Azerbaijan - the country of black gold
The history of oil, or ‘black gold’, goes back centuries, but Azerbaijan is the place that the main stages of its extraction, use and processing are most connected with. Azerbaijan has been known as an oil country since ancient times – as far back as the 10th century, wells were dug to a depth of up to 12 metres, producing oil known as ‘white oil’ due to its unique properties. Travellers at the time noted the oil’s medical qualities as well as its traditional heating uses.
Located on the Silk Road, 16th-century Baku became an important transit port. Oil left the city bound for global markets, and ‘black oil’ was brought by camel and mule to every corner of the country. Azerbaijan and the Caspian Sea came to the attention of global powers in the 18th century as a rich source of this black gold, and the country became an important consideration in the foreign policy of many of its neighbours.
Oil production was already well under way in and around Baku in the 19th century, but only from wells dug to a very shallow depth. In 1847, however, an event took place that revolutionised oil extraction – the first oil ‘gusher’ was struck at Bibiheybat. At just 21 metres this well was not particularly deep, but it marked the start of industrial oil extraction methods in the world, and Baku’s place in the history books as the origin of this industrial production was secured. The Nobel brothers founded the first oil company, Branobel, in 1872, and the first oil refinery soon followed. Not long after this in 1877, the first oil tanker, Zoroastr, took to the seas.
The Caspian’s oil played a key role in the Second World War, with Baku producing 70% of all the Soviet Union’s oil. In Soviet times Azerbaijan’s scientists made a large number of oil and gas discoveries, including the world-famous Oil Rocks, which gave a strong boost to oil production in Azerbaijan.
Independence marked the start of a golden age for Azerbaijan’s economy. When the country found itself in a difficult situation following the break-up of the Soviet Union, Azerbaijan’s National Leader and President, Heydar Aliyev, took a number of momentous steps. In September 1994 the Contract of the Century was signed – an agreement between the State Oil Company of Azerbaijan Republic (SOCAR) and a consortium of leading international oil companies to develop the offshore Azeri-Chirag-Gunashli fields. 20 years ago, Azerbaijan became a symbol of global cooperation with the launch of this ambitious project for countries and companies around the world. The contract was both the first of its kind in the Caspian Region and a clear example of successful cooperation between Azerbaijan and leading international investors, who brought with them the world’s most advanced oil production technologies. Its signing set the course for large-scale development of the Caspian’s resources and marked a new era in the petroleum history of Azerbaijan.
In the very same year, Azerbaijan’s first exhibition dedicated to oil and gas, Caspian Oil & Gas, was organised on the initiative of Heydar Aliyev. From its launch to the present day, it has remained a key event in the oil and gas industry and continues to make an important contribution to the whole region’s fuel and energy sector. Azerbaijan is still carrying out large energy, oil and gas projects. Production at the Shah Deniz field, the world’s largest gas field discovered in the past 20 years, has begun. A new Absheron gas field was discovered in 2011. Production plans have been developed and approved for the Umid, Zafar-Mashal, Nakhchivan, Shafag and Asiman offshore fields. Azerbaijan is also involved in the Baku-Novorossiysk, Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzerum pipelines, as well as the TANAR pipeline, for which an agreement was signed in 2012. Work has also begun on the major Oil & Gas Processing and Petrochemical Complex (OGPC) project not far from Baku.
The country’s government is implementing an oil strategy centred on the interests of the country, with revenues from hydrocarbon sales and transportation being ploughed into the non-oil sector to make Azerbaijan’s economy stable and sustainable. Every visitor to Baku can see how much has been achieved in the last 20 years and the changes planned for the next 20. As time goes on, a brand new chapter is set to be written in the history of black gold in Azerbaijan.