GENERAL CONCEPT OF HEYDAR ALIYEV'S OIL STRATEGY

Azerbaijan has been implementing the new oil strategy since 1994 and the major principles of these strategies imply the effective utilization of the rich natural resources of Azerbaijan including oil and gas resources.
Heydar Aliyev

Following the elections of the national leader of the Azerbaijani people Heydar Aliyev as the leader of Azerbaijan in 1969 deep changes occurred in the socioeconomic as well as other spheres of life. Beginning from 1969 the national economy of Azerbaijan was characterized with the dynamic growth of oil and gas industry. At that period a new stage started in the history of Azeri oil and gas industry development.

As the result of the great policy conducted by President Heydar Aliyev Azerbaijan was supplied with 400 of 75 types of crane vessels, load-lifting boats, seismic, passenger and other boats in the 1970-1980s. The receipt of Azerbaijan crane with the capacity of 2500 tons, Khazar type tin-up and later the Shelf type allowing working in the depth of 200 meters promoted the discovery of new rich deep sea oil and gas fields. As the result 8 new oil and gas fields were discovered and the oil reserves expanded by 2 and gas reserves by 3 in the late 1960s. The total volume of oil and gas production reached 27.1 million tons (of standard fuel) in 1975. The number of drilling plants rose up to 11 in the 1980s and as the result of their operation new field rich in oil were discovered at the depth of 80-350 meters in the Caspian Azeri sector (Guneshli, Chyrag, Azeri and others).

A special program for oil processing in Azerbaijan was developed and implemented by the initiative and under coordination of the prominent politician Heydar Aliyev. The new plants equipped with modern technique and technology, were established and new installations were established in accordance to the said program. At the same time the reconstruction of the oil refineries was initiated. With the implementation of the stages of the reconstruction plan of oil refining industry in Azerbaijan, the changes occurring in the said sphere deepened and expanded. Thus, the construction of ELVOU-AVT-6 plant in 1976, Catalytic Reforming in 1980, Oil coxing in 1986 and Catalytic Cracking in 1993, other works he carried out during the Soviet times and the strong foundation he created promoted the formation of oil industry corresponding to the world standards in independent Azerbaijan.

The allotment of USD 450 million in the Soviet Union for the construction of the unrivalled Plant of Deep Sea Basis of Azerbaijan, the receipt of license from Moscow for the construction of the plant in Astrakhan was the result of the wise policy of Heydar Aliyev.

The construction of the plant was initiated in 1978 and it was commissioned in 1989.

All these facts were due to the wise and farsighted policy of Heydar Aliyev. He realized perfectly that all the conducted works would serve the economic independence of Azerbaijan that would gain independence in the future. History proves the correctness of Heydar Aliyev's considerations.

Azerbaijan faced a number of problems after gaining independence in the early 1990s. The cut off of the economic relations between former USSR and Azerbaijan, the instability established in the country, the lack of financial and technical provisions caused deep crisis in the oil and gas industry. All those difficulties as well as technical, financial and other problems hindered the development of such discovered fields as Azeri, Chyrag, Guneshli. In such conditions Heydar Aliyev who returned to Azerbaijan by the request of the people stood with the slogan "Oil is the national wealth of Azerbaijan" and engaged in the development and restoration of the country's oil industry. It was necessary to choose between two variants for the settlement of the hard situation established in the oil industry and the development of hydrocarbon reserves of the country: either to wait for the improvement of the financial and economic state of the country for 15-20 years or to attract foreign oil companies to the country. National leader of the Azerbaijani people decided on attracting large oil companies to Azerbaijan and a new oil strategy was developed in a short period of time.

The negotiations with the foreign companies on the development of Azeri-Chyrag-Guneshli fields were initiated by the decree of the President of Azerbaijan at that time. Heydar Aliyev who averted the disaster in the country initiated measures for the economic development of the country. Ilham Aliyev, the vice president of the SOCAR, was involved into the process of negotiations from the very beginning and was the most active participants of the successfully conducted process. The Production Sharing Agreement -the Contract of the Century on the development of Azeri-Chyrag-Guneshli fields (deep water Guneshli) was signed with 11 famous oil companies from 7 countries of the world on September 20, 1994.

The successful implementation of Heydar Aliyev's new oil strategy for over ten years from the signing of the contract of century turned into the actual theme in our country. Considering all that it is possible to single out the following implemented directions of the new oil strategy:

1. The ensuring of Azerbaijan's access to the global markets of energy sources through the attraction of international oil companies, foreign business circles, large investments to oil and gas projects;

On the whole 26 oil contracts have been concluded with the foreign oil companies in frames of the Contract of the Century.

These contracts stipulated for the investment of nearly USD 60 billion in the oil and gas industry of Azerbaijan that is the real guarantee of the future development of our country.

2. the establishment of export pipeline to ensure the express and free access of Azeri oil to the global markets;

Currently produced oil is transported to the global markets by two routes: by Novorossiysk on the Black Sea coast of Russia and Georgian port of Supsa.

Despite both negative and positive features of the two pipelines, the national leader of the Azerbaijani people H. Aliyev carried out wise decision that confirmed the necessity of the establishment of both oil pipelines. The implementation of the initial oil project created conditions for the intensification of the operations on Azeri, Chyrag and Guneshli pipelines and the attraction of new investments for the development of hydrocarbon resources of Azerbaijan.

Presidents of USA, Turkey, Azerbaijan, Georgia, Kazakhstan and Turkmenistan signed an intergovernmental agreement on the establishment of the head export pipeline Baku-Tbilisi-Ceyhan at the OSCE summit in Istanbul in November of 1999 and later the contract was ratified by the Parliaments of Turkey, Azerbaijan and Georgia. The foundation stone of Baku-Tbilisi-Ceyhan pipeline was laid with participation of national leader of Azerbaijan Heydar Aliyev, Turkey and Georgia at Sangachal terminal in Baku September 18, 2002 and its construction was initiated. The Azerbaijan and Georgian sections of BTC were united in October of 2004.

In the future BTC will not only promote the access of Azeri oil to the global markets but will turn to the major pipeline of the Silk Road and Turkic countries.

The selection of the direction of the pipeline was the result of the great policy of Heydar Aliyev and the pipeline will join the oil pipelines system as the artery of the world.

3. the accumulation and the increase of incomes from oil for the future generations, their utilization for the present generation considering the social needs of the country, economic prosperity and development requirements;

National leader Heydar Aliyev signed a decree on the establishment of the State oil fund of the country on December 29, 1999. Nearly USD 1 billion have been transferred to the fund since its establishment.

4. The import of the modern technique and technology of the West was one of the achievements in the implementation of the new oil strategy established by national leader of Azerbaijan Heydar Aliyev;

The new technology and equipment used in the development, drilling and operation of the fields has a positive impact on the oil industry. The construction of a giant offshore plant allowing the drilling of 48 wells in the Central Azeri is nearing its completion. Sangachal terminal is one of the largest terminals in the world and a number of establishments have been constructed there due to its expansion. An underwater oil pipeline with the length of 186 kilometers and 800 mm and gas pipeline of 187 kilometers 720 were constructed from the Azeri field to the Sangachal terminal. Such enterprises as Tekfen, Azfen, Makdermot and others played great role in the construction of the aforementioned important establishments and their completion. Foreign firms and companies operating in the oil and gas sector of Azerbaijan accounts for 17 thousand Azeri workers. Of them 9500 directly work at Azeri-Chyrag-Guneshli.

Oil production is forecasted to reach the level of 40-45 million tons in 2010 due to the oil potential existing in Azerbaijan. The total income from the works within the framework of the contract is estimated to USD 100 billion. The idea of the establishment of Baku-Tbilisi-Ceyhan oil pipeline and its realization is one of the major parts of the new oil strategy.

To date the oil strategy worked out by Heydar Aliyev symbolizes that Azerbaijani people are the owners of their wealth, that the economics of our country has integrated into the global economics, that our country survived the political, economic and social crisis that occurred in the early 1990s and that the developed, strong and democratic state of Azerbaijan was established in the beginning of the 21st century.
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