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 Agakishiyev "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.
Turkey was very interested in cooperation in the oil sector, because it was profitable everywhere in the world. This also makes Baku an economically vulnerable city. The population of Baku is comparable to the population of Georgia or Armenia. The population of Karabakh is now only about 20 thousand. Although there are many Armenians living abroad, they are not coming to Karabakh, because the only economic resource there is agriculture.
The Turkish company Türkiye Petrolleri (TPAO) had a very small share in the "Contract of the Century" – 1.75% - and planned to increase it. At first the negotiations were held at the level of TPAO and SOCAR, but the question demanded government support, similar to the situation with Exxon. The Turkish government repeatedly approached Azerbaijan with this issue. The Azerbaijani government paid attention to them. After the events of March 1995, this agreement could guarantee security and strengthen cooperation with Turkey. Mustafa Murat, who participated in the negotiations from the Turkish side, noted that “it was the first time that Turkey had participated in the big oil project together with the world giants.”
On April 12th 1995, the presidents of SOCAR and TPAO, Natik Aliyev and Sidgi Sandzhar, and the prime ministers of both countries signed an agreement about the increase of TPAO's share of 5% at the expense of SOCAR's share. As a result, the Turkish share reached 6.75%. According to Natik Aliyev, for this the Turkish company had to pay 170 million dollars within a month after the promulgation of the agreement.
These agreements became the additions to the contract signed on September 20, 1994. They referred to the article of the contract allowing the participant to give their share to the other members of the consortium. If the share was wanted to be given to the external company, it required the approval of SOCAR. This time the case concerned the share of SOCAR and the question was resolved in a simpler manner, while the other members of consortium were simply informed of it. On June 20th 1995 the Azerbaijani President issued special decree N 346 about the agreement between Exxon and SOCAR.
The transmission also required a document about the guarantee and the responsibilities of the government. According to the contract, Exxon bought a 5% share from SOCAR and also promised to finance the 5% share that remained at SOCAR. The later retained altogether only a 10% share, as the other 10% was sold to Exxon and TPAO.
The document about the guarantee and responsibilities of the government was to be signed by the prime minister and approved by the Cabinet of Ministers of the Azerbaijani Republic. When signed, this document would become a law that would have priority over the other state acts.
The oil resources in the Azerbaijani sector of the Caspian attracted not only the West but also the East. Thus, the interest of Japan developed after the signing of the “Contract of the Century” and a visit by Heydar Aliyev to this country.
The first Japanese company to get involved in the oil projects in the Azerbaijani Caspian was the Itochu Corporation. Other possible actors were Marubeni Corporation, Mitsubishi Oil Co and Tekoku Oil Co Ltd. Their CEO came to Baku for negotiations.
The leader among these companies was the Japanese state oil company. The first result of the negotiations was the agreement that the Itochu Corporation would join the alliance of the companies in the "Contract of the Century". In May 1996 it was announced that the composition of the consortium would grow.
Events kept developing around the contract. Iran, Azerbaijan’s closest neighbor with a 35-million Azeri diaspora, was seen as a prospective partner. The Azerbaijani government was thinking about the inclusion of Iran in the consortium, because it needed to guarantee its part of the capital investment to the amount of 1.7 billion dollars. However, the American side strictly opposed the inclusion of Iran. The American companies were threatening that they would leave the consortium because the American government would not give loans to the corporation for joint business projects with Iran. As a result, SOCAR had to reject Iran.
In March 1996 the composition of consortium changed once again. McDermott sold all its shares (2.45%) to the Japanese Itochu Corporation that later also got 5 out of the 9.82% share of Pennsoil. However, using their priority right, Exxon and Unocal took the initiative and as a result Exxon received 3% and Unocal 0.5%, leaving Itochu with just 1.5%. As a result, the shares in the consortium were divided in the following way: Itochu 3.9%, Exxon 8%, Unocal 10%.
