Speech by Ilham Aliyev at signing ceremony of new agreement on Azeri-Chirag-Gunashli oilfields
14 september 2017, 09:45
Dear ladies and gentlemen!
It is a very significant and historic day in the life of our country today. A new period in the development of the giant Azeri-Chirag-Gunashli oil field begins. I sincerely welcome all the guests who have come from abroad to participate in this historic ceremony together with us. Their participation in this event once again reflects the significance of today's event.
The contract being signed today is of great importance for our country. The development of the Azeri-Chirag-Gunashli oil field is being extended until 2050. The new contract is more profitable for Azerbaijan even though the contract signed in 1994 also fully provided for our interests. This time, the contract is being signed on better terms. I want to bring some of its main parameters to your attention: after the signing of the contract, foreign investors will pay our country a bonus of $3.6 billion; SOCAR "AzACG" will take part in the implementation of the contract as a contractor; the share of SOCAR will increase from 11.6 to 25 per cent, and the share of Azerbaijan's profit oil will be 75 per cent. These are the key conditions. Of course, the contract contains many provisions. The main provisions already show that this contract is very important for the future development of Azerbaijan and for the enhancement of our financial capabilities.
In addition, I should note a very successful implementation of the contract for 23 years. During these years, 436 million tons of oil were produced from Azeri-Chirag-Gunashli. I remember very well that when the contract was signed in 1994, the estimated oil reserves were determined at 511 million tons. However, today's data – I am convinced that this is not the last data and the reserves will further increase – show that there are still approximately 500 million tons of undeveloped oil reserves in the Azeri-Chirag-Gunashli fields. I want to note again that these are preliminary estimates. I am sure that this figure will further increase during the implementation of the contract.
Twenty-three years ago, a very significant event in the history of our country occured. The signing ceremony of the Contract of the Century took place at Gulistan Palace in Baku under the chairmanship of great leader Heydar Aliyev. This gave a strong impetus to the successful development of our country. I remember that day very well. That day stands out quite vividly in my memory. Indeed, Azerbaijan took one of the important steps in its history. The signing of the Contract of the Century is connected with the name of great leader Heydar Aliyev. After gaining independence in 1991 Azerbaijan faced very serious problems. In particular, as a result of the negligent activities of the PFPA-Musavat tandem, which illegally seized power after a coup in 1992, our country found itself on the verge of an abyss. There was an economic recession, the industrial potential was shrinking, the inflation was reaching thousands of per cent, there were practically no economic prospects for our country, and there was a deep political, military and economic crisis, anarchy and chaos. In order to preserve their shaky administration, the then illegal government resorted to arms. A civil war broke out in Azerbaijan and fraternal blood was shed. The PFFA-Musavat government bombed the second largest city of our country Ganja. Azerbaijan was faced with a huge tragedy.
In parallel, Armenia pursued an aggressive policy against our country, as a result of which a large portion of our lands was occupied. We have more than a million refugees and internally displaced persons. In such a difficult situation, the people made the only right choice, turned to Heydar Aliyev and invited him to take power. In 1993, after his election as president, the situation gradually began to stabilize. Economic and political reforms began, all illegal armed groups were disarmed, our country embarked on a path of democracy and Azerbaijan was able to break through international isolation.
Of course, the successful development of our country required investment. The treasury was empty and there were no opportunities for development. To convince major foreign oil companies in this situation and attract them to Azerbaijan certainly required great wisdom, abilities, competence and political experience. Heydar Aliyev successfully implemented this historic mission. Azerbaijan was considered a very risky place at the time, and the signing of the Contract of the Century in such a situation in 1994 and the attraction of major investments to our country is a truly historic achievement.
Twenty-three years have passed since that day. Over these years, Azerbaijan has rapidly developed. Azerbaijan is known in the world as a country firmly standing on its feet. Our international relations are very broad. Azerbaijan is a country with a very good and positive reputation in the international arena. It is no coincidence that a few years ago, 155 countries elected Azerbaijan as a non-permanent member of the UN Security Council. This is a sign of sympathy, respect and support on the part of the international community.
Azerbaijan today is among countries living at their own expense. We have fairly large foreign exchange reserves. The economy is developing dynamically. Very important steps have been taken to diversify the economy, reduce our dependence on the oil and gas factor, and there are no political, economic or any other obstacles or problems in the way of future development of our country. Azerbaijan will continue to develop successfully. Our country has great potential. In recent years, we have built up this potential, and the Contract of the Century plays a special role in the development of this potential. It is difficult to imagine what situation we would be facing now if the Contract of the Century had not been signed in 1994. We are among countries that pursue an independent policy. It is also underpinned by our strong political will and economic independence. We do not depend on anyone and our destiny is in our own hands. Our ability to conduct an independent policy is primarily based on our economic opportunities. And these opportunities have been created for us by the Contract of the Century.
Since that time, the oil strategy of Heydar Aliyev has been successfully realized and enriched. new important steps are being taken and investments made. If we look at the chronology in the oil and gas sector since 1994, we can see that this is a chronology of success.
In 1994, a contract was signed for the Azeri-Chirag-Gunashli oil field. In 1996, a contract was signed for Shah Deniz, which is one of the largest gas fields in the world. In 1997, first oil was produced from the Chirag platform. This is one of the unique events in the world oil history. The contract was signed in 1994 and first oil was produced three years later. In 1998, this oil began to be exported to the Black Sea via the restored Baku-Novorossiysk oil pipeline. In 1999, an oil pipeline from Baku to another Black Sea port, Supsa, was built and commissioned, and Azerbaijani oil began to reach world markets in two directions. In 2002, with the personal participation of Heydar Aliyev, the foundation of the Baku-Tbilisi-Ceyhan oil pipeline was laid. In 2006, the Baku-Tbilisi-Ceyhan oil pipeline was put into operation in the Turkish port of Ceyhan. In 2007, the Baku-Tbilisi-Erzurum gas pipeline was commissioned, and exports of gas to Turkey began as part of the first stage of Shah Deniz.
In 2012, Azerbaijan and Turkey signed the TANAP project in Turkey, and it is being successfully implemented today. There is little time left for its completion. In 2013, the TAP project was selected as the gas pipeline, and work in this direction is under way. So such is the chronology of events.
In addition, the world's largest Sangachal oil and gas terminal was built. A shipbuilding plant capable of building any type of vessel was launched in Azerbaijan. One of the largest drilling rigs in the world, a drilling rig bearing the name of Heydar Aliyev, was commissioned. Platforms are built in Azerbaijan. Azerbaijani specialists make up the majority in the implementation of foreign oil and gas projects. So these are the benefits brought to Azerbaijan by the Contract of the Century.
We have very large financial resources. The Azerbaijan State Oil Fund, which started operating in 1999, is a very important factor for us. We are increasing our currency reserves. Even some of the difficulties that have arisen in connection with the fall in oil prices have not been able to turn us off this path. We have increased our foreign exchange reserves Even in these years, and we will increase them in the future too. Of course, as a result of the extension of the Contract of the Century, the implementation of the Shah Deniz project and the Southern Gas Corridor, our material capacities will further increase.
At this ceremony today, I want to highlight the contribution of Azerbaijani oil workers. Azerbaijan is a country where oil was industrially produced for the first time in the world in 1846. The first oil rig is now guarded as a historical monument and is located in the center of our city.
Azerbaijan also produced the world’s oil offshore - from Oil Rocks in the middle of the 20th century. In other words, we have very large and rich traditions. Azerbaijani oil workers have earned great respect in society with their dedication and professionalism. The profession of an oil worker is very respected in Azerbaijan. All of our successes are to a large extent underpinned by the great work of Azerbaijani oil workers. As someone who worked in the State Oil Company for nine years, I consider myself also an oil worker to some extent. If we take into account the fact that today's ceremony is being held on the eve of the day of oil workers, I sincerely congratulate the oil workers of Azerbaijan and express my gratitude to them.
Today I want to highlight the activities of our main partner BP. The cooperation between us and BP also has a 23-year history. In other words, BP acts as the main partner and investor in all our major projects – Azeri-Chirag-Gunashli, the Baku-Tbilisi-Ceyhan project, the Shah Deniz project, the Southern Gas Corridor project. So this strategic partnership has already passed a great test. The excellent business relations, the mutual trust between us, between SOCAR and BP, have made today's ceremony possible. It is no secret, as I said earlier, that the Azeri-Chirag-Gunashli field has huge potential. I want to note again that according to today's estimates there are 1 billion tons of oil reserves out there. The agreement signed today is even more ambitious than the agreement signed in 1994.
The Contract of the Century is already coming to an end. Of course, at the end of the contract Azerbaijan could have signed a new contract with any other partner, and we had such opportunities. However, the mutual trust, the business relations between BP and SOCAR have, of course, predetermined today's choice. I am very happy about it. I am sure that BP and SOCAR will ensure the successful development of Azerbaijan’s oil and gas fields for many years to come.
At the same time, I would also like to highlight all the partners of Azeri-Chirag-Gunashli. I want to express my gratitude to them too. They have invested heavily in Azerbaijan. Every partner company has contributed to today's decision. If it wasn’t for their decision, there would be no ceremony today.
In short, Azerbaijan has created a very successful format based on mutual interests and cooperation with leading foreign oil and energy companies. This has brought us great benefits. Of course, foreign partners have also made a big profit from this project. This is one of the cases when all sides win.
The Contract of the Century has allowed us the opportunity to channel the revenues from oil into the non-oil sector. I believe that in this sphere too, unlike many oil-producing countries, Azerbaijan was able to turn oil into human capital. Oil can bring benefits and problems. We know that both in previous periods and now there is struggle for oil in the world. Conflicts flare up and blood is shed. Oil production does not mean that countries will thrive and there will be development. The situation observed in many oil-rich countries today actually suggests the opposite. Therefore, our main task was to turn oil revenues into human capital, so that every citizen of Azerbaijan could see this positive change.
Today we have well-developed regions and a developing country. The city of Baku is one of the most beautiful cities in the world. Over 3,000 schools, more than 600 hospitals, over 50 Olympic centers have been built in the regions. Over 11,000 kilometers of roads have been laid, there is energy infrastructure, economic development and economic diversification – and at the core of all this is our ability to effectively use the revenues derived from oil.
Over the years, we have allocated substantial funds from the State Oil Fund to improve the living standards of the internally displaced persons and provided 250,000 IDPs with beautiful homes and apartments in about 100 new settlements. This process continues. In addition, we store our incomes from oil in the State Oil Fund in a very transparent manner. Data on its activities, incomes and expenditures are regularly communicated to the public. Any expenses from the State Oil Fund are possible only after approval of the parliament. When our budget is approved, the Milli Mejlis determines the amount of transfers at the government's suggestion. In other words, maximum transparency has allowed the opportunity to effectively use these resources. Today, Azerbaijan belongs to countries that deserve a very high international assessment for transparency.
At the beginning of my speech, I noted that the Contract of the Century is one of the exceptional contributions of great leader Heydar Aliyev to the Azerbaijani people. Today all the Azerbaijani people see the excellent results of this contract in their daily lives. I think that the holding of today's ceremony in the Center bearing the name of great leader Heydar Aliyev, is also quite symbolic. On 20 September 1994, great leader Heydar Aliyev underlined the importance of the contract in his speech at Gulistan Palace. He stressed that this contract would bring us huge benefits. Twenty-three years on, we see vivid evidence of that. Twenty-three years on, the signing ceremony is taking place in this majestic building, one of the most beautiful architectural monuments on a global scale bearing the name of great leader Heydar Aliyev. And it is on the Azeri-Chirag-Gunashli field again. This also shows that the policy of Heydar Aliyev lives on and will continue to live in Azerbaijan. Thank you.