The necessity of making the local currency convertible forced the authorities to take measures. The foreign economic association "Deniz" was established in Baku. Such enterprises as "Kasmorneftegaz", "Azneft", and the Caspian steam line co-founded it. The General Director of "Kasmorneftegaz", K. Agazov, was appointed chairman of the association’s board. The main aim of the association was to improve ties between Azerbaijani oil and gas enterprises and foreign partners.
One of the most acute problems of the Soviet oil industry was that of associated gas. A certain technology that can solve this problem was invented in the United States. That’s why the main partner of "Deniz" was an American company, "Eastern Credit Ltd". The main aim of the cooperation was to solve the problem of associated gas, which was estimated at 1.5 billion cubic metres annually.
Another serious joint program aimed at solving the problem of outdated hydrotechnical facilities. Local enterprises were unable to solve this problem by themselves and were interested in cooperation with Western companies.
The third aim was to increase the amount of oil produced. The only way to solve this problem was to implement new Western technologies. The Soviet equipment was useless. That is why many deposits were not even being developed.
The decrease in oil production was harmful for the economy of the entire Soviet Union and for Azerbaijan as well. During the last five-year production cycle the amount of oil produced decreased by 1 million tons and the production of gas by 334 million cubic metres. The number of developing deposits reduced by 329.
It was decided to allow Western companies to use vessels of the Caspian steam line in order to encourage investment in the republic. Azerbaijani vessels were used to carry products for Western consumers and contracted out. American, British and Turkish companies were interested in using Azerbaijani vessels.The decision made by the Council of Ministers of the Republic of Azerbaijan to nationalize the Caspian steam line was favourable to the activity of the relevant governmental bodies and secured a profit for the republic.
The Caspian steam line was a complex company that united a fleet and big enterprise. The steam line cost about 1 billion roubles. The company had its own merchant fleet, 4 ship-building yards, the port of Baku and dozens of smaller ports and enterprises. It was a company that attracted investment into the Azerbaijani economy.
International oil companies were interested in the Azerbaijani sector of the Caspian Sea, as the infrastructure in the region was well-developed and the country had rich experience in extracting oil from the bottom of the sea. Soviet equipment was most efficient at a depth of 140 metres. It could even be used during storms and in the winter. "Kasmorneftegas" had 13 machines capable of extracting oil from the bottom of sea. This equipment was used not only on the Azerbaijani coast of the Caspian Sea, but also on the Eastern coast.
"Kasmorneftegas" saw a lot of income due to the exploitation of this equipment. In 1990 the company signed a contract with the National Oil Company of Iran. With the help of Azerbaijani machinery the Iranian side started searching for oil on the Iranian shore of the Caspian sea.
However, investment in the oil industry of the USSR during the crisis was accompanied by great political and financial risks. The was no guarantee that existing structures would be stable in such a situation. At the same time the Soviet authorities were carrying out a harmful policy that eventually led to the collapse of the Soviet Union. In 1991, elections for new presidents were held in each republic. The appearence of this new office predetermined further conflict between the local and the central elites.Ismail Agakishiyev, the head of the Center for Caucasian Studies of the Russian State University for the Humanities.
