Ilham Aliyev attends ceremony to mark 25th anniversary of Contract of the Century and Oil Workers Day

20 september 2019, 12:00

President of the Republic of Azerbaijan Ilham Aliyev has attended a ceremony to mark the 25th anniversary of the Contract of the Century and Oil Workers Day at the Heydar Aliyev Center.

The head of state made a speech at the event.

Speech of President of the Republic of Azerbaijan Ilham Aliyev

- Dear ladies and gentlemen, dear friends!

It is a very significant day in Azerbaijan today. We are celebrating the Day of Oil Workers. I heartily congratulate all Azerbaijani oil workers on their professional holiday and wish you further success and victories.

The profession of an oil worker has always enjoyed great respect in Azerbaijan. This is the case today and will be the case tomorrow. Azerbaijani oil workers have done a great job of building up our country's economic power and made an immense contribution to that. Today, the oil and gas sector of Azerbaijan is undergoing a new period of development.

As you know, oil was industrially produced for the first time in the world in Azerbaijan. The world's first oil well in the center of our city is now a tourist attraction. From that day to the present, large volumes of oil have been produced in Azerbaijan. As you know, offshore oil was also produced in Azerbaijan for the first time in the world, and today we are witnessing a new stage in the oil industry of Azerbaijan.

Today, Azerbaijani oil serves the independent state of Azerbaijan. We all remember well that the signing of the Contract of the Century created the conditions for our country to enter a new era. In the early 1990s, the newly-independent state of Azerbaijan faced enormous difficulties and challenges. The incompetence, unsatisfactory activity and treacherous steps of the then authorities put our country at the edge of the abyss. The 1991-1993 period will remain in our history as difficult and tragic years. Our country was in crisis – political and economic. The industry was completely paralyzed. The recession experienced in the economic sphere posed great obstacles to the development of our newly-independent country.

The people of Azerbaijan demonstrated their inherent wisdom, turned to great leader Heydar Aliyev in 1993 and invited him to take power. Since that time, Azerbaijan has been going through a period of stability. The country has been on the path of development. The reforms carried out from 1993 to this day, the work done have showcased Azerbaijan in the world as a successfully developing country. The economic and political crisis that we were going through at that time was a source of great threat. The courage, foresight and dedication of Heydar Aliyev were able to protect Azerbaijan from all troubles. The civil war ended and Azerbaijan embarked on a path of reform. The Constitution of the independent state was adopted. Illegal armed groups were disarmed and the country was put in order. Of course, it was necessary to take serious steps related to the further development of our country, and the signing of the Contract of the Century occupies a special place among these steps.

The signing of the Contract of the Century is a historic event. The Azerbaijani state and the Azerbaijani people are benefiting from this contract today. It is hard to imagine how Azerbaijan could have ensured its economic development at that time if the Contract of the Century had not been signed. How could we develop successfully? The Contract of the Century has a special place, a special role in the history of our independence. The signing of this contract was also not easy. Long negotiations were not producing results. Of course, both sides tried to achieve more favorable and acceptable conditions for themselves. I believe that on the example of the Contract of the Century we see the positive side of international cooperation because both the investing party, the investors, and the Azerbaijani state, having found a balance of interests, signed this contract on the most acceptable terms for themselves. If the terms of the contracts do not suit investors, then, of course, there can be no talk of any contracts being signed. At the same time, the interests of the Azerbaijani state were fully secured. Azerbaijan, renewing and modernizing as a result of the implementation of the contract, is a clear confirmation of my words.

I remember the final stage of the negotiations well. The negotiations in the American city of Houston lasted more than a month. They played a crucial role. The entry into force of the contract took Azerbaijan to a new path of development, and today the Contract of the Century plays its role in the development of our oil industry. The extension of the contract until 2050 shows how correct the decision made in 1994 was.

The Contract of the Century is an integral part, the beginning of the oil strategy of great leader Heydar Aliyev. Thanks to the courage and wisdom of Heydar Aliyev, Azerbaijan was able to assert itself in the world. For the first time in history, foreign companies began to participate in the development of oil and gas fields in the Caspian Sea. As a result of the signing of the "Contract of the Century", tens of thousands of jobs were created. Thousands of companies in Azerbaijan are involved in the implementation of this contract as contractors. In other words, the Contract of the Century is of great benefit.

At the same time, Azerbaijan was regarded as a risky country at that time. Let me reiterate that the occupation of our lands by Armenia, the civil war and the economic difficulties did nothing to demonstrate Azerbaijan as a country favorable for investment. At that time, one of the biggest achievements of Heydar Aliyev was that he was able to convince investors. The leadership of the State Oil Company – our late friend Natig Aliyev, Khoshbakht Yusifzade, Valeh Alasgarov, myself and a few other colleagues tried to convince investors that it was possible and necessary to invest in Azerbaijan and that whoever invested in Azerbaijan today would benefit greatly tomorrow. And so it happened. Investments made in the implementation of the Contract of the Century paid off in full. Foreign investors earned billions of dollars in revenue. The income of the Azerbaijani state has exceeded one hundred billion dollars.

In other words, I want to say again that this contract occupies a worthy place in world because the interests of both the state and investors were secured. At the same time, oil revenues created the conditions for the rapid development of our country. We are aware of what is happening in the oil industry in the world. In many cases, oil does not bring happiness. In fact, it brings tragedy, confrontation, inequality and injustice. In Azerbaijan, oil has benefited the people because oil revenues were channelled in our overall development, created the conditions for resolving social issues and ushered opportunities for strengthening the international standing of our country. Modernizing cities, landscaping villages, improvement in the country – our oil industry lies at the heart of all this.

Of course, today we have chosen the path of economic diversification. In other words, we are trying to reduce our dependence on oil. We are developing the non-oil sector. However, we must know that the oil and gas sector is the leading sector of our country today and tomorrow. For the successful development of the country today and tomorrow, the work of our heroic oil workers is indispensable. It is our oil industry that provides the power and development of Azerbaijan today. Therefore, further successful development of the oil and gas sector continues to be one of our top priorities. I repeat this because of the policy we are pursuing in the field of economic development is based on the non-oil sector. However, we should know that if the oil sector does not develop, then our non-oil sector will not be able to meet the country's needs either.

After the signing of the Contract of the Century, foreign companies realized that investments could and should be made in Azerbaijan. I remember quite well that many foreign companies turned to Azerbaijan, put forward their proposals and expressed intentions to cooperate with us. Thus, after the Contract of the Century, dozens of contracts were signed – about 40 production sharing agreements. True, some of them were terminated because the exploration there did not discover adequate oil and gas resources. However, other projects are still in force, multiplying our strength. I want to specifically note the development of the Shah Deniz gas condensate field. The contract on Shah Deniz was signed two years after the Contract of the Century – in 1996. At that time, gas fields were not particularly significant on the world energy market. Today, natural gas is crucial for energy security. At that time, it was not the case. Therefore, the signing of the Shah Deniz contract is also a historic event. Today, Shah Deniz is the main resource base for the Southern Gas Corridor. The Shah Deniz gas condensate field is one of the largest fields in the world. The Azeri-Chirag-Gunashli and Shah Deniz deposits have the same importance.

After that, the construction of oil and gas pipelines began. The Baku-Novorossiysk pipeline was reconstructed. The Baku-Supsa pipeline was launched in 1999. In 2006, we successfully completed the construction of the Baku-Tbilisi-Ceyhan pipeline, the foundation of which was laid by Heydar Aliyev personally. In 2007, the Baku-Tbilisi-Erzurum gas pipeline was commissioned, and Azerbaijan began to export natural gas. In 2012, an agreement was signed between Azerbaijan and Turkey on the TANAP gas pipeline. This event occupies a special place in the full-field development of the Shah Deniz field. Last year, we held the official opening of both TANAP and the Southern Gas Corridor project. TANAP is successfully functioning now.

All this is our history. Of course, it is impossible to enumerate everything that has been done in the oil and gas industry in one speech at this event today. This would probably take hours and days. The construction of drilling rigs in Azerbaijan, the employment of tens of thousands of Azerbaijani citizens, the prudent use of the revenues coming into the country, i.e. all this is today's reality.

In today's successful development of Azerbaijan, we see the manifestation of steps taken precisely in those years. We see that, along with all the other contributions of great leader Heydar Aliyev, his deeds for the people and the state in this area deserve the highest praise. We, his followers, continue to work in this direction. New contracts are being signed today, great interest is being shown in the oil and gas industry of Azerbaijan. Azerbaijan has made great strides in the field of international cooperation, in the energy sector. Taking this opportunity, I want to recognize the activities of our strategic partner BP. BP is our key partner in major strategic projects. Our cooperation in the development of both the Azeri-Chirag-Gunashli and Shah Deniz fields, TANAP and the recently signed contracts is long-term – it has a history of 25 years. This cooperation will be continued for at least another 25-30 years.

I want to mention one other thing. The Contract of the Century brings multifaceted benefits to our country and people. One of them is the training of personnel. I remember that when we were working on the contract in 1994, we emphasized that we wanted it to indicate the issue of attracting Azerbaijani citizens to work. We wanted this to be a commitment for companies of the consortium – Azerbaijani specialists should gradually work in all key positions, and this has happened. Of course, in the early years the majority was made up of expatriate specialists. However, the trainings conducted by foreign companies and Azerbaijan have contributed to the creation of capable human resources. I am told that trained specialists are now involved in important BP projects not only in Azerbaijan, but also in many other countries. And they are working in senior roles. More than 90 percent of those working in the development of the Azeri-Chirag-Gunashli oil field are Azerbaijani citizens. We have achieved that. This is a huge asset. Oil and gas are exhaustible resources, while intellectual potential, knowledge, literacy, competence, experience – this is unchanging wealth. Azerbaijani citizens, trained specialists are doing a great job today and making a huge contribution to the development of our country. Oil revenues have been used in the development of the country's economy. We have channelled them into that. The infrastructure has been completely upgraded. Remember the state of our infrastructure in 1994 and see what state it is in now. At that time, even half of Baku could not receive natural gas. In the regions, this was completely out of the question. Today, gasification in Azerbaijan constitutes 96 percent. We have built gas lines to the most remote mountain villages, and this process continues. I have asked the State Oil Company not to stop this work. Of course, 96 percent is a very large figure. Only a handful of countries conduct gasification at such a level. But we must continue it. In those years, half of our country was left without electricity. There was a shortage even in Baku. Sometimes even television channels stopped working at midnight so that people used less electricity because there was a shortage of it. Today, about 3,000 megawatts of new generation capacities have been created, and we not only provide for ourselves, but also export.

The roads were in terrible condition. According to the estimates of the Davos World Economic Forum, Azerbaijan today is in 34th place globally in terms of the quality of roads. Drinking water was a huge problem. Today, 75 percent of the population is constantly provided with drinking water, and this process continues.

More than a hundred settlements have been built for the internally displaced. We got rid of tent camps back in 2007. Due to what? Due to the Oil Fund! Where does the money for the oil fund come from? From the implementation of the Contract of the Century! We have provided new homes, new apartments to hundreds of thousands of IDPs. Benefits to the families of martyrs and war veterans, allowances, apartments, cars, etc. That is, the Contract of the Century has brought huge benefits and we have used the funds properly. Oil Fund’s revenues can only be used within the budget, so the people of Azerbaijan through their representatives in the Milli Majlis take part in the distribution of these funds.

The social infrastructure has been completely reconstructed. More than 3,200 schools and 640 hospitals have been built and renovated. New sports facilities have been constructed. Azerbaijan has become a space-faring nation. We have three satellites. Using revenues, we keep our public debt at a low level. It accounts for only 19 percent of the gross domestic product. Our foreign exchange resources are five times higher than the external debt. Where else is this possible? There are such countries, but there are not many of them.

We could talk about the benefits of the Contract of the Century for a long time. Revenues from the sale of oil will continue to be spent primarily on social issues, infrastructure projects and diversification of the economy in order to ensure the long-term and sustainable development of Azerbaijan.

I want to once again congratulate you on this remarkable date – the 25th anniversary of the Contract of the Century and the Oil Workers Day. I wish the Azerbaijani oil industry workers continued success and new victories. Thank you!

XXX

The US Ambassador to Azerbaijan Earle Litzenberger then read out Secretary of State Michael Pompeo’s letter, while the UK Ambassador James Sharp read out the letter of Secretary of State for International Trade of the Department for International Trade Elizabeth Truss and Minister for Europe and the Americas in the Foreign and Commonwealth Office Christopher Pincher.

Other speakers at the event included BP Regional President for Azerbaijan, Georgia and Turkey Gary Jones and first vice-president of State Oil Company of Azerbaijan (SOCAR) Khoshbaxt Yusifzade.

Addressing the event BP Regional President for Azerbaijan, Georgia and Turkey Gary Jones said:

-Your Excellency President Aliyev,

Distinguished guests,

Ladies and gentlemen,

Each year on this date we celebrate the Oil Worker’s Day. This time the joy of celebration is particularly special as we mark the 25th anniversary of Azeri-Chirag-Gunashli.

25 years ago, on this very day the signing of the groundbreaking ACG production sharing agreement, so rightfully called the Contract of the Century, opened a new chapter in the modern history of this country. As the national leader Heydar Aliyev put it: “…It marked the beginning of independent Azerbaijan’s new oil strategy and doctrine”.

Today we can witness the incredible results of that strategy, inspired by the late President’s strategic vision. We can see how that contract paved the way to unprecedented economic growth and turned Azerbaijan into a modern energy hub.

We think of ACG as a pioneer. It became Azerbaijan’s first offshore PSA. It brought the first major investment by Western multinational companies ever made in any country of the former Soviet Union.

As a massive and complex project, ACG involved the development of a world-class energy infrastructure that included offshore production platforms, subsea pipelines, drilling rigs, processing terminals and export pipelines.

Over 3.6 billion barrels of oil produced, 44 billion cubic meters of associated gas delivered to Azerbaijan, 3.3 billion barrels of oil carried via the Baku-Tbilisi-Ceyhan pipeline, loaded on 4300 tankers and sent to world markets, $36 billion dollars of capital invested, $84 million dollars spent on sustainable development projects.

Quite outstanding and something we should all be proud of.

For me, this success has been underpinned by three key drivers.

First and foremost, it is the oil workers who have delivered ACG turning it into a truly national treasure for Azerbaijan.

Azerbaijan has historically given birth to outstanding petroleum professionals, and this long-standing expertise has continued with a new cohort of highly skilled national workers involved in the ACG development.

I feel particularly proud that 90% of our professional staff here in Azerbaijan are national employees and it’s great to see more and more of them taking on senior leadership roles in BP’s offices around the world.

Second, it is the strategic partnership and collaboration among multiple parties that have taken us through many decades of joint efforts to build this truly world class project.

The ACG PSA has formed the basis of a unique framework that provides legal stability and reliable protection for the investments of the ACG co-venturers in Azerbaijan.

I cannot imagine this being possible without the mutual trust and solid commitment of all parties involved, and particularly of the government of Azerbaijan. It is this spirit of trust and cooperation that has allowed us to deliver the ACG accomplishments hand in hand as one team.

Throughout these 25 years, our partnership with the government and SOCAR has been unmatched. On behalf of all ACG co-venturers, I want to thank you, Mr. President, and your government for the outstanding support and commitment to making ACG a success.

And third, it is technology applied in ACG’s development and operations.

The use of industry’s most advanced technology and home-grown novel solutions has allowed us to run ACG in a safe and efficient manner, maximize production and overcome technical challenges. Moreover, nowadays ACG stands out as a major center of technology trials and deployment across BP’s global assets.

ACG’s story over the past quarter century has been breathtaking, and we believe the future will be equally impressive.

The extended and amended ACG PSA, signed just two years ago this month and dubbed the Contract of the New Century, laid a solid foundation for this future.

For the next 30 years, we will continue to work together to unlock the long-term development potential of ACG through new investments, new technologies and new joint efforts to maximize recovery.

So finally, I want to thank all people whose energy, skills and hard work, often deployed in harsh environments have forged ACG’s success. Your efforts, dedication and commitment allow us to celebrate this red-letter day in the modern oil and gas history of Azerbaijan. Thank you!

XXX

BP Regional President for Azerbaijan, Georgia and Turkey Gary Jones then presented a collection of stamps on the 25th anniversary of the Contract of the Century symbolizing the Azeri-Chirag-Gunashli field to President Ilham Aliyev.