Speech of the President of the Republic of Azerbaijan Heydar Aliev in the ceremony of devoted to putting into operation the Drilling Rig "Istiglal" - September 2, 1998

Ladies and gentlemen!

Dear friends!

We, the people who have assembled here today, arc partici­pants of a great remarkable event in the life of the oil industry of Azerbaijan, in the life of whole Azerbaijan. We are taking part in the ceremony devoted to putting into operation of the floating semi-submerssibe drilling rig for the performance of the project aimed at the exploration, development of rich oil and gas deposits in deep water portions of the Caspian Sea and at ensuring oil and gas production within the frames of this project.

It is an unordinary event. Because, this drilling rig, in front of which have assembled now, is a huge, magnificent production entity, equipped with the update technology. Mr. Mike Sherman noted briefly that it is necessary to rename this drilling rig. Several days ago I renamed it. Its name is "Istiglal" (Independence).

I have named this huge production entity, this drilling rig like that not accidentally. You know, some time ago we reconstructed and updated a huge drilling rig and celebrated the beginning of its exploitation. I gave it the name of "Dede Gorgud". It was my idea. Why did I call it "Dede Gorgud"? You know, Dede Gorgud is our forefather, ancestor, our historical root and our nation. By naming this drilling rig "Istiglal", I wanted to tie our past and present more closely. Our historical past is Dede Gorgud, our present day and future are our eternal independence (Istiglal). I am sure that this floating semi-submerssibe drilling rig will bear the name of "Istiglal" with dignity, it will have a long life and serve the develop­ment of the economy of Azerbaijan, improvement of the welfare of the Azerbaijani citizens faithfully.

The oil industry of Azerbaijan has an ancient and rich history. Azerbaijan is an ancient land of fires. In 1848 for the first time in the world oil spouted in Azerbaijan, thus, the commercial produc­tion of oil began. At the beginning of the XX century the Azerbaijani oilmen started to move towards the sea, to drill wells on the shore and extract oil. In 1922, just in this very port, in this area, at the proposal of Potatsky, a Pole, an engineer by profession, wells began to be drilled and oil produced from the bottom of the sea.

In the 1940s the Azerbaijani oilmen gained great successes in the world scale, the first well was drilled in the famous Oil Rocks, probably in the middle of the Caspian Sea oil spouted from the well. It was in the November of 1949. In the following years oil produc­tion grew in this legendary Oil Rocks, in this way Azerbaijan laid the foundations of off-shore oil production in the world.

Thus, the development of the oil industry in Azerbaijan may be divided into three periods: the first period which covers the years between the mids of the XIX century till the twenties of the XX century, the second period covers the years from 1920 till Azerbaijan gained its independence.

Finally, the years since the independence of Azerbaijan form the third period of the development of the oil industry of Azerbaijan. Each stage has its own peculiarities and a striking his­tory.

After gaining independence, Azerbaijan became the owner of its national natural resources for the first time in the history and began to use them on its own consideration. You know, we have developed an extensive program, begun great activities. They will allow to raise the economy and improve the welfare of the Azerbaijani people in the forthcoming years, in the XXI century.

When we began all this as an independent state, we began it on the foundations laid by several generations of the Azerbaijani oil­men who had discovered the rich oil and gas deposits in the Azerbaijani Sector of the Caspian Sea. At present they form the basis of our present and future activities. The oilmen, scientists, geologists of Azerbaijan, who lived in the past and who work now, have done great things, discovered rich oil and gas deposits, they have created the basis for Azerbaijan to develop an extensive pro­gram. Today, on this remarkable day of holiday we commemorate all the generations of the Azerbaijani oilmen with a sense of grati­tude and want to say that the Azerbaijani people will never for­get the work done by them. Today I bow my head to their memory.

The God has endowed Azerbaijan with rich natural resources. The worthy persons of Azerbaijan, its great scientists, selfless oil­men and other specialists have done a lot of things to give these rich resources at the disposal and utilization of the people. One of them was the creation of technical and production base and infrastructure of the oil industry. In 1970-1980 there emerged the necessity of the construction of new installations, facilities and devices for the development of oil and gas deposits in the sea, for the production of oil and gas from the bottom of the sea. For this purpose there rose the question of development and exploitation of floating drilling rigs. Soon the question found its solution. In those very years we began to exploit the floating semi-submerssibe drilling rig "Shelf-1". Then "Shelf-2", "Shelf-3", "Shelf-4", "Shelf-5" were constructed in close succession.

As you know, the floating semi-submerssibe drilling rig "Shelf-2" has been updated, reconstructed by the Azerbaijan State Oil Company and Azerbaijan International Operating Company in the recent years and put into exploitation. Now it is engaged in drilling in the deposit of "Shah-deniz" under the name of "Dede Gorgud". Today we are celebrating the putting of "Shelf-5" into operation after its repair, updating and modernization.

Today we are looking at this floating semi-submerssibe drilling rig "Istiglal", at this huge installation, at the sections which rule it, we got acquainted with it closely. We were given a comprehensive information. I was one of the initiators of the construction of such drilling rigs in the past, and I know well the details of such drilling rigs, therefore, when I look at "Istiglal" today I feel a great sense of pride. Because, it will do great things for the exploitation of oil and gas deposits in the Azerbaijani Sector of the Caspian Sea, and it has all facilities and technology, apparatus and residential conditions for the workers to live, all the said meets the requirements of the day and able to perform great variety of activities. The consortium on the project of "Shah-deniz" was engaged in the updating and mod­ernization of this drilling rig, the manager of the project Mr. Mike Sherman spoke on the rig and the performed work here.

The project, or contract on "Shah-deniz" was signed on June 4, 1996. It is the third big oil contract signed by Azerbaijan on joint oil developments with the biggest oil companies of the world. I note it with great satisfaction that after the signature of the first oil contract on the 20th of September of 1994, all the signed contracts are being implemented into life consistently and successfully and are already producing their yields. The implementation of these projects evi­dence that the obtained results surpass the expected figures.

I think it necessary to be disclosed to you today, because when we signed our first contract, "the Contract of the Century", there were people who did not understand its essence, or misinterpreted ft, to soil it knowingly and said that it will not produce any yield for Azerbaijan. I suppose, if they are a bit fair, they will understand their mistakes and give up their evil thoughts. Because the deposit of "Chirag" is producing oil in conformity with "the Contract of the Century", and the work performed up to now evidences that the reserves of the deposit exceed the expected figures, i.e., it was expected that the reserves in "Chirag" are 510 million tons, but now it has become obvious that it is 630 million tons.

The wells drilled in "Chirag" produce oil for 4-5 times more than they were expected. The deposit produces over 10 thousand tons of oil daily. I was informed several days ago that Well 7 produces bet­ter results than the rest. It was expected to produce 500 tons of oil daily, now it is expected to produce 3000, or perhaps 4000 tons of oil a day. These are the results of the work founded by us!

I remember, on the eve of the signature of the contract on "Shah deniz" some people in Azerbaijan spread rumours that the contract has got no significance for the republic, or it is not beneficial. But our specialists discussed this issue in detail and proved that the deposit of "Shah deniz" possesses great gas and oil resources. Nevertheless, some people wanted to prove the reverse without any argument. The former speaker of the Parliament, Rasul Guliyev, who considered himself to be a great specialist in the field of oil industry, spoke against the signature of the contract of "Shah deniz" in 1996. We discussed it comprehensively. Undoubtedly, the con­cerning people and me knew well that his objection was groundless. Simply, it had the aim to soil the work performed in Azerbaijan, or to obstacle them and in this way to slow the pace of development of economy in Azerbaijan. We were aware of such ill intentions.

Nevertheless, I had broad discussions on it participated by our greatest scientists in the field of oil, specialists and administration of the Azerbaijan State Oil Company. It was proved once more that "Shah deniz" is a very rich oil and gas deposit and its utilization requires the signature of a contract. Thus, on June 4,1996, this con­tract was signed in the Palace of Gulustan in Baku.

Two years have passed since. Now we are witnessing its posi­tive yields. Just as a consequence of the signature of the contract on "Shah-deniz", an oil consortium was founded. It included "BP", "Statoil", 'Turkish Petroleum Anonymous Partnership". Then it was joined by "ELF Aquataine", "LUKoil" and "OIEC" of Iran. They began their joint activities and today we are witnessing the yields. What do these yields consist of? Today we are having such a huge floating semi-submerssibe drilling rig, which can work in the Caspian Sea at least for 20 years. The drilling rig Shelf-5 could drill wells in places where the depth of water was 200 meters. And the depth of the well could be about 6000 meters. But it was just a pro­ject and it did not work since 1990, in 1995 this drilling rig was con­served. Now it has been renewed, repaired, reconstructed, updated and all its indicators have been improved. Now it can drill in loca­tions where the depth of the sea is 700 metres and the depth of the well can be not 6000, but 7500-7600 meters. In comparison with the floating drilling rig existing in the world, this rig surpasses most at them with its technological specification. Its a great national wealth. 200 million dollars have been spent for bringing this rig to its presents state. It means that 200 million dollars have been invest­ed in Azerbaijan. As you were informed, 1200 people participated in the updating of this rig within 17 months. These people are the Azerbaijani citizens, specialists, and workers. It means that they have new jobs with high salaries.

At present, we are in the territory of the ship- repair yard of the Azerbaijan State Oil Company with you. This ship yard probably idled and the territory was in the state of destruction, but US$ 12 million have been invested, the ship repair yard has been updated, repaired, renewed and now it is able to perform respective activi­ties. This is the first fruits, first yields of the contract of "Shah-deniz", of the project on "Shah-deniz". It is doubtless that the drilling rig "Istiglal" will soon begin to drill new wells in the deposit of "Shah-deniz" where the depth of water is 700 meters. In this way we shall be able to develop the rich oil and gas reserves there.

According to the project, it's expected to get 500 billion cubic meters of gas in the deposit of "Shah deniz" and 200 million tons of oil condesator. But it is just a project and expectation. I suppose that the drilling rig "Istiglal" will add to these figures and we shall be the witnesses of great deeds. The present state of this drilling rig is an indication of the existing of high technology, on one hand, and high level of education and qualifications of all the Azerbaijani citizens and specialists working in this rig, on the other hand. And I think it is a great achievement.

I think that in future we shall continue the reconstruction of other drilling rigs, that is, one of the former "Shelf's", and we shall witness the putting of another new rig into operation.

On September 20, 1994, we signed the first big contract, "the Contract of the Century". Not long has passed sine, even not four complete years. But in the past four years we signed new contracts. Azerbaijan State Oil Company has signed 15 contracts on joint oil and gas developments in the Azerbaijani Sector of the Caspian Sea and in the Azerbaijani territory, and they are being implemented into life. The signed contracts require the investment of 35-38 bil­lion USA dollars. These investments are very great for the future development of Azerbaijan, for the development of its economy and all spheres of its life.

The signed contracts and performed works are producing their fruits. The oilmen are getting new jobs, high wages and their wel­fare is improving day by day. But all what we have done are aimed at the happy and brilliant future of Azerbaijan. We try to make our future generations, our children, grandchil­dren, great grandchildren live happily, not experience the hardships, which we have suffered. By taking these steps we want to make the Azerbaijani citizens, Azerbaijani peo­ple happy, we want to ensure a plenti­ful life for them. We do all this with the biggest oil companies of the world and with other companies through them.

The putting of "Istiglal" into oper­ation today is the result of the work, which Azerbaijan began with several oil companies of the world in 1996. On this occasion I express my grati­tude, my thanks to the representatives of foreign companies, foreign special­ists and citizens for their fruitful joint cooperation with the Azerbaijani spe­cialists and citizens in the sphere of the oil industry and other spheres of economy.

In the past several years the for­eign companies engaged in Azerbaijan were convinced that it is possible to work in Azerbaijan, that there are all conditions to work in Azerbaijan, first and foremost, there are favourable conditions, social and political stability in the republic, the existing laws and rules create chances for the flow of foreign investment in Azerbaijan which is very useful for both parties.

This ceremony, held with the participation of the representa­tives of foreign companies and the Azerbaijani public, oilmen is a striking example of our cooperation. It proves once more that the work performed in Azerbaijan has a great future, and the investors who come to Azerbaijan will taste the fruits of their investments. The conditions existing in Azerbaijan will provide the further flow of investments in Azerbaijan.

The performed work and obtained results are only due to the independence of Azerbaijan. By making use of this freedom and independence, Azerbaijan has pursued a good, right, well-thought internal and foreign policy, now we witness the fruits of that policy.

Today we are taking part in the ceremony of completion of the reconstruction and updating work in the floating drilling rig of "Istiglal", we wish future successes to this huge production entity and declare that the independence of Azerbaijan will strengthen day by day, develop and become mighty, strong, unbending and irre­versible like this drilling rig.

The persons who have updated "Istiglal" will leave the shore with the rig in several days and move to the depths of the Caspian Sea, or just to its mids. Those who work in the sea are usually hero­ic, strong, brave in nature. I hope that they will demonstrate new examples of heroism. I wish good health to all of them and suc­cesses in the efficient utilization of this huge rig.

I wish a long life, happy future and new successes to "Istiglal" once more.

Long live the Azerbaijani oilmen!

Long live the national freedom, independence of Azerbaijan!

Long live, long live, long live "Istiglal!"