History of the Baku Oil Industry. Part 36

After the discovery of oil fields, Baku became a special place, where various economic and political interests of international coalitions, industrial clans and leaders were concentrated and clashed. VK begins publishing chapters from the book by Ismail Agakishiev "History of the Baku Oil Industry and the Second Oil Boom (second half of the 19th century - beginning of the 20thcentury)" The book presents a historical analysis of the emergence and current state of the Azerbaijani oil industry.

Apart from the European countries, the USSR also maintained cooperation with Iran in the energy sphere, importing gas. In April 1990, after a 10-year break, supplies of gas to Azerbaijan were resumed under the agreement of the Iranian National Gas Company and “Soyuzgazeksport”. A gas pipeline between Iran and Azerbaijan was built in 1970 through the border town of Astara, whic h was divided into two parts – Soviet and Iranian.

According to the contract between the USSR and Iran, the latter should send 3 billion cubic meters of fuel annually to the Soviet Union  for 15 years.  To ensure constant gas supply to Transcaucasia, Gazprom created the 125-km long  Masally-Kazi-Magomed gas pipeline. This new pipeline was supposed to be a continuation of the second line of the Astara pipeline. Due to lack of currency, the USSR agreed with Iran that gas would be provided on barter terms.

The Soviet Union promised to help Iran with the construction of energy facilities, expansion of the metallurgical plant in Isfahan and some other industrial sites. Iranian gas, as the Head of “Aztransgaz” Tariel Gusseinov said, was supposed to “cover almost twice the demands of the population and industrial plants of the republic.” The need to resume importing gas from Iran was connected to the decline in gas extraction in Azerbaijan at the Caspian fields.

Another reason was the lack of means to transport the gas from the Eastern regions of the USSR to its European part.  Iranian gas allowed the most remote villages of the country to be linked to the gas network. The advantage of the Iranian-USSR pipeline was the opportunity to use it as fuel for electrical power plants instead of residual oil, which was more beneficial for the environment. The gas industry of Azerbaijan, one of the oldest in the USSR, with its years of experience, could become one of the leading ones. An analysis of gas consumption in more than 40 districts of the republic confirms the potential of Azerbaijan in this sphere:

Balance of gas consumption and losses in 1988

Actual consumption: 4.712 cubic meters per year [mistake?]

Plan over-realization: 5.3 times

Gas losses: 355,109 cubic meters per year

Actual losses: the population was consuming 16.7% more gas.

The situation in the sector in the period 1990-1991 was disturbing. At the beginning of 1989 the consumption of gas in the republic was 6.1% more than planned, while the losses of gas during transportation were very high - more than one billion cubic meters per year. The real demand for gas in the republic forced the government to take measures to solve the problem in 1990. The association for international economics "Daniz" was created in Baku by "Kaspmorneft", "Azneft" and the Caspian Sea Fleet. K. Abasov from "Kaspneftegaz" was elected the head of the association. The aim of the organization was to strengthen business cooperation between Azerbaijani oil and gas enterprises, the Caspian cargo fleet and foreign companies. The main accent was put on joint production and the creation of a joint Azerbajani-American enterprise for new, more environmentally-friendly production and recycling in the oil and gas industry.