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.
The board of the CIOC was to report to the Management Committee of the contractor, which consisted of representatives of contracting parties or founding companies, and had the right to approve work programs and budgets. Corresponding subcommittees, in turn, provided necessary assistance and support for the activities of the Management Committee of the contractor. These sub-committees are composed of representatives of contracting parties to parent companies.
The first president of the CIOC was James Tilley, senior vice president for production - Andrea Chiura, senior vice president for finances and personnel - Paul Kaufman. J. Tilley was a very famous and experienced top manager, who spent about 30 years in the oil and gas sector in US companies outside America - in Russia, Turkey, Libya and Netherlands. An Italian citizen, Andrea Chiura had 26 years of experience working in the gas industry. It is noteworthy that Paul Kaufman was appointed the CIOC's first vice president for finance and personnel, who had graduated from the Azerbaijani State Oil Academy. From 1971-1972 he worked at Neftyanye Kamni as an engineer and economist and then was head of the planning department of the Narimanov Oil Gas Production Division. Kaufman had participated both in Russian and in Azerbaijani projects. From 1977-1990 he worked as deputy general director of the Nefteotdacha, from 1992-1996 he was president of Sibirneftegaz, and from 1996 was vice president of the CIOC.
Member companies of the CIOC operate in more than 70 countries, and their combined gross revenue amounts to $12.6 billion. The total number of employees in all three companies exceeds 107 thousand people, and the daily production of oil and gas equivalent is 2,300,000 barrels.
Vice-president of the CIOC A. Chiura praised the experience of local staff: "We would like to note the high professionalism of local experts, whose experience we are trying to use to the maximum in all areas." 4 In choosing staff, citizens of the Azerbaijani Republic were mainly invited. Efforts of a large contingent of Azerbaijani specialists and finances of oil companies merged together so deeply that in the course of the implementation of the contract, success became their common purpose.
The CIOC conducted personnel policies to increase the number of citizens of the Azerbaijani Republic in the company. While these developments provided that from 30 to 50% of technical engineering staff were to be Azerbaijani, in fact locals accounted for 79% of the staff. 100% of the employees were citizens of the Republic of Azerbaijan, while the contract provided only for 70%. In real numbers, out of 71 employees of the CIOC only 12 were foreign specialists.
The CIOC was the first consortium in Azerbaijan, which started working with undeveloped areas, which itself was a great production risk. It was necessary to prove the existence of hydrocarbon reserves. Moreover, according to the contract, countries were not reimbursed for their expenses. The company's budget for 1996 was approved to the amount of 18.2 million dollars and was fully implemented, while the budget for 1997 amounted to 42.2 million dollars.
Drilling works on the Karabakh field were conducted by a monopolist in drilling exploratory wells in the Azeri Caspian shelf, an Azerbaijani-American company «Caspian Drilling Company» (CDC). Drilling was carried out with the semi-submersible rig "Dede Gorgud", which was at the disposal of the CIOC from the North Absheron Operating Company. The CIOC planned to spend 15.5 million dollars on drilling works (drilling the first well) in 1997. The promising structure of the Karabakh field was discovered as a result of seismic reconnaissance works conducted by SOCAR. Increased rate of early works allowed production of hydrocarbons to begin in 2001. The ship "Baku" began exploratory work on September 15th 1996 using CBS seismic pick-ups (technology which was being used in the Caspian Sea for the first time). During the drilling of the first exploration well in December 1997, the contractor had to stop drilling. The CIOC found gas-bearing sediments in the course of drilling of the first exploration well, which stopped at a depth of 3840 meters.
In management's opinion, the choice of the drilling spot for the first well was a mistake by the CIOC, which hadn't listened to recommendations of geologists from the SOCAR. The only method used to accurately identify the contents of a reservoir, sampling works, were not used after the drilling of the first exploration well (PSK-1). The contractor refused to conduct them in connection with an increase in the costs of the well. The CIOC was ready to sample layers at the drilling of the second well. SOCAR strongly advised them not to abandon the well and sample its beds, but the contractor took a different decision.
It should be noted that there is no pure oil or pure gas fields. A deposit is always a transition from gas to a gas-condensate and oil shell. The ratio of the phase states of hydrocarbons can be revealed with the help of sample works. SOCAR specialists were confident that at the drilling of the second well everything would be fine.
