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.
Attracting Western investment in the Soviet economy and, in particular, the oil industry of Azerbaijan, was an utmost necessity at the turn of the 1990s. Without these investments and modern western technologies oil extraction from the Caspian Sea would have been a mere dream. It was believed impossible to overcome the economic crisis without substantial investments. The way to realize the decision of the government was envisaged in the creation of joint enterprises.
The negotiations with the international oil companies were conducted both by the central and the republican government. The difficulty of these negotiations was connected to the fact that the Soviet system was not integrated into the financial system of the West. Therefore, the international oil companies could not count on the partnership of the leading banks. Mutallibov explained that the complications of the transition were due to the risk of the partners, because “our state cannot provide the oil companies with bank loans, therefore all the agreements should be made on the basis of a “gentleman’s word” and the authority of the president.”
Certain principles of a market economy were introduced, such as decisions about joint enterprises and the careful use of foreign capital in the oil industry. In March 1991 Mutallibov announced that cooperation with foreign companies was possible. On July 5th 1990 the Supreme Council of the USSR approved the Basic Legislation about Foreign Investments. This Act granted foreign investors equal rights with Soviet enterprises and provided certain guarantees for foreign capital. According to this law, enterprises were allowed to be created where the share of foreign capital was up to 100%.
This meant a significant change in economic policy. Sub-companies and filial branches. were allowed to be created, but their share could not exceed 50%. The law also granted foreign investors the right to export and import without licensing and exempted them from export and import taxes and fees. Thus the principle of liberalization in favor of the Western companies was established. According to the Soviet authorities, it was supposed to attract the necessary investments. The Chairman of the USSR Council of Ministers, Pavlov, claimed that “attracting foreign investments to the Soviet economy was a strategic course for the country.”
The new economic policy was based on attracting foreign investments and creating joint enterprises with foreign companies. The oilfields were the most desirable object for investments. During the years of perestroika the big American companies became very active in the oil sector of the USSR. The first fruit of this activity appeared in 1990. The vice-president of Conoco oil corporation, M.J. Peter, signed three preliminary agreements with the Soviet leadership on exploring oil and gas in the Soviet Union. The projects that Conoco developed together with the Soviet ministries included evaluation and development of the oilfields through the creation of the joint plants in the Northern European part of the USSR, Western Siberia and the Shtokman gas field.
This cooperation between the Soviet oil sector and the foreign companies around 1990 was mutually beneficial. From early May 1990, the captain of the ship “Neftegaz -62” and the chief mechanic of this ship, both from Baku, were working for the drilling station of Shell corporation. The crew of “Neftegaz-62” was mainly from the Soviet Far East. “NEftegaz-62” belonged to the Caspian oil fleet.
