Oil strategy of Azerbaijan under Ayaz Mutalibov - 4

As there was no political stability, foreign countries were afraid of investing in the economy of the republic instead of the anticipated big prospects. The start of open interest in Baku oil in the late 80s was the visit of the chairman of the Scottish oil company Ramco, Steve Remp, in 1989.

During the visit Remp met the legendary oilman Kurban Abbasov. Usta (master) Kurban (as he was called by all oilmen of the USSR) showed the head of Ramco the real prospects for Azerbaijani oil deposits. Later, Remp said: "After the fall of the Iron Curtain in 1989, most oil companies concentrated their efforts on Western Siberia. It was thought that the resources of Azerbaijan were about to finish. After meetings with Azerbaijani specialists I realized what tremendous unexplored reserves the Caspian Sea has." According to the Soviet oil men, in the Azerbaijani sector in the late 1980s there were rich deposits of hydrocarbons in the Apsheron and Baku archipelagos. In the Apsheron archipelago the biggest deposits "Gyuneshli", "Azeri" and "Chirag" were found at that time. Later, in the same part of the Caspian Sea, the biggest gas-condensate deposit of the Azerbaijani sector was found, called "Shakh-Deniz". Also, in the Soviet period the oil deposits "Bank Darvina", "Pirallahy adasy", "Gyurgyan-Deniz", "Chilov adasy", "Neft dashlory", "Gum-deniz" and "Bakhar" were discovered. The forecasts of Azerbaijani oil scientists on big reserves of  hydrocarbons were confirmed after the deposits "Ashrafi" (1988) and "Shakh Deniz"  (1999) were uncovered.

Steve Remp shared the data he got in Baku from Kurban Abbasov with the company BP. After that, foreign companies paid more attention to Caspian oil. After long negotiations between Remp and the Azerbaijani government, Remp was allowed to recommend foreign companies to cooperate with Azerbaijan in exchange for some share of the contracts.

The negotiations with future participants of oil contracts started in 1990. The participants were the Azerbaijani government, the USSR Oil and Gas Industry Ministry, "Amoco", "Alliance", "BP/Statoil", "Unical", "McDermot" and "Ramco". The USSR Oil and Gas Industry Ministry signed an order to organize a tender to create a joint enterprise with the production association "CaspMorNeft" on research and development of the off-shore deposit "Azeri" found in 1987. The companies started active work and organized charitable actions for the population of the republic. They supplied medical equipment and medicines and send the best students to foreign universities to prepare local personnel to realize potential contracts. The tender organized in 1991 was won by the American company "Amoco".

On the 18th of January 1991 Boris Yeltsin became the president of Russia and together with the presidents of Belarus and Ukraine signed the Belavezha accords, which were the beginning of the end of the Soviet Union. The next day, US deputy trade minister Timothy McBride arrived in Baku, as the American company "Amoco" won the tender. The visit of  McBride to the USSR and his meeting with the head of Azerbaijan, Ayaz Mutalibov, showed the political support given to the American company which won the tender. It was not the only visit of American representatives to Baku. Together with state officials, the heads of the companies came and analyzed the situation within the oil industry and the prospects of joint development of deposits in the Caspian Sea.

 The head of the American corporation "Unical", Richard Stenmeyer, arrived in Baku in July of 1991 and "was positively surprised by the level of technical knowledge of the Azerbaijani specialists." Heunderlined that Unical was interested in Baku as a world oil center. At the Unical presentation on the 23th of July, Stenmeyer met with the prime-minister, Gasan Gasanov. The meeting was also attended by the partner of the American company, the general director of CaspMorNeft, Kurban Abbasov. They agreed to use the best technologies and world experience which would guarantee environmental safety. Environmental protection was the main condition of the Azerbaijani government.Another task of Azerbaijan was to establish business contacts with oil companies and become a world competitive partner with equal rights. The privileges of Azerbaijan were big reserves of energy resources, big experience in the development of hydrocarbons, well-prepared personnel and a good geographical location between Europe and Asia.In the autumn of 1991 the authorities of the oil corporation "Amoco production company" were working on the last variant of the contract. As company president Patrick John Early said, long negotiations to specify all the positions of the contract should be accomplished. In Baku the delegations visited not only oil industry companies, but also some industrial enterprises. The guests became interested in the factory of deep-water foundations, built in the Soviet period, and wanted to use it for joint work.

To be continued.

Ismail Agakishiyev, the director of the Center of Caucasus Studies of
the Russian State University for the Humanities.