The Azeri-Chirag-Deep Water Gunashli (ACG) field, located approximately 100 km east of Baku, is the largest block of oil and gas fields in the Azerbaijan sector of the Caspian basin. When the Contract of the Century was signed in 1994, though the reserves of the block had been projected to be 511 million tons, afterwards this indicator was estimated to be 1.072 billion tons.
By virtue of the strenuous efforts of the National Leader of Azerbaijan Heydar Aliyev, on the 20th of September 1994, 11 international oil companies - Amoco, BP, McDermott, UNOCAL, SOCAR, LUKOIL, Statoil, TPAO, Pennzoil, Ramco, Delta - representing 7 countries including Azerbaijan - USA, UK, Russia, Türkiye, Norway and Saudi Arabia – gathered in Baku to sign an Agreement on Production Sharing and Joint Development of the Azeri, Chirag and Deepwater Gunashli fields in the Azerbaijan sector of the Caspian Sea. This document went down in history as the Contract of the Century. The Agreement, of utmost importance in the history of the independent Azerbaijan, laid the foundation of the country’s new and multifaceted oil strategy.
The development of the ACG field is operated by BP via the Azerbaijan International Operating Company (AIOC), carrying out cooperation between the government of Azerbaijan and foreign shareholders.
In 1995, the Chirag-1 platform was rehabilitated to extract the first oil from the Chirag field. The upper module of this platform was modernized, and new equipment was installed for directional drilling of wells with large inclinations. The newly equipped drilling rig enabled drilling horizontal wells. Wells in the depths of more than 5,500-6,300m with a maximum slope were drilled, and extraction of the field’s ample resources commenced. Consequently, the first oil from the ACG block was obtained from the Chirag platform in November 1997. Thereafter, necessary measures were taken for the Azeri field's development, and in 2005, with the commissioning of the Central Azeri platform, the first oil was extracted therefrom. Eventually, the Western Azeri and Eastern Azeri platforms were constructed and began to operate in late 2005 and 2006, respectively. The launching of Deepwater Gunashli platform in 2008 and Western Chirag platform in 2014 gave a new impetus to increase production. Currently, the Azeri Central East project is being implemented there. This new offshore platform project creates an additional production capacity of 100,000 barrels per day at the field. In general, 300 million barrels of oil extraction is planned within the project. Domestic human resources are used in the construction work, and 8,000 Azerbaijani citizens were employed here during the peak period of work.
More than 500 million tons of oil from the ACG field has been transported directly to the world market through the Baku-Tbilisi-Ceyhan (BTC) pipeline and the Western Export Pipeline (WEP) from the Sangachal Terminal near Baku. In total, this volume was 550 million tons of crude oil from the start of operation until the end of 2023. The first oil profit was achieved in December 1999.
On the 14th of September 2017, the parties amended and revised the Agreement on the joint development of the Azeri, Chirag fields and Deep Water Gunashli. According to the new agreement extended until the end of 2049, BP continues its function as the operator of the project, the share of SOCAR is increased from 11.65% to 25%, and 75% of the profit belongs to Azerbaijan.
Addressing the signing ceremony, Ilham Aliyev, President of the Republic of Azerbaijan highly valued the importance of the agreement:
The contract to be signed today is of significant importance for our country. The development of the Azeri-Chirag-Gunashli oil field is being extended until 2050. The new contract to be signed is even more favorable for Azerbaijan, although the contract signed in 1994 fully satisfied our interests. This time, the contract is signed on even better terms. I would like to bring some of the main parameters to your attention: after signing the contract, foreign investors will pay a bonus of 3.6 billion dollars to our country; AzACG of SOCAR will take part in the implementation of the contract as a contractor; SOCAR’s share will increase from 11.6% to 25%, and the share of Azerbaijan’s profit oil will be 75%. These are the key conditions. Of course, the contract contains many provisions. The main provisions already show that this contract is very important for the future development of Azerbaijan and for the enhancement of our financial capabilities.
Over 40 billion dollars are planned to be invested in the field's development in the next years. In the new agreement ratified on the 31st of October 2017, the share distribution ratio of the partners was also changed: BP - 30.37%, AzACG (SOCAR) - 25%, Chevron - 9.57%, Inpex - 9.31%, Equinor (Statoil) - 7.27%, ExxonMobil - 6.79%, TPAO - 5.73%, Itochu - 3.65% and ONGC Videsh Ltd. (OVL) - 2.31%.
In 2019, the Hungarian MOL Group acquired Chevron’s shares in ACG (9.57%) and the Baku-Tbilisi-Ceyhan pipeline (8.9%), and a respective agreement has been concluded and the acquisition was completed in 2020.
BP Exploration (Caspian Sea) Limited was selected as the operator on behalf of the contracting parties of the Agreement on Production Sharing for the ACG block.
On December 22, 2023, an agreement was signed for SOCAR's acquisition of Equinor’s 7.27% stake in the ACG project. Consequently, the share distribution ratio of the partners changed: AzACG (SOCAR) – 32,27%, bp - 30,37%, Chevron - 9,57%, Inpex - 9,31%, ExxonMobil - 6,79%, TPAO - 5,73%, Itochu - 3,65% və ONGC Videsh Ltd. (OVL) - 2,31%.