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.
Under the agreement, the Republic of Azerbaijan was not involved in financial expenses. SOCAR was involved in investment as a contractor. At 20 % interest SOCAR was to have 20 % of expected oil according to the initial conditions. Later, the involvement of SOCAR in investments became a problem for Azerbaijan. The country had no funds. It was necessary either to take long-term loans, or to cede part of its share to the oil consortium. Under pressure from the West, emerged in economic, territorial and political problems, the country was forced to choose the second alternative.
Ultimately, SOCAR gave up half of its share, and 90% of financing was invested by international oil companies. The projected investments of the project under the contract were to amount to 7.4 billion dollars. Azerbaijan was expected to receive 253 million tons of oil from the extracted volume. Naturally, with the change of world oil prices, expected benefits were also to be changed. Heydar Aliyev believed that in case of the most unfortunate scenario (decrease in oil prices, increase of costs for consumables, etc.) the profit of Azerbaijan was to amount to no less than 60%.
The draft contract had an article about the need to ratify the contract in the parliament after its signing. In this case, the contract was to take the force of law. In fact, it was a guarantee by Western companies to the Republic of Azerbaijan, taking into consideration the uncertain status of the Caspian Sea. The contract was supposed to be ratified on December 2nd 1994 in the parliament of Azerbaijan. In addition, for its successful implementation, the foreign oil companies asked the republic's parliament and government to provide the following guarantees to the oil consortium: the stability of the economic conditions of the contract for the entire period of its existence, the legal protection of property of foreign companies, the absence of right of the government of the republic to nationalization and confiscation of the property of foreign companies. The bitter experience of the "Society of the Nobel Brothers" and "Royal Dutch / Shell" in the years of Sovietization had not been forgotten. In addition, it was impossible not to consider that these were the first major investments in a country where in the recent past there had been no private property and where a mixed economy was not yet entirely formed. In case of a change in the legislation of the Republic of Azerbaijan, in case of the loss of existing rights provided by the contract or in case of loss of property by foreign companies, the latter were entitled to: full compensation; free regime of import and export shipments of material resources, machinery and equipment to the republic during the contract's existence; support and all possible assistance in obtaining necessary licenses and permits; free access of consortium employees to the existing oil infrastructure for the successful operation of the contract.
Of course, Aliyev knew that, sooner or later, the crisis in the Republic of Azerbaijan was going to be eliminated by reaching the planned level of oil production and that the political situation in the region was to change for the better. However, even a stronger republic would not be capable of renegotiating the contract - the law is not retroactive. But this disadvantage was, in fact, a continuation of other benefits:
- the contract opened the door to the first major investments in the economy;
- the contract terms allowed the creation of a market economy in the country and it to be integrated into the global economy;
- the contract improved the image of the republic and the country gained reputation in the business world.
Prior to signing the contract, SOCAR had some infrastructure in the Caspian Sea, which the consortium could use under certain conditions. The project particularly highlighted a deep water plant, built in the 1980s. Under the agreement it was to be upgraded after the contract was signed. It was planned to create platforms to operate around the Caspian Sea on the basis of this plant. It was necessary to purchase modern ships and tankers, while upgrading the flyover of the Neftyanye Kamni, which was 15-20 years past its initial working life. Under the contract, all the equipment which was bought, brought and installed ultimately became the property of the republic. However, certainly, one has to take into account the wear of the purchased equipment with time.
Not everyone in the country agreed with the oil strategy of Aliyev's team, and some considered the "Contract of the Century" and other agreements signed later to be disadvantageous to the country. The deputy chairman of the Azerbaijani Popular Front Party (APFP), Ali Karimov, noted that the "Contract of the Century" provided worse conditions for Azerbaijan than the project that was discussed during the joint rule of the Popular Front Party and Musavat. The contract developed by Elchibey provided that foreign companies would have 15 % and the Azerbaijani republic - 85 %. If they came to power the Democratic Congress promised to revise all the contracts signed during the rule of Heydar Aliyev. However, according to the former head of SOCAR, Sabit Bagirov, their accusations were ungrounded, since there was no contract during the presidency of Elchibey - only intentions: "During the government of the APFP there were no conditions approved with foreign partners, there were only intentions of the then government and SOCAR." Bagirov also noted: "There is nothing surprising in the fact that draft contracts did not fully coincide with the terms of the signed contract. After all, the companies knew about the crisis situation in Azerbaijan and had not failed to take advantage of it by putting forward tougher conditions."
