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.
There were oil deposits in Russian sector that could have been opened to international tender. But the presidential decrees forbade Russian companies from developing the Caspian shelf. The territory above 45 latitude is a nature reserve, while the rest, in the opinion of the Russian government, is in the common ownership of the Caspian states. There the oil could be extracted only after the creation of the Committee for the Caspian Sea.
The Russian deposits were frozen in order not to create a precedent. The situation was absurd: rich Russian deposits on Caspian sea with developed infrastructure were abandoned, while Russia was spending enormous money on exploring and developing oil in the difficult conditions of Sakhalin. This led to the possibility of Russia being just a passive observer in Azerbaijan. It forbade its companies from participating in the projects, and their place was eagerly taken by their foreign competitors.
The 5% received in the “Contract of the Century” by Exxon could have gone to Rosneft, if it had had state support. It was necessary to separate politics from the economy without waiting until the diplomats reached an agreement. This was a matter of state importance. The Russian Foreign Ministry was silent for a while and then started protesting against the contract, but it was not supported by the leaders of the state.
LUKOIL understood that it might take too long until the politicians come to an agreement and got involved in the projects in the Azerbaijani part of the Caspian Sea. The Russian position was that the oil deposits should be in common ownership and exploited together. All states should have their 12-mile zones, while the sea beyond this line should be in common ownership. A special collective body would have to license the oil companies according to their capacities and the ecological situation.
At the level of the Foreign Ministry, the Ministry of Energy and Roskomnadzor, a document sharing the Caspian shelf was prepared. It was sent to all the coastal republics. Originally this draft was supported by all the states except Azerbaijan. But then Kazakhstan and Turkmenistan became opposed to the idea of joint exploration in the Caspian Sea, expressing their support for the Azeri-Chirag-Guneshli oil project. At the time Russia's foreign policy was dominated by the view that all the Caspian oil and gas resources belonged to all the Caspian countries. It was based on the presupposition that the former Soviet Union, the legal successor to which was the Russian Federation, had spent huge sums on exploration of the fields, and now none of the newly-established sovereign States could appropriate them, even if they were in their exclusive economic zones. This point of view is understandable, but the position of Azerbaijan must be recognized, for which in that difficult period the development of the fields of the Caspian shelf was the only way to defend the state's sovereignty.
Indeed, the Ministry of the Oil and Gas Industry of the USSR invested great sums in the Caspian. Of course it would have been fair if all the Caspian countries participated in the joint development of oil, but without the means and technology of the world's oil giants it was impossible for both political and economic reasons. But Russia took an unconstructive position and blocked potential projects, and its oil companies lost large resources and time. According to an agreement between SOCAR, the AP and LUKOIL signed in September 1993, the supply of equipment was carried out through the LUKOIL Trading House. The supplies included details for oil equipment, including a part for renovating drills, pipes for the pumps, etc. In response, the LUKOIL Trading House received complete products that could be sold to Russian oil plants.
In the situation of the sharp reduction of intergovernmental economic ties, this joint activity allowed the capacity of the Azerbaijani machine-building enterprises to be maintained and to meet the needs of the Russian enterprises in the production of petroleum engineering. The company LUKOIL-BAKU worked to coordinate this work in Baku.
Unfortunately, the foreign oil consortium lobbied the interests of engineering companies, and companies in Baku were later demolished as allegedly unnecessary. The results of LUKOIL in 1994 were successful. According to V. Alekperov, LUKOIL proved to be a large-scale manufacturer and oil exporter and took a place among the top five private companies in the volume of oil reserves and the top ten in terms of oil extraction. (Production reached 45.1 million tons, and processing 19.7 million tons.)
From the end of 1994, favorable conditions had been developing on the oil markets and oil prices increased to 45-50 dollars per barrel. As Alekperov noted, "until recently, almost all available information related to the Azerbaijani and Kazakh shelves." 1 But in 1995, the situation began to change.
