History of gas industry in Azerbaijan

The history of gas industry in Azerbaijan achieved great milestones over the course of the last 170 years. It is closely related to the history of the oil industry in Azerbaijan.  

Since 1969 the oil and gas industry in Azerbaijan entered a period of dynamic development, as well as other fields of national economy. This was the first period of the leadership of the national leader Haydar Aliyev in Azerbaijan. A new era in developing of the Azerbaijani oil and gas industry, especially the offshore oil production started. The Khazardanizneft Production Association was established in 1970. Taking into consideration the offshore production experience of the Azerbaijani oilmen in the Caspian Sea, the Ministry of Oil Industry of the USSR decided to involve them in all the relevant works, such as geological discovery, oil-producing and exploitation across the sea.    

The improvement of oil and gas producing had already been related to the wells situated at the depth of the sea. The geological discovery of rich oil and gas wells at the depth of the sea started to be possible after the acquisition of rigs, such as Khazar for the oil-producing at the depth of 70m and Shelf for the working at the depth of 200m. As a result, in comparison with the late 60s, 8 new oil and gas wells was discovered, whereas oil reserves was increased three times. The total production of both oil and gas reached 27.1b t in 1975. In 1980s the number of swimming rigs rose up to 11 and it paved the way for discovering rich oil wells, such as Gunashli, Chirag and Azeri – the main Azerbaijani oil wells situated at the depth of 80-350 meters.      

The special oil program started to be implemented by the initiative and guidance of the national leader Heydar Aliyev. As per this program, new plants and rigs were built in line with the latest technologies. At the same time, modern oil refining plants were constructed. Thanks to the efforts of Heydar Aliyev, Moscow sanctioned the construction of the Deep Water Base plant in Baku by allocating $450.000. The works were kicked off in 1978 and the plant was ready to be exploited in 1989.   

After the dissolution of the USSR and the proclamation of independence in Azerbaijan the modern era in history of the national oil and gas industry is being identified with the New Oil Strategy. Thus, the treaty named the Contract of the Century and implied to be implemented from 1994 to 2024 was signed on the 20th of September, 1994, between the State Oil Company of the Republic of Azerbaijan (SOCAR) and the consortium of foreign oil companies known as the Azerbaijan International Operating Company (AIOC) with great efforts of Heydar Aliyev. Thereby, the new oil strategy of the state went into action. Moreover, the exploitation of the Azeri-Chirag-Gunashli oil well was extended by the new treaty signed on the 14th of September, 2017. According to the new contract, foreign investors had to gradually invest bonuses in the national economy as a sum of $3.6b. The shares of the SOCAR also had been increased from 11.6% up to 25%. This Treaty was a newest milestone in developing of the Azerbaijani oil industry.