Speech of President of Azerbaijan Heydar Aliyev at the energy session in Davos Economic Forum – January 30,1995


Mr. Chairman! Ladies and gentlemen! It is the first participation of Azerbaijan in Davos forum. Therefore, I express my gratitude for the invitation and organization of such an interesting meeting as Davos-95. I consider it very useful for my nation to take part in the forum, particularly in this session dedicated to energy problems.

Azerbaijan gained its independence three years ago. It now pursues the policy of strengthening its independence, creating a democratic legal state, establishing market economy, encouraging free enterprise and foreign investments, closely integrating into the world economy, building mutually beneficial economic relations with the countries interested in cooperation with Azerbaijan. Our country has great economic potentials both in industry and agriculture. Oil industry and petrochemical complex occupy an important place in these potentials.

Our oil industry reached its peak at the beginning of the 20th century when more than half of the world`s oil output was produced in Azerbaijan. Nearly 1.4 billion tons of oil have been extracted in Azerbaijan so far. But Azerbaijan still possesses rich oil and gas deposits.

As an independent state in the world community, we take measures to enjoy our energy resources.

A lot of work has been done in this direction. Last September, an important contract was signed between Azerbaijan and a consortium of foreign oil companies, which includes Amoco, Pennzoil, McDermott, Unocal, BP, Statoil, Lukoil, and others. The practical implementation of the contract has begun. The contract was signed for 30 years and the extraction of more than 500 million tons of oil is expected in this time. We consider it the first step of Azerbaijan towards the integration into the world economy, demonstrating that our country is open for foreign investments, business, mutually beneficial cooperation.

The oil contract covers three fields in the Azerbaijani sector of the Caspian Sea. Two of them have recently been discovered, while the third one is being exploited for a long time. You are informed that Azerbaijan has rich experience in offshore oil production. This work started in our country 45 years ago. The Azerbaijani experts have great experience in the fields of oil industry, oil science, geology and also created strong cadre potential. Azerbaijan was considered the oil academy of the former Soviet Union. All oil deposits in the Soviet Union were discovered and exploited with the participation of our specialists. Azerbaijan`s scientific and practical cadre potential in this field is still available and can be used more extensively in future.

Large infrastructure of oil and gas industry has been created in Azerbaijan. Besides the research institutions and scientific potential, we a have strong oil-refining industry. Currently, 9 million tons of oil is extracted in Azerbaijan, while the capacity of our oil-refining plants is approximately 23-25 ​​million tons. Azerbaijan has strong petrochemical and oil engineering complexes. Up to 70 percent of oil equipment in the Soviet Union was produced by the Azerbaijani oil engineering plants.

Of course, our agenda includes the export of the Azerbaijani oil abroad, especially to the western countries. The main participants of the consortium are the western oil companies. In addition to the oil fields on the contract, there are other promising deposits in the Azerbaijani sector of the Caspian Sea. Oil and gas reserves of those deposits have been defined. At present, we conduct negotiations with foreign oil companies on the development of these deposits. These deposits can be developed by attracting foreign capital, foreign companies, foreign financial institutions. We look forward to it. The fields will be submitted to tender soon in order to conclude relevant agreements.

One of the important issues is the export of the produced oil. Our scientists and experts together with the foreign companies and international financial organizations have elaborated several options of the route of the oil pipeline for more than two years. I don’t want to speak about it now. We will examine the available options and identify the most appropriate one for the route of the oil pipeline. At the same time, long-term profitability and security of the pipeline, as well as the relations with the countries, which the oil pipeline is to pass should be considered. In this connection, I share the view of Mr. Nursultan Nazarbayev on the possibility of transportation of the Kazakh oil to the south through the Caspian Sea, Azerbaijan, Iran, Turkey and other countries. We have talked about it and I think that we will further negotiate on it.

In other words, Azerbaijan, which possesses rich oil and gas deposits, as well as other natural resources, is open for foreign investments, for cooperation with foreign companies based on modern principles.

Thank you for your attention.

“Azerbaycan”, February 2, 1995

General historical background

Azerbaijanat World Economic Forum in Davos