Chapters from the book by Ismail Agakishiyev
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.
After the contract was signed it required approval of the Cabinet of Ministers of Azerbaijan, presidential administration and the president himself, as well as ratification by the National Assembly. On November 11, 1994, the prime minister Guliyev issued a Decision No. 385 "On guarantees and obligations of the government of the republic of Azerbaijan under the contract on the joint development of the fields Azeri, Chirag and deepwater part of the Gunashli field in the Azerbaijani sector of the Caspian Sea." The Cabinet of ministers, taking in consideration the presidential decree No. 56 from February 4 on the acceleration of works on the development of oil and gas fields and the contract from September 20, 1994 decided to "adopt the fifth annex to the contract regarding the guarantees and obligations of the republic of Azerbaijan." It was followed by the Decision No. 924 of the National Assembly of the republic of Azerbaijan adopted on November 15, 1994. By the first paragraph of this document, the National Assembly confirmed the contract signed on September 20, 1994 as well as the document adopted by the Cabinet of Ministers on the guarantees and obligations of the government adopted on November 11, 1994. The second paragraph of this document recognized the contract as law. The decision of the National Assembly of the republic of Azerbaijan became effective and came into force from the date of its publication. At that time, Azerbaijan had no law regulating economic relations in the oil field, which was one of the reasons why the contract became a law: "In the absence of a law on hydrocarbon reserves and in respect of the terms of the contract, after its ratification by legislative authorities, it takes the force of law." This law is fully consistent with the legislative principles of the republic of Azerbaijan, and does not contradict to the constitutional act on the state independence of Azerbaijan.Thus, the first oil contract of Azerbaijani republic was signed on September 20, 1994, confirmed by the parliament as law and became effective as law on December 12, 1994. [5] Perhaps the most important of its economic achievements was the signing of an agreement in the autumn of 1994 between the State Oil Company of the rebulic of Azerbaijan (SOCAR) and eleven leading oil companies in the world. It is known in history as the "contract of the century" on the development of the Azeri-Chirag-Gunashli fields in the Azerbaijani sector of the Caspian Sea (BP Azeribaiyan Sustainbility Report 2004, p. 8.) The signing of the "contract of the century" opened up new economic and political era for Azerbaijan which will always be associated exclusively with the figure of president Heydar Aliyev. One stroke of his pen moved aside a serious political threat: in fact during the summer and autumn of 1993 the Armenian troops occupied the Azerbaijani towns of Jabrail, Fizuli and Kubatly as well as the Goradiz settlement. For a start it was necessary to stop these attacks and receive a consent from the major countries to maintain political stability and territorial integrity of the country. It was facilitated by the signing of the oil agreement with the leading oil companies in the world. The "contract of the century" became a grand event in the history of Azerbaijan. A year earlier, the country had been in deep political crisis, and its political independence and integrity were questioned. After overcoming the crisis in a very short period of time, the country managed to find itself on the uniquely effective path for economic prosperity. The success was evident from the presence of leaders of the largest oil companies and government leaders of major countries in Baku who recognized the sovereignty of the republic of Azerbaijan and begun the implementation of a major joint project, designed for 30 years. It is hard to overestimate the importance of the "contract of the century" for the republic of Azerbaijan. It became the most important factor in the country's economic development and, more importantly, its economic independence.
The contract for the development of the Azeri-Chirag-Guneshli fields became known as the "contract of the century." For the first time it was called this way in the first letter of B. Clinton to Alieyev. It should be noted that there were doubts about the inclusion of the Guneshli field in the contract. Prior to signing the contract, 6.5 million tons a year were produced there annually, but SOCAR had no money or technology for the development of the underwater part of the field. The contract provided that 80% of investments were to be given by Western companies. [2] In the original version of the signed "contract of the century" Azerbaijan was entitled to 80% of profits or 253 million tons of oil at 20% of capital investments. Foreign companies received 20% of profits or 65 million tons of oil at 80 % of capital investments. [3] The rest of oil was intended for direct reimbursement of costs, such as the construction of platforms, onshore terminals and pipelines, which was to eventually become the property of Azerbaijan.
