-Chirag-Gunashli (ACG) field, which lies 120km off the coast of Azerbaijan is considered to be the largest oilfield in the Azerbaijani sector of the Caspian Sea. Azeri Light oil grade that Azerbaijan sells to the world market is being produced at the field, while the daily oil output stood at 651,000 barrels in the first quarter of 2016. The crude produced in this field is among the lightest in the world, which is considered to be an advantageous quality, as it is less expensive to refine.

New economic strategy

Today Azerbaijan is the leading country in the region and oil factor still bears a great importance for the development of its economy. Fully ensuring its energy security, Azerbaijan is also one of the major energy suppliers to Europe. The oil and gas sector is considered to be the engine of Azerbaijan's economy today.

Oil has made its tremendous contribution to the nation and ensured its well-being for decades, occupying a lion’s share in Azerbaijan’s exports.

The energy sphere gave Azerbaijan a lot, but it is high time to switch to something new, as the current tendencies in the world economy are forcing many countries to keep focus on the development of non-oil sector, putting oil and gas industry on the back burner.

Azerbaijan is paying special attention to diversification of its economy and is seeking to enter a qualitatively new stage of its development with a view to minimize its dependence on hydrocarbon resources. The country is aimed to pursue a policy, which will ensure sustainable economic growth and development of auxiliary sectors of economy, as well as will create a new export-oriented economic model not depending on energy sphere.

September 20 is marked as the Day of Oil Workers in Azerbaijan, under a decree signed by President Heydar Aliyev..


Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

Follow us on Twitter @AzerNewsAz

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