Speech of the President of the Republic of Azerbaijan Heydar Aliyev at the Ceremony of the ‎Signature of the Agreement between the oil companies "Japan Petroleum", "Indonesia ‎Petroleum", "Itochu Oil Exploration" and "Teykoku Oil" and the State Oil Company of ‎Azerbaijan Republic on exploration, developments, and production-share in "Yanan Tava", ‎‎"Ateshgah" and "Mugan-Deniz" blocs located in the Azerbaijani Sector of the Caspian Sea - ‎Gulustan Palace, December 25, 1998‎

Leadies and gentlemen!

Distinguished guests!

Today we have assembled for the signature of a new oil contract in Baku, Azerbaijan. This ceremony is a further step of the Azerbaijani President and state in pursuing the oil policy.

Clearly, Azerbaijan has been conducting its own oil policy since 1994. The essence and basis of this policy lie in the intensive exploitation of the Azerbaijani oil and gas fields. To conduct joint projects with big oil companies was a reasonable way perceived by the independent Azerbaijani state in order to attract foreign investment.

By doing that we attract foreign investment for the exploitation of the Azerbaijani oil and gas fields on the one hand, we intend to use relevant expertise of giant oil companies and utilize their modern technology on the other hand.

By planning and implementing the oil policy we were sure that it would bring benefits for today and for the future of Azerbaijan. The work done and the incomes yielded in the last four years prove that our oil policy is beneficial for the national interests of Azerbaijani nation.

Fifteen contracts have been signed in the last four years. Twenty seven big oil companies of fifteen countries take part in these agreements. These agreements are being carried out accordingly, and eventually impact on economic development of Azerbaijan.

We do witness the practical outcome of "Contract of the Century", signed in September 20, 1994. A year ago on, oil started to be extracted in "Chirag" oil deposit. Now the Azerbaijani oil is being shipped to the world market via the Baku-Novorossisk pipeline.

Evidently, the first contract, "Contract of the Century", exceeds the expected result. Oil in the deposit of "Chirag" is being produced more than twice, or thrice. It was set out to expected produce 510 million ton oil in accordance with the contract. However, we expect 630 million ton oil. I suppose there will be more than that. Other contracts are being implemented respectively. It is worth noting that they bring new stimulus to the Azerbaijani economy and well-being.

Giant oil companies and advanced countries pay more attention to the Azerbaijani sector of the Caspian Sea. Japan, among these countries, expressed its willingness a couple of years ago to be engaged in oil and gas developments in Azerbaijan. Initially "Itochu" of Japan purchased a share in the first consortium. Afterwards, "Itochu" joined the consortium set up for the exploitation of "Dan Ulduzu" and "Ashrafi" oil deposits and eventually purchased 20 per cent of the project.

"Mitsui" company of Japan is part of the consortium established for the developments of "Kurdashi" oil deposit located in the Azerbaijani Sector of the Caspian Sea. It holds 15 per cent of the project. Other Japanese companies have shown their interest in the Azerbaijani oil and gas as well.

Thus, economic cooperation between Japan and Azerbaijan has extended lately and is of great significance. During my official visit to Japan in February this year we conducted broad negotiations, and subsequently we signed several documents on the further development of the bilateral relations. Declaration on friendship and cooperation between Japan and Azerbaijan was signed by the prime minsiter of Japan, Mr. Hashimoto, and by the president of Azerbaijan. Apart from this, there was a formal agreement as a result of negotiations between the Japanese government and "Eksimbank" on granting credits for the development of the Azerbaijani economy.

Agreement on granting favourable credits in the amount of 160 million USD on the reconstruction of "Shimal" power station was signed in Tokyo in February. Additional agreement was signed on providing favorable credit in the amount of 90 million USD in order to reconstruct and modernize facilities that produce ethanol in the Azerbaijani chemical complex.

Negotiations conducted with the Japanese government show that there are possibilities of to receive further credits for the development of other branches of the Azerbaijani economy. We highly appreciate our relations, particularly economic relations with Japan. Moreover, we express our gratitude to the Japanese government for their interest and financial aid. We have consented to the proposals of some Japanese oil companies to conduct joint developments in the Azerbaijani Sector of the Caspian Sea.

These proposals were made a year ago. While being in Tokyo in February, I had comprehensive talks with the Japanese government and presidents of companies. Further talks were held between the SOCAR and four Japanese companies - "Japeks", "Inpeks", "Itochu" and "Teykoku", and consequently an agreement was reached on joint development in "Yanan Tava", "Ateshgah" and "Mugan-Deniz" blocs.

After protracted negotiations SOCAR submitted its proposal. I have reviewed it and found it satisfactory. Therefore, I made a decision to sign a contract between four Japanese companies and SOCAR on joint venture in "Yanan Tava", "Ateshgah" and "Mugan-Deniz" oil fields.

This oil field was discovered in 1950s by the Azerbaijani scientists, oil workers and geologists. Afterwards, SOCAR carried out exploration in 1970s, and eventually collected some valuable information on the prospects of the field.

The field covers 510 square kilometer. It is expected to extract roughly 75-90 million ton oil. It is set out to invest 2,3 billion USD. Both the Japanese companies and SOCAR will have 50 per cent of the share each. All investments will be made by the Japanese companies. According to all indicators, this agreement is profitable for SOCAR and Japanese oil companies as well.

Delegates of Japanese oil companies and Japanese government have come to Azerbaijan to sign this agreement. The agreement has been studied by the parties and presented for the signature.

By signing the agreement we extend relations between Japan and Azerbaijan. This agreement is sixteen contract signed with foreign companies. Consequently, four Japanese companies will join the project.

I declared in Tokyo and do it today that Japan is economically an advanced country. The Japanese companies have immensely contributed to scientific-technological progress. In addition, Japan, with its breakthrough in science and technology, has greatly influenced the development of world economy. Therefore, we advocate to expand cooperation with Japan. Namely, we applaud the participation of the Japanese oil and gas companies in the Azerbaijani projects.

I believe that this agreement will boost economic relations between our countries. Another aspect of this agreement is that the consortium is composed of only Japanese companies.

So far, all the agreements have been signed between the consortium of companies from varous countries and SOCAR. This agreement is to be more successful as all the members of the consortium are the Japanese companies. They are all familiar with eachother, therefore can pursue an efficient cooperation.

I congratulate the Japanese companies, the delegate of the Japanese government and SOCAR on this occasion and invite you to sign the agreement.


Concluding Speech

Distinguished Japanese guests!

I express my gratitude to all of you for your kind words about Azerbaijan, the Azerbaijani state and Azerbaijani nation.

Your speech further proved that today’s agreement will yield benefits both for Japan and for Azerbaijan. We noticed that you are aspire to coopearte with Azerbaijan and work with SOCAR in the Azerbaijani oil and gas fields. Your intentions coincide with our dreams. Therefore, I hope that our cooperation will be a succees.

You correctly mentioned that our cooperation in the oil field fosters the Japanese-Azerbaijani economic relations. The distance between Japan and Azerbaijan is huge. However, as our willingness to cooperate is strong enough, we have shortened this distance.

Mr. Ambassador emphasized the position of the Japanese government to the restoration of the ancient Great Silk Road. Aparently, a number of suggestions have been made for the restoration of the historical Silk Road. However, the Japanese proposal, in general, and the Prime Minsiter Mr. Hashimoto’s initiative, in particular, are of special importance.

International conference on the restoration of the historical Silk Road was organized in Baku, Azerbaijan, in the Gulustan Palace, on September 7-8. The Japanese delegate attended the conference. Agreements on the restoration of the historical Silk Road and on the development of TRACECA were signed. Thus, proposals concerning the restoration of the historical Silk Road in Japan, Europe and the Caucasus began to be realized. Apart from what has been done so far as part of cooperation between Japan and Azerbaijan, restoration of the historical Silk Road will further expand the Japanese-Azerbaijani cooperation.

1998 comes to an end. We have done much in Tokyo for developing the partnership and cooperation between Japan and Azerbaijan at the outset of this year, and eventually we signed significant intergovernmental documents. Ultimately, important agreement was signed in Baku, Azerbaijan, at the end of the year, to improve the cooperation between Japan and Azerbaijan. I believe that the Japanese-Azerbaijani cooperation will enhance in the forthcoming 1999.

I congratulate the distinguished guests and participants on the upcoming 1999. I wish the Japanese, Azerbaijanis and all peoples peace and progress.

Thank you. 

"Azerbaycan" newspaper, December 26, 1998

Brief essays


General historical background