Azerbaijan's Oil Revolution: Legacy Of“Contract Of The Century”

(MENAFN- Trend News Agency) BAKU, Azerbaijan, September 20.​ The“Contract of the Century,” signed in Baku on September 20, 1994, was Azerbaijan's first and most significant step in attracting foreign investment to its oil sector.

The agreement established the first large-scale production-sharing contract for the joint development of the Azeri-Chirag-Gunashli (ACG) fields in the Caspian Sea with an international consortium.

The main participants included 13 leading oil companies from eight countries: Azerbaijan, the United States, the United Kingdom, Russia, Türkiye, Norway, Japan, and Saudi Arabia. Key shares were allocated as follows: BP (United Kingdom) – 17.12 percent, Ramco (UK) – 2.08 percent, Amoco (USA) – 17.01 percent, Unocal (USA) – 11.2 percent, Pennzoil (USA) – 9.81 percent, McDermott (USA) – 2.45 percent, Lukoil (Russia) – 10 percent, Statoil (Norway) – 8.56 percent, Turkish Petroleum – 1.75 percent, and SOCAR – 20 percent. The contract successfully implemented Azerbaijan's new oil strategy and doctrine.

Initial recoverable reserves were estimated at 511 million tons and later revised to 730 million tons based on appraisal wells, with investment requirements of $11.5 billion. The contract was originally set for 30 years and extended in 2017 until 2050. A revised agreement was signed for deeper sections of the ACG fields, which included a $3.6 billion bonus for Azerbaijan from foreign investors, SOCAR participation as a contractor, an increase in SOCAR's share from 11.6 percent to 25 percent, and a 75 percent share of profit oil for Azerbaijan. By 2025, 436 million tons of oil had been produced from ACG, with an estimated 500 million tons of oil still remaining.

The“Contract of the Century” attracted billions of dollars in foreign investment, setting an example in the post-Soviet space and establishing Azerbaijan as a stable and reliable country for investors. Revenues from the contract significantly strengthened the state budget, funding infrastructure, social programs, military modernization, and other sectors. The State Oil Fund of Azerbaijan (SOFAZ), established in 1999, ensured transparent and efficient management of oil revenues, protecting resources for future generations and maintaining economic stability.

The agreement linked Azerbaijan closely with the West in energy matters, making the U and the European Union important energy partners and strengthening the country's international position. It also laid the foundation for the Baku-Tbilisi-Ceyhan (BTC) pipeline, enabling Caspian oil to reach global markets.

Thanks to this contract and the subsequent strategic steps, Azerbaijan emerged as the energy leader of the South Caucasus, enhancing its influence in the region and positioning the country as a key player in regional initiatives. At the time of the agreement, Azerbaijan faced economic instability, but the contract demonstrated that foreign states and companies had a vested interest in the country's stability and proved that Azerbaijan, as an independent nation, was fully capable of managing its own energy policy.

The“Contract of the Century” fundamentally transformed Azerbaijan's economy and energy sector. It created thousands of jobs, allowed Azerbaijani specialists to gain international experience and technological knowledge, and facilitated the education of thousands of students abroad. Social infrastructure projects, including roads, schools, and hospitals, were funded from oil revenues. Today, Azerbaijan is working to develop a post-oil economic model, with the“Contract of the Century” providing the necessary capital and experience base. It represents a turning point in Azerbaijan's history of independence, political stability, economic growth, international influence, and geostrategic balance, serving not just as an oil contract but as a platform for the country's long-term development and energy strategy.

The BTC pipeline has transported 605 million tons of crude oil since 2006. In the first half of 2025, approximately 13 million tons (106 million barrels) of crude oil and condensate were exported through BTC, with operational costs of around $60 million and capital expenditures of $30 million. Since its launch, a total of 4.6 billion barrels of crude oil have been transported via the 1,768 km BTC pipeline.

Since the start of production in the ACG block until September 1, 2025, 612.2 million tons of crude oil and 238.7 billion cubic meters of associated gas have been produced. SOCAR currently holds the largest share in the ACG contract at 31.65 percent.

MENAFN20092025000187011040ID1110087514