Speech of Heydar Aliyev, President of Azerbaijan in the ceremony of the signature of the contract on joint exploitation of the Shahdeniz deposit in the Azerbaijani Sector of the Caspian Sea - June 4, 1996

Ladies and gentlemen!

Distinguished guests!

Today - June 4, 1996 is dedicated to the oil and gas industry of Azerbaijan. This morning we opened a big international oil and gas exhibition in Baku, Azerbaijan. Three years successively such a big oil and gas exhibition is organized in Azerbaijan; the number of the participants of the exhibition increase year by year, and the scale of the exhibition enlarges.

Today we all came to such an opinion that the international exhibition will be held in Azerbaijan annually and become a tradition. It proves the interest paid to our republic for the exploitation of the rich oil- and gas fields, as well as the high appraisal given to Azerbaijan as an oil country. At the same time, it is a remarkable event that demonstrates the establishment of independent relations of Azerbaijan with companies and countries of the world.

Oil has been extracted in Azerbaijan since the ancient times. Azerbaijan became famous as an oil country last century. However, till the recent years there has never been such an exhibition in our country.

Today we have assembled in this grand Gulustan Palace on the occasion of a new significant event - the ceremony of the signature of a contract between the State Oil Company of Azerbaijan Republic and some oil companies of the world on the joint developments of Shahdeniz deposit on the Azerbaijani Sector of the Caspian Sea.

For the recent two years we have been signing such a big contract for the third time. For the third time we assemble in the Gulustan Palace on the occasion of such a significant event. The big oil contract signed in Baku on September 20, 1994, between Azerbaijan and the oil companies of the world, is realized and yields results. The so-called “Contract of Century” is on the joint developments of Azeri, Chirag and Guneshli fields in the Azerbaijani sector of the Caspian Sea.

Last year SOCAR signed the second oil contract with some big oil companies of the world on the joint use of the Garabagh oilfield located in the Azerbaijani Sector of the Caspian Sea. The contract is implemented into life; I hope that it will yield results.

The contract-to-be-signed today is on the joint developments of the Shahdeniz oil- and gas field on the Azerbaijani Sector of the Caspian Sea. Shahdeniz is one of the rich fields discovered by the Azerbaijani geologists. Though our geologists were aware of its existence decades ago, it was discovered in the 80s. Finally, we are making a step for the practical development of the field.

Around in 1990 SOCAR allegedly launched drilling in the Shahdeniz field in order to secure gas supply to Azerbaijan. According to the information, approximately 2000 metres were drilled, however, because of the shortage of means, the work wasn`t continued. In September 1992 the government of Azerbaijan signed a contract with BP of the UK and Statoil of Norway on the exploitation of the field. In that contract BP and Statoil were empowered special authorities on leading of negotiations for the joint development of the field and its preparation for the exploitation. The two companies launched the work, having established an alliance. Afterwards “Turkiye Petrollari Anonim Ortagligi” (TPAO) joined the alliance and led this work within its facility.

In the recent years SOCAR took measures for the effective use of our oil and gas resources and fields with the aim of economic development of our country. SOCAR, as well as our geologists and oil workers were engaged in the research of the Shahdeniz field and did a lot in the recent years. As a result, in October 1995 SOCAR considered the joint development of Shahdeniz with big companies necessary and proposed it. I've assigned them proper tasks and authority in order to work in this sphere on the basis of the proposal. Consequently, SOCAR presented me a draft contract on joint exploitation of the Shahdeniz field with some big companies of the world.

While preparing the draft contract and taking measures for practical use of Shahdeniz, SOCAR proposed the involvement of other oil companies along with BP, Statoil, TPAO to the exploitation of the field and achieved the realization of this proposal. Subsequently, the Russian LUKOil, the French ELF-Aquitaine and an Iranian oil company joined the exploitation of this oil- and gas field. The prepared document is a contract on the joint work of SOCAR and other companies such as BP, Statoil, TPAO, LUKOil, ELF Aquitaine and Iranian oil companies.

I want to tell also about some indices of this oil- and gas field as well as of the contract. According to the information, extraction of 400 billion cu.m. gas, 200 million ton of gas condensate and 100 million ton of oil is expected to be produced in Shahdeniz. Thus, it is a rich field; the exploitation and the use of such a field will undoubtedly profit Azerbaijan, the companies participating in this contract and the countries which those companies belong to.

For the realization of the project implied in the contract, the investment of 4 billion USD is planned; the term of the contract is 30 years. Thus, the contract is very effective economically for Azerbaijan, the companies participating in this contract and the countries which those companies belong to.

Taking into consideration all these indices I approved this contract and signed a decree on its signature on the basis of this project. Therefore, today we have assembled in the ceremony of the signature of this contract.

With great pleasure I want to note that the government of the United Kingdom which has been cooperating with us in the exploitation of a new oilfield of Azerbaijan for several years and BP of that country are with us again. In this connection I welcome Tim Eggar, Minister of Energy and Industry of the UK and note his contributions in these works. I especially note that when we started this work, since the signature of the first contract up to now Mr. Tim Eggar has been with us; he takes part in this ceremony today, too.

The cooperation between Azerbaijan and Norway is stable, too. The Norwegian company Statoil is the participant of our first contract, and takes an active part also in this contract today. In connection with it, I note the interest of the Norwegian government in Azerbaijan and the presence of Mr. Stoltenberg, Minister of Industry and Energy of Norway here. He took part in the exhibition and had to return to his country because of an important issue. However, he is with us. The heads of Statoil and representatives of the Ministry of Industry and Energy of Norway are participating in the signature of the contract. I welcome them.

Since the beginning of the process of joint development of the oil- and gas fields on the Azerbaijani Sector of the Caspian Sea we have been cooperating with Russia along with the companies of the world up to now. In October 1993 Mr. Yuriy Shafrannik, Minister of Fuel and Energy of the Russian Federation visited Azerbaijan with a big delegation. Then an agreement on joint development of the oilfield in the Azerbaijani Sector of the Caspian Sea was signed between the governments of Azerbaijan and Russia. The Russian Federation and its biggest oil company LUKOil are the members of all the contracts signed by us up to now, including the contract signed on September 1994 and the contract signed on November 1995 on joint exploitation of the Garabagh oilfield. LUKOil is also participating in the contract on joint exploitation of Shahdeniz. I think that it is a positive fact. I mention it as a demonstration of an economic cooperation between Azerbaijan and Russia. I welcome the delegation that has come to Azerbaijan and especially Vladimir Kostyunin, First Deputy Minister of Fuel and Energy of the Russian Federation.

One of the features of the contract to be singed today is that we are starting cooperation with new countries in the sphere of oil- and gas industry. One of those countries is France and its famous ELF-Aquitaine company. I highly appreciate our cooperation with France in this sphere, and state my satisfaction. In connection with it, I welcome Gui Arletti, head of the delegation that has come to Azerbaijan from France, Deputy Minister of Industry and Energy of France and Philippe Jaufret, President of ELF-Aquitaine.

I want to note once again that TPAO Company of Turkey closely cooperates with us in the sphere of oil- and gas industry. It has been engaged in elaboration of the contract on the Shahdeniz field for several years along with BP and Statoil. Therefore, TPAO is an active partaker of the contract to be singed. Delegations of high rank from Turkey visit Azerbaijan constantly. Mr. Ambassador told me today that the Minister of Energy of Turkey couldn`t come here because of the internal situation in Turkey. But we think that he is here, too. Today I emphasize the participation of Turkey and its TPAO company in the contract. I welcome the delegation of Turkey to Azerbaijan, Mr. Sidqi Sandjar, President of TPAO and all our guests from Turkey.

Iran is a close neighbor and friend of Azerbaijan. The cooperation between Iran and Azerbaijan is developing day by day. Now we intensify our cooperation with Iran in the sphere of oil and gas industry. I want to emphasize that there is cooperation. Azerbaijani oil workers received an order to drill two oil wells in the Iranian Sector of the Caspian Sea, and now work there. We think that it is the demonstration of our cooperation with Iran. Iran has its own sector in the Caspian Sea. At the same time I think that the involvement of Iran to the exploitation of Shahdeniz in the Azerbaijani Sector of the Caspian Sea is a remarkable event. I guess that it will help the further development of our cooperation. OIEC Company of the Islamic Republic of Iran is also participating in the contract to be signed today. I welcome the guests from Iran and Seyid Ali Akbar Hashimi, vice-president of the national oil company of Iran.

The contract to be signed today is on joint work of the companies from 7 countries: Azerbaijan, the UK, Norway, Russia, Turkey, France and Iran. It is a remarkable case.

I sincerely congratulate the Azerbaijani people on the signature of a new oil contract; I hope that this big step will bring success made in the spheres of economic cooperation, development of economy for the welfare of the Azerbaijani people.

I welcome all the people in the hall - our guests from foreign countries, ambassadors of foreign countries to Azerbaijan, representatives of international organizations to Azerbaijan; I am hopeful that we'll witness such great events further.

I congratulate all of you. I think that we may begin to sign the contract. Please. 

Translated into English from the newspaper "Azerbaycan", June 6, 1996