The Production Sharing Agreement (PSA) signed in September 20, 1994 in Baku by the Government of Azerbaijan and a consortium of 11 foreign oil companies from six nations initiated a rapid period of development which has transformed the country into a major global energy supplier and changed the energy map of Europe.

The contract covered the development of an area that covered three major oil fields in the Azerbaijan sector of the Caspian Sea – Azeri, Chirag and Deepwater portion of the Gunashli field (ACG).

It was Azerbaijan’s first offshore PSA. With a lifetime of 30 years, it represented the first major investment by Western multinational companies in any country of the former Soviet Union and became known as The Contract of the Century.

To date the field has been developed in several phases:

Chirag has been producing since 1997 as part of the Early Oil Project.

This was followed by Phase 1 of the Azeri Project – Central Azeri, where production started in early 2005.

Phase 2 included West Azeri, which started production in December 2005, and East Azeri, which started production in late 2006.

The next ACG development phase – Phase 3 Deepwater Gunashli – started up in April 2008.

The last project in the series to date was the Chirag Oil Project, which was sanctioned in 2010.

The West Chirag platform has been installed between the existing Chirag and Deepwater Gunashli platforms.

First oil from the platform was achieved on 28 January 2014. On 14 September 2017 the Azerbaijan Government and SOCAR, together with the international co-venturers signed the amended and restated ACG PSA.

The contract was ratified by the Parliament (Milli Majlis) of the Republic of Azerbaijan on 31 October. In 2018, ACG continued to safely and reliably deliver stable production.

Total ACG production for the full year was on average 584,000 barrels per day (b/d) (about 213 million barrels or 29 million tonnes in total).

In 2018, we spent about $505 million in operating expenditure and $1,150 million in capital expenditure on ACG activities.

Discovered in the early 1970s when Azerbaijan was part of the Soviet Union, ACG is the largest oilfield in the Azerbaijan sector of the Caspian basin. Lying beneath 120 metres of water about 120 km east of Baku, it comprises a series of individual “reservoir horizons” located 2,000–3,500 metres beneath the Caspian seabed.

It is operated by BP on behalf of the Azerbaijan International Operating Company (AIOC). AIOC was formed in February 1995 following the ratification of the PSA and originally comprised eleven partner companies( BP, Amoco, Unocal, LUKoil, Statoil, Exxon, TPAO, Pennzoil, McDermott, Ramco, Delta Nimir) representing six countries: UK, USA, Russia, Norway, Turkey and Saudi Arabia.

BP is the largest single shareholder. ACG’s current shareholders and participating interests are indicated below.

ACG is a complex of six production platforms: Chirag 1, Central Azeri, West Azeri, East Azeri, Deepwater Gunashli, West Chirag; and two process, gas compression, water injection and utilities (PCWU) platforms, equipped with latest technologies.

A sophisticated web of subsea pipelines was laid at the bottom of the Caspian Sea to transport oil from offshore to Sangachal terminal, near Baku. Sangachal is one of the biggest and most efficient terminals in the world, which can receive and process up to 1.2 million barrels of oil per day.