Oil Industry in Azerbaijan - AbsoluteAstronomy.com

The petroleum industry in Azerbaijan produces about 914000 barrels (145,314.4 m³) of oil per day and 1 bcma of gas. Azerbaijan

Azerbaijan

Azerbaijan , officially the Republic of Azerbaijan is the largest country in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe, it is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west, and Iran to...

is one of the birthplaces of the oil industry, its history is linked to the fortunes of petroleum

Petroleum

Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

. It is poised to become an important oil and gas producer once again.

Early history

There is evidence of petroleum being used in trade as early as the 3rd and 4th centuries. Information on the production of oil on the Apsheron peninsula can be found in the manuscripts of most Arab

Arab

Arab people, also known as Arabs , are a panethnicity primarily living in the Arab world, which is located in Western Asia and North Africa. They are identified as such on one or more of genealogical, linguistic, or cultural grounds, with tribal affiliations, and intra-tribal relationships playing...

ic and Persian

Persian people

The Persian people are part of the Iranian peoples who speak the modern Persian language and closely akin Iranian dialects and languages. The origin of the ethnic Iranian/Persian peoples are traced to the Ancient Iranian peoples, who were part of the ancient Indo-Iranians and themselves part of...

authors.

The following paragraph from the accounts of the famous traveller Marco Polo

Marco Polo

Marco Polo was a Venetian merchant traveler from the Venetian Republic whose travels are recorded in Il Milione, a book which did much to introduce Europeans to Central Asia and China. He learned about trading whilst his father and uncle, Niccolò and Maffeo, travelled through Asia and apparently...

is believed to be a reference to Baku oil: "Near the Georgian border there is a spring from which gushes a stream of oil, in such abundance that a hundred ships may load there at once. This oil is not good to eat; but it is good for burning and as a salve for men and camels affected with itch or scab. Men come from a long distance to fetch this oil, and in all the neighbourhood no other oil is burnt but this."

The Turkish

Turkish people

Turkish people, also known as the "Turks" , are an ethnic group primarily living in Turkey and in the former lands of the Ottoman Empire where Turkish minorities had been established in Bulgaria, Cyprus, Bosnia and Herzegovina, Georgia, Greece, Kosovo, Macedonia, and Romania...

scientist and traveller of the second part of the 17th century, Evliya Çelebi

Evliya Çelebi

Evliya Çelebi was an Ottoman traveler who journeyed through the territory of the Ottoman Empire and neighboring lands over a period of forty years.- Life :...

, reported that "the Baku fortress was surrounded by 500 wells, from which white and black acid refined oil was produced".

The first detailed description of the Baku oil industry was made by E. Kempfer, Secretary of the Swedish Embassy to Persia (Iran

Iran

Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

) in 1683.

In his notes he confirms the existence of places where natural gas discharges to the surface. Kempfer describes "flaming steppe" as follows: it "…constitutes a peculiar and wonderful sight, for some of the fissures were blazing with big, others with quite flame and was allowing everybody to come up; thirds emitted smoke or at any case minimum perceptible evaporation that was sending off heavy and stinking taste of oil. It was occupying the territory of 88 steps in length and 26 in width."(improved translation needed)

Many 18th and 19th century European accounts of the Caucasus refer to the Fire Temple of Baku

Fire Temple of Baku

The Baku Ateshgah or "Fire Temple" is a castle-like ancient Hindu religious structure in Surakhani, a suburb of greater Baku, Azerbaijan. "Atash" is the Persian word for fire....

at Surakhany

Surakhany

Suraxanı is a settlement and raion of Baku, Azerbaijan. It has a population of 196,700....

, where the fire was fed by natural gas from a cavern beneath the site.

Pre-industrial period

occupied Baku Khanate

Baku Khanate

Baku Khanate was Persian ruled Khanate on the territory of modern day Azerbaijan from Safavid dynasty to 1806. Baku was one of Khanate which arose during the domination of Iran. During the period of Iranian domination, head of principality was a Khan. Although, the khan could act within certain...

and took monopolistic control of oil production. Later exclusive rights to produce oil were given to individuals, thereby creating the otkupchina lease system.

Oil extraction methods in those times were very primitive —mainly hand dug wells, drilled to very shallow depths. The production volume of those years can be judged from data provided in 1842 by the Caspian Chamber of the Department of State Property Ministry. It refers to 136 wells around Absheron, which produced 3760 cubic metres (23,649.7 bbl) per year, and this oil was exported to Persia, where it was used in lighting as well as a source for ointments and other traditional remedies.

As a result of otkupschina monopoly and the absence of growing demand, annual oil production in the first half of 19th century remained unchanged at 250–300 poods (4–5 thousand tons). In 1813, the number of producing wells was 116, then 125 in 1825, 120 in 1850, and only 218 in 1860. Otkupschina system meant that oil production was monopolized by set of individuals who saw no incentive to increase production or improve drilling methods.

In 1846, under the supervision of state advisor V.N. Semyonov engineer Alekseev drilled a 21 m deep well using a primitive percussion drilling mechanism, in Bibiheybət to explore for oil, with positive results. More than a decade later, on August 27, 1859, "Colonel" Edwin L. Drake struck oil on American soil for the first time.

A small petrochemical industry sprung up around Baku, as demand for kerosene

Kerosene

Kerosene, sometimes spelled kerosine in scientific and industrial usage, also known as paraffin or paraffin oil in the United Kingdom, Hong Kong, Ireland and South Africa, is a combustible hydrocarbon liquid. The name is derived from Greek keros...

soared locally. Vasily Kokorev, Peter Gubonin and German baron N.E. Tornow built the first kerosene

Kerosene

factory in Surakhany

Surakhany

Suraxanı is a settlement and raion of Baku, Azerbaijan. It has a population of 196,700....

. The factory was used to produce kerosene

Kerosene

out of "kir", an asphalt-like substance. In 1859 N.I. Vitte, a Tiflis pharmacist, built the second paraffin

Paraffin

In chemistry, paraffin is a term that can be used synonymously with "alkane", indicating hydrocarbons with the general formula CnH2n+2. Paraffin wax refers to a mixture of alkanes that falls within the 20 ≤ n ≤ 40 range; they are found in the solid state at room temperature and begin to enter the...

-producing factory on Pirallahi

Pirallahi

Pirallahı may refer to:* Pirallahi Island, an island* Pirallahı, Baku, a village...

island.

First oil boom

In 1871 Mirzoyev, then an otkupchina monopolist, built the first wooden oil derrick followed by another the next year. Drilling was conducted primitively with a balance arm, whim and manual pump.

In the early 1870s the otkupschina system was abolished and oil lands were parcelled out under an 1872 auction to local and Russian-born investors. In Balakhani more than 149 parcels of land were sold with other parcels being in Surakhani, Bibi-Heybet and Binagady. This year marked the beginning of oil drilling on a massive scale. On 13 June 1872 the largest oil gusher — "Vermishevsky" — blew on Balakhany field ". Within three months, it had produced 90 million poods (averaging 2600 barrels (413.4 m³) of oil per day). By 1878 Bibi-Heybat field had its first oil gusher.

As a result there was flurry of financial activity and various bank societies and organization were created. In 1884, the oil barons in Baku established their own organization, the Oil Extractors Congress Council for the discussion of oil business. They created their own magazine, Neftyanoe Delo (Oil Business), a library, school, hospital, and pharmacy. For six years, the Council of Oil Extractors Congress was directed by Ludvig Nobel

Ludvig Nobel

Ludvig Immanuel Nobel was an engineer, a noted businessman and a humanitarian. One of the most prominent members of the Nobel family, he was the son of Immanuel Nobel and Alfred Nobel's older brother...

.

The oil industry greatly influenced the architectural appearance of Baku

Baku

Baku , sometimes spelled as Baki or Bakou, is the capital and largest city of Azerbaijan, as well as the largest city on the Caspian Sea and of the Caucasus region. It is located on the southern shore of the Absheron Peninsula, which projects into the Caspian Sea. The city consists of two principal...

as a modern city. Administrative, social and municipal institutions were established which, in turn, made decisions about the city's illumination, roads, streets, buildings, telephone stations, and horse-drawn trolleys. Gardens and parks were laid out and hotels, casinos and beautiful stores were built.

First, exclusive rights to develop Baku

Baku

oil fields were in the hands of Russian-registered businesses, and only in 1898 foreign companies were granted rights to explore and develop oil fields as well as to participate in annual bidding process. Between 1898 and 1903 British oil firms invested 60 mln rubles in Baku

Baku

oil fields.

Oil production

The main oil-producing regions were located near Baku at Sabunchy

Sabunçu, Baku

Sabunçu is a settlement and municipality in Baku, Azerbaijan. It has a population of 22,344.Until the beginning of the 20th century, the Sabunçu region was producing 35 percent of Baku's oil...

, Surakhany

Surakhany

Suraxanı is a settlement and raion of Baku, Azerbaijan. It has a population of 196,700....

and Bibi-Heybat. Until the beginning of the 20th century, the Sabunchi region was producing 35 percent of Baku's oil, and the Bibi-Heybat region produced 28 percent, followed by the Romany

Romany

Romany relates or may refer to:*The Romani people, also known as Gypsies*Romani language or Romany language, the language of the Romani people*"Romany", the pseudonym of a broadcaster and writer of Romani descent, George Bramwell Evens...

and the Balakhany regions. Blowout oil gushers

Blowout (well drilling)

A blowout is the uncontrolled release of crude oil and/or natural gas from an oil well or gas well after pressure control systems have failed....

made up the main portion of all oil production in the early days although this was a very uneconomical and environmentally harmful process. However, blowout production decreased as the equipment was improved. In 1887 blowouts accounted for 42 percent of the recovered oil, but in 1890 it had decreased to 10.5 percent.

In oil industry of pre-revolutionary Russia foreign capital dominated the sector. On the eve of the World War One three companies ("Russian General Oil Company", "Royal Dutch Shell

Royal Dutch Shell

Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...

" and "Partnership of Nobel Brothers.") held 86% of all share capitals and controlled 60% of oil production. In 1903, 12 English companies with capital equaling to 60 mln. rubles were functioning in Baku region. In 1912, Anglo-Dutch firm "Shell" obtained 80% shares of Caspian-Black Sea Society "Mazut", which had belonged to Rothschild Banking-house. Other British firms purchased oil operations from Hajji Zeynalabdin Taghiyev.

In 1898, the Russian oil industry exceeded the U.S. oil production level. At that time, approximately 8 million tons were being produced (160000 barrels (25,438 m³) of oil per day). By 1901, Baku produced more than half of the world's oil (11 million tons or 212000 barrels (33,705.3 m³) of oil per day), and 95 percent of all Russian oil. Approximately 1.2 million tons of Baku kerosene were also sold abroad.

Local oil barons and foreign oil companies

Branobel
Branobel
The Petroleum Production Company Nobel Brothers, Limited,or Branobel , was an oil company set up by Ludvig Nobel and Baron Peter von Bilderling, in Baku, Azerbaijan...

Operating Company — largest single oil producer in Azerbaijan at 25,000 bop/d in 1914. Largest refiner and transporter of oil, as well as retailer of kerosene in Europe. Markets of France, Turkey, Greece and Germany were fully supplied by Nobel-produced kerosene and other products.
De Rothschild Frères — trading and shipping in association with Shell. Possessed largest tanker fleet in the Caspian after Nobels.
Royal Dutch Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...

— Shell acted through following associated companies: the Caspian Black Sea Society, Caucasus, S.M. Shibayev, and Co. Shell-led consortium produced a fifth of Russian output up to 1914. Royal Dutch Shell's output from the Baku oil fields was 15,000 boppd in 1914.
Zeynalabdin Taghiyev — oil, textiles and fishing. His firm was producing 1900 oilbbl/d in 1887 and occupied 4th place in refining business "
Aga Musa Nagiyev
Musa Nagiyev
Musa Naghiyev was an Azerbaijani industrial oil magnate in late 19th - early 20th century.He was born into a very poor family near Baku and started working as a cargo carrier , but thanks to his natural wit and business abilities, he progressed to accumulate a vast amount of wealth...

— oil and real estate. He was the second-largest oil producer and largest native producer
Murtuza Mukhtarov
Murtuza Mukhtarov
Murtuza Mukhtarov was an Azerbaijani Oil industrialist and millionaire.Mukhtarov was born into a poor family in a village of Amirajan near Baku. Mukhtarov managed to become one of the most reputable drilling experts in Baku through his ability and many years of experience. He set up his own...

— oil drilling services.
Shamsi Asadullayev — oil shipping, largest native industrialist.
James Vishau and Anglo-Russian Oil Company
Trade House Benkendorf
Benkendorf
Benkendorf is a village and a former municipality in the district Altmarkkreis Salzwedel, in Saxony-Anhalt, Germany. Since 1 January 2009, it is part of the town Salzwedel....

and Co — oil production.
The Russian Oil General Corporation — established in London in 1912 by the most important Russian and foreign banks, united 20 companies. These included A.I. Mantashev & Co., G.M. Lianosov & Sons, Adamov and sonsMoscow-Caucasus Trade Company, Caspian Partnership, Russian Petroleum Society, Absheron Petroleum Society and others. This agglomeration produced more than 30% of Russian oil by 1916.

There were other entrepreneurs with lower rank who also made contributions to industrial development of Azerbaijan, such as Haji Baba Alekperov, Agasibek Ashurbeyov, Ali Bala Zarbaliyev, Kerbalay Zarbaliyev, Huseyin Melikov, G. Bagirov, G. Aliyev, S. Zminov, Amir-Aslanov brothers and others were owners of oil-field areas in Sabunchi, Balakhani, Romani, Shubani, Bibi-Heybat.

Subsurface and drilling

By late 1890s large companies started to employ geologists to describe and map prospective structures. Geologist and oil specialist Dmitry Golubyatnikov began a systematic investigation of Absheron and predicted the availability of oil deposits in Surakhany field. In 1901, Pirallahy oil field was discovered and put on production. Scientists like Ivan Gubkin

Ivan Gubkin

Ivan Mikhaylovich Gubkin was a Russian geologist and president of the 1937 International Geological Congress in Moscow. He was a petroleum geologist particularly interested the region between the Volga and the Urals....

, Golubyatnikov and Uskin described the productive series deposits of Azerbaijan and the process generation for the first time in 1916.

By early 20th century innovation started to improve hitherto backward well drilling

Well drilling

Well drilling is the process of drilling a hole in the ground for the extraction of a natural resource such as ground water, natural gas, or petroleum...

practices. Most of the wells up to that time were drilled by cable-tool drilling method, which limited the exploitation to shallow depth.

Qualified engineers (of which Fatulla Rustambeyov is the first Azeri national) contributed to the improvement of well designs. By early 1913 the following changes occurred in some of largest producers such as Branobel

Branobel

The Petroleum Production Company Nobel Brothers, Limited,or Branobel , was an oil company set up by Ludvig Nobel and Baron Peter von Bilderling, in Baku, Azerbaijan...

Transition from percussion cable-tool drilling to rotary drilling using electrical drive.
Use of thread line casing pipe instead of valve strings during drilling.
Replacement of wooden derrick
Derrick
A derrick is a lifting device composed of one tower, or guyed mast such as a pole which is hinged freely at the bottom. It is controlled by lines powered by some means such as man-hauling or motors, so that the pole can move in all four directions. A line runs up it and over its top with a hook on...

s with metal ones.
The process of gaslift
Airlift pump
An airlift pump is a simple pump which is powered by compressed air.-Principle:The only energy required is air.This air is usually compressed by a compressor or a blower....

was tested for the first time in 1915 in Romani field.
The compression during transportation of oil and gas was introduced in 1911.

Storage and transportation

In 1858, one of the major shipping companies on the Caspian Sea — joint-stock company "Kavkaz and Merkuriy" was established and served as the first oil shipping outlet.

Great changes were introduced in the area of oil storage by Nobels. To counteract the waste of the ground pits, vessels and lakes where great quantities of oil evaporated or simply penetrated back into the ground, the company started to use iron reservoirs for oil storage.
The first oil tanker

Oil tanker

An oil tanker, also known as a petroleum tanker, is a merchant ship designed for the bulk transport of oil. There are two basic types of oil tankers: the crude tanker and the product tanker. Crude tankers move large quantities of unrefined crude oil from its point of extraction to refineries...

in the world — a refurbished metal ship called "Zoroastr" — was built in 1877 in Sweden by Nobels. By 1890 345 tankers, including 133 steam vessels and 212 sailing vessels were sailing on the Caspian Sea. For instance, Mazut Trading Co, created by the Rothschild Frères

Rothschild family

The Rothschild family , known as The House of Rothschild, or more simply as the Rothschilds, is a Jewish-German family that established European banking and finance houses starting in the late 18th century...

in 1898, possessed 13 tankers in Caspian Sea alone. During these years, native Azerbaijani ship-owners appeared, of which the largest fleet belonged to Shamsi Asadullayev.

In 1877 construction of the first ever oil pipeline linking Surakhany oil field and refinery in Baku was completed. By 1890 there were more than 25 pipelines totalling 286 km.

The Nobel Brothers were the first to introduce railway tanks (cisterns) for oil transportation, when the railway link between Baku and Tiflis was built in 1883. The situation with limited exporting options was solved by the construction of the Baku-Batum Oil Pipeline. Construction began in 1897 and was completed 10 years later under supervision of Professor N. L. Szhukin.

Revolution and Soviet Republic

Several oil crises jolted Russia around 1903, when constant strikes, violence and ethnic strife during Russian Revolution of 1905

Russian Revolution of 1905

The 1905 Russian Revolution was a wave of mass political and social unrest that spread through vast areas of the Russian Empire. Some of it was directed against the government, while some was undirected. It included worker strikes, peasant unrest, and military mutinies...

led to fall in the oil production from the peak of 212000 oilbbl/d. The relative calm of the early 1910s was disrupted by World War I, when production of oil steadily decreased to reach the lowest level of just 65000 oilbbl/d by 1918 and then dropped even more catastrophically by 1920. As a result of civil unrest no oil export was possible, oil storage facilities were damaged and wells were idle. The government of Democratic Republic of Azerbaijan was unable to restore the damage done to the oil industry during its time in office between 1918 and 1920.

Since 1918, more 5 mln ton of oil accumulated in Azerbaijan. After the occupation of Azerbaijan

Azerbaijan

by Bolsheviks, all oil supplies were directed to Russia. All oil assets in the country were nationalized and Azneft State company was formed.

In 1920, only 1800 qualified specialists worked in the Russian oil industry of which 1232 worked in Azerbaijan

Azerbaijan

. The industry urgently needed technology, education and specialists. The scientific exchange started with the US, where visitors from Baku were seconded to oil-fields in Pennsylvania, Oklahoma, California, Texas, learned new methods of well deepening and exploitation. The Azerbaijan State Oil Academy was established in 1920 to train oil specialists.

By the late 1920s, production stabilized. In 1928–29, oil production in the USSR equaled to 13.5 mln t including Azerbaijan's 8.7 mln t. By 1940, the total production of Azerbaijan — 23.5 mln. t (475000 oilbbl/d) — was a historical record not broken until 2005.

Advancement in drilling and logging practices

For the first time in Russia in 1925, Baku engineer M.M. Skvortsov constructed a device for the automatic movement of a chisel, which became known as the "automatic driller". By 1930, electrical logging tools were used in the wellbore by Schlumberger

Schlumberger

Schlumberger Limited is the world's largest oilfield services company. Schlumberger employs over 110,000 people of more than 140 nationalities working in approximately 80 countries...

in the Surakhany oil field.

A new technology in drilling was introduced in Baku: electrical aggregates with exact control of the number of rotations came into widespread use. By the early 1930s about third of well stock was operated with pumps using gaslift. In 1933, the first deviated well was drilled in the Bibi-Heybat field.

Other firsts were:

1936 saw the beginning of the industrial application of the multi-stepped turbo drill without a reducer which had been invented by Shumilov, Taghiyev and others.
For the first time in the world, an oil well was drilled by the electro-drilling construction which was introduced by engineers Ostrovsky, Aleksandrov and others in Kala oil field

World War II

Between 1939 and 1940, when the Soviet Union was supplying oil to Nazi Germany, Britain and France planned a major strategic bombing offensive called Operation Pike

Operation Pike

Operation Pike refers to a strategic bombing plan, overseen by Air Commodore John Slessor, against the Soviet Union by the Anglo-French alliance...

to destroy the oil production facilities in Baku.

During that first year of the war, Azerbaijan produced 25.4 million tons of oil — a record. By the Decree of the Supreme Soviet of the USSR in February 1942, the commitment of more than 500 workers and employees of the oil industry of Azerbaijan

Azerbaijan

was recognised by the giving of orders and medals of the USSR.

By the end of the year, so many engineers and oil workers had left for the war front that positions had to be filled by women. By the summer of 1942, more than 25,000 women or 33% of all the workers were working 18 hour shifts in the oil industries. At refineries and chemical plants, the percentage of women was even higher, estimated at 38%. By 1944, women's participation had grown to 60%. Veterans and retirees also returned to the oil fields to help. It was not uncommon for the workforce of small towns (i.e. Kıncıvo

Kincivo

Kıncıvo is a village and municipality in the Lerik Rayon of Azerbaijan. It has a population of 202. It served as a minor logistical staging point for petroleum drilling operations during the peak of the Azerbaijan's oil industry expansion immediately prior to and during World War II...

) to completely and rapidly convert toward dependence on the oil industry during this period.

Hitler

Adolf Hitler

Adolf Hitler was an Austrian-born German politician and the leader of the National Socialist German Workers Party , commonly referred to as the Nazi Party). He was Chancellor of Germany from 1933 to 1945, and head of state from 1934 to 1945...

was determined to capture the oil fields of the Caucasus, in particular Baku, as it would provide much needed oil-supplies for the German military which was suffering from blockades. The 1942 German offensive codenamed Case Blue saw a determined attempt to seize the oil fields in a large scale advance into the area. The plan was to attack Baku on September 25, 1942. Anticipating the upcoming victory, Hitler's generals presented him a cake of the region, where piece showing Baku

Baku

was given to Hitler. But the Axis forces were surrounded and eventually defeated at Stalingrad

Battle of Stalingrad

The Battle of Stalingrad was a major battle of World War II in which Nazi Germany and its allies fought the Soviet Union for control of the city of Stalingrad in southwestern Russia. The battle took place between 23 August 1942 and 2 February 1943...

forcing a retreat from the region.

Beginning of offshore exploration

The oil production from the existing fields started to decline after World War II, as a result of catastrophic over-production and under investment. However real potential for new discoveries was felt to be present offshore.

As far back as 1864, a German

Germany

Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

mineralogist and geologist

Geology

Geology is the science comprising the study of solid Earth, the rocks of which it is composed, and the processes by which it evolves. Geology gives insight into the history of the Earth, as it provides the primary evidence for plate tectonics, the evolutionary history of life, and past climates...

H.V.Abikh

Otto Wilhelm Hermann von Abich

Otto Wilhelm Hermann von Abich was a German mineralogist and geologist.He was born at Berlin and educated at the local university. His earliest scientific work is related to spinels and other minerals. Later he made special studies of fumaroles, of the mineral deposits around volcanic vents, and...

surveyed and reported structures present on the seabed of the Caspian.

In the early 1930s, engineers proposed construction of offshore wells timber piles, connected by a causeway, and the first such well was laid in the open sea on the depth of 6 m to the east from filled Bibi-Heybet bay.

In 1945, oil engineers S.A. Orujev, Y. Safarov proposed a method of tubular collapsible constructions for offshore bases. This construction enabled quick installation under oil-rig at any season. In 1947, a group of oilmen developed the trestle

Trestle

A trestle is a rigid frame used as a support, especially referring to a bridge composed of a number of short spans supported by such frames. In the context of trestle bridges, each supporting frame is generally referred to as a bent...

method of linking development rigs and processing facilities. Average height of trestle above sea level is 5–7 m, and width of causeway was about 3.5 m. In 1948, construction of trestles and other causeways started on Pirallahi and Oil Rocks

Oil Rocks

Neft Daşları is an industrial settlement in Baku, Azerbaijan. The settlement forms part of the municipality of Çilov-Neft Daşları in Əzizbəyov raion. It lies away from the Azeri capital Baku, and from the nearest shore in the Caspian Sea...

Oily Rocks Saga

One of the striking examples for offshore oil deposit development is "Oily Rocks" — "Neft Dashlari". It is located to the south-east of Absheron Archipelago. In "Oily Rocks" sea depth ranges from 10 to 25 m, though part of the oil pool reaches 60 metres depth. Oil prospecting with geological survey, structure drilling, seismic prospecting and preliminary drilling started in 1945.

On August 24, 1949 the first offshore exploration well at Neft Dashlari (Oil Rocks

Oil Rocks

) was spudded after the causeway was built. On November , at a depth of 1,000 metres, the well N1 tested oil with a rate of 700 oilbbl/d. Neft Dashlari is referred to as "The Island of Seven Ships" because during construction of the bridge-head, disused ships were sunk to provide a solid base for causeways.

Intensive development began in 1950. Development from multiple drilling sites connected by trestle

Trestle

bridges also employed deviated holes. In 1953, to maintain the reservoir pressure, a water flood was applied. The field is still delivering about 15000 oilbbl/d after 50 years of exploitation.

Offshore exploration in the 1960s and 1970s

As a result of intensive geological and geophysical mapping during 1950-1960 main Caspian oil-and-gas bearing structures were determined. The discoveries included such fields as Darwin Bank

Darwin Bank

Darwin Bank is an Azerbaijani bank oil field in the Caspian Sea, - north-east of Baku and west of Pirallahi Island. Industrially significant oil and natural gas resources were discovered here in the 1950s. To date, 16.2 million tons of oil and 1.5 billion cubic meters of gas were extracted...

, Gum Deniz

Gum Deniz oilfield

Gum Deniz is an offshore oil and gas field in the Caspian Sea, located southeast of Baku, Azerbaijan.The field has been in operation since 1955. Gum Deniz has produced approximately 28.9 million tonnes of oil and 27 billion cubic meters of gas to date. In March 2009, Azerbaijan drilled its last...

"Canub", "Gurgani-sea", "island Jiloy", "Hazi Aslanov", "Sangachalli-sea", "Duvanni-sea", "Island Bullah", "Peschany", .

One of the largest offshore fields "Sangachal-deniz" was drilled several times since 1959, but success came only in 1965. "Duvanni-deniz field" discovery well was tested in May 1963 with an output of 700 oilbbl/d. This field has about 700 Moilbbl of oil reserves.

Several large oil and gas fields were discovered and put into production between 1968 and 1975: Bahar

Bahar oilfield

Bahar is an offshore oil and gas field in the Caspian Sea, located southeast of Baku, Azerbaijan.The field has been discovered in 1968 and was developed since 1969. Bahar has produced a little over 16.8 million tonnes of oil and 128.7 billion cubic meters of gas up until 2010...

(1968), Sangachali-Duvanni (1969), Bulla Deniz (1975).

Production reached its peak in 1967 with 414000 oilbbl/d being produced and henceforth started to decline as Oily Rocks development was complete. Gas production increased steadily through until 1990s until the decline of Bahar and Bulla gas fields ensued.

As a result of modern methods of exploration being employed four new multireservoir fields were opened in the Caspian at a depth of 200 meters: Gunashli

Gunashli oilfield

Gunashli is an offshore oil field in the Caspian Sea, located east of Baku, Azerbaijan, southeast of Oil Rocks and its deep water section is a part of the larger Azeri-Chirag-Guneshli project. The Azeri translation of Gunashli means "sunny". The field was explored in 1958-63. The first offshore...

(1979), Chirag

Chirag oil field

Chirag is an offshore oil field in the Caspian Sea, located east of Baku, Azerbaijan and is a part of the larger Azeri-Chirag-Guneshli project. The production, drilling and quarters platform Chirag 1 has been in operation since 1997. Chirag 1 has been producing the Early Oil from the ACG field...

(1985), Azeri

Azeri oilfield

Azeri is an offshore oil field in the Caspian Sea, located east of Baku, Azerbaijan and is a part of the larger Azeri-Chirag-Guneshli project...

(1988) and Kapaz (1989). The Caspian was covered by extensive 2D seismic grid and 3D seismic was attempted, however unsuccessfully. The discovery of Azeri-Chirag-Guneshli

Azeri-Chirag-Guneshli

Azeri–Chirag–Guneshli is a large complex of oil fields in the Caspian Sea, about off the coast of Azerbaijan. An overall estimated area of the field is . It is operated by a BP-led consortium. The ACG fields have estimated recoverable reserves of about of petroleum...

field complex was the last but significant achievement by Azeri Soviet explorationists. The shallow portion of Guneshli, where water depth allowed oil development was put in production by 1989 and now delivers 120000 oilbbl/d.

In Chirag drilling took place via semi-submersible drilling equipment at a depth of 200 meters — an offshore record for USSR. The Azeri-Chirag-Guneshli

Azeri-Chirag-Guneshli

complex contains more than 16 Goilbbl of oil in place.

"Contract of the Century" and following years

After gaining independence Azerbaijan started to attract badly needed foreign investment into the country.

The implementation of the 20 PSA

Production sharing agreement

Production sharing agreements are a common type of contract signed between a government and a resource extraction company concerning how much of the resource extracted from the country each will receive....

contracts (requiring $60 billion investment) that have been concluded so far is an integral part of Azerbaijan's oil strategy. The first contract to be signed was Azeri-Chirag-Guneshli

Azeri-Chirag-Guneshli

Azeri, Chirag and deep-water Gunashli (ACG)-International Contract No. 1-was signed by President Heydar Aliyev

Heydar Aliyev

Heydar Alirza oglu Aliyev , also spelled as Heidar Aliev, Geidar Aliev, Haydar Aliyev, Geydar Aliyev was the third President of Azerbaijan for the New Azerbaijan Party from June 1993 to October 2003, when his son Ilham Aliyev succeeded him.From 1969 till 1982, Aliyev was also the leader of Soviet...

and the participating international companies on September 20, 1994, ratified in Parliament on December 2, and went into effect on December 12. Because of its potential reserves estimated at 6 Goilbbl of oil, this project is often referred to as the "Contract of the Century". The projected investment for this project is $13 billion.

A few months later in 1995, a consortium was organized known as the Azerbaijan International Operating Company (AIOC

Azerbaijan International Operating Company

Azerbaijan International Operating Company is a consortium of currently 10 petroleum companies that have signed extraction contracts with Azerbaijan...

). Originally AIOC was composed of eleven major international companies: BP (UK), Amoco

Amoco

Amoco Corporation, originally Standard Oil Company , was a global chemical and oil company, founded in 1889 around a refinery located in Whiting, Indiana, United States....

(U.S.), LUKoil

LUKoil

Lukoil/LUKoil ; ) is Russia's second largest oil company and its second largest producer of oil. In 2009, the company produced 97.615 million tons of oil; ....

(Russia), Pennzoil

Pennzoil

Pennzoil is an American oil company founded in Los Angeles, California in 1913. In 1955, it was acquired by Oil City, Pennsylvania company South Penn Oil, a former branch of Standard Oil. In 1963, South Penn Oil merged with Zapata Petroleum; the merged company took the Pennzoil name. During the...

, (now Devon of U.S.), UNOCAL (U.S.), Statoil

Statoil

Statoil ASA is a Norwegian petroleum company established in 1972. It merged with Norsk Hydro in 2007 and was known as StatoilHydro until 2009, when the name was changed back to Statoil ASA. The brand Statoil was retained as a chain of fuel stations owned by StatoilHydro...

(Norway), McDermott (U.S.), Ramco (Scotland), TPAO (Turkey), Delta Nimir (now Amerada Hess of U.S.), and SOCAR (Azerbaijan).

Since then Exxon, now ExxonMobil (U.S.); ITOCHU (Japan); and INPEX (Japan) have joined the consortium. McDermott, Ramco and LUKoil have since sold their shares. AIOC's first president was Terry Adams (UK) of British Petroleum (BP), the company which operates the offshore oil platforms and the onshore Sangachal Terminal

Sangachal Terminal

The Sangachal Terminal is an industrial complex consisting of a natural gas processing plant and oil production plant, located on the coast of the Caspian Sea south of Baku, Azerbaijan.-History:...

.

However, the problem of how to deliver the oil to European markets existed. This problem was solved by the agreement for the construction of the Baku-Tbilisi-Ceyhan pipeline

Baku-Tbilisi-Ceyhan pipeline

The Baku–Tbilisi–Ceyhan pipeline is a long crude oil pipeline from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean Sea. It connects Baku, the capital of Azerbaijan; Tbilisi, the capital of Georgia; and Ceyhan, a port on the south-eastern Mediterranean coast of Turkey,...

among Azerbaijan

Azerbaijan

, Georgia

Georgia (country)

Georgia is a sovereign state in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe, it is bounded to the west by the Black Sea, to the north by Russia, to the southwest by Turkey, to the south by Armenia, and to the southeast by Azerbaijan. The capital of...

and Turkey

Turkey

Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...

in 1998.

The Baku-Tbilisi-Ceyhan pipeline was officially opened on July 13, 2006 and now transports crude oil 1760 km (1,093.6 mi) from the Azeri-Chirag-Guneshli

Azeri-Chirag-Guneshli

oil field in the Caspian Sea to the Mediterranean Sea. The oil is pumped from the Sangachal Terminal

Sangachal Terminal

The Sangachal Terminal is an industrial complex consisting of a natural gas processing plant and oil production plant, located on the coast of the Caspian Sea south of Baku, Azerbaijan.-History:...

close to Baku

Baku

, via Tbilisi

Tbilisi

Tbilisi is the capital and the largest city of Georgia, lying on the banks of the Mt'k'vari River. The name is derived from an early Georgian form T'pilisi and it was officially known as Tiflis until 1936...

the capital of Georgia, to Ceyhan

Ceyhan

Ceyhan is a city in southeast Turkey and with 105,000 inhabitants it is the second largest city of Adana Province after the capital Adana. Ceyhan is the transportation hub for Middle Eastern, Central Asian and Russian oil and natural gas. It is situated on the Ceyhan River, from which it takes...

a port on the south-eastern Mediterranean coast of Turkey. It is the second longest oil pipeline in the world (the longest being the Druzhba pipeline

Druzhba pipeline

The Druzhba pipeline is the world's longest oil pipeline and in fact one of the biggest oil pipeline networks in the world. It carries oil some from the eastern part of the European Russia to points in Ukraine, Belarus, Poland, Hungary, Slovakia, Czech Republic, and Germany...

from Russia to central Europe).

The BTC pipeline is expected to make a major contribution to the development of world energy supply with its more than 1 Moilbbl per day capacity. Thanks to this project Turkey is also expected to earn about $300 million annually. Around 15,000 people were employed during the construction of the pipeline which cost $3 billion

Shah Deniz field, discovered in 1999, is one of BP's largest gas field finds in recent decades. The Shah Deniz gas plant at Sangachal Terminal started up in 2007 and transformed Azerbaijan into a major gas producer. Stage 1 of Shah Deniz project is now complete and supplies Europe with 8 bcma of natural gas via the South Caucasus Pipeline

South Caucasus Pipeline

South Caucasus Pipeline is a natural gas pipeline to transport natural gas from the Shah Deniz gas field in the Azerbaijan sector of the Caspian Sea to Turkey...

. Stage 2 of the Shah Deniz Project has been approved and is being designed.

On September 9, 2011 French energy giant Total S.A.

Total S.A.

Total S.A. is a French multinational oil company and one of the six "Supermajor" oil companies in the world.Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and...

which has been operating in Azerbaijan since 1996, announced a major gas discovery in Absheron gas field

Absheron gas field

The Absheron gas field is an offshore natural gas field in the Caspian Sea. The field is located southeast of Baku and northeast of the Shah Deniz gas field. It covers approximately ....

offshore 100 km southeast of capital Baku. The field is estimated to have around 300 billion cm of gas subsequently boosting Azerbaijan's gas reserves from 2.2 to 2.5 trillion cm. The find also increased hopes for faster realization of Nabucco pipeline

Nabucco Pipeline

The Nabucco pipeline is a proposed natural gas pipeline from Erzurum in Turkey to Baumgarten an der March in Austria diversifying natural gas suppliers and delivery routes for Europe. The pipeline attempts to lessen European dependence on Russian energy...

External Links

Oil Conflicts in Central Asia from the Dean Peter Krogh Foreign Affairs Digital Archives

Early history

Pre-industrial period

First oil boom

Oil production

Local oil barons and foreign oil companies

Subsurface and drilling

Storage and transportation

Revolution and Soviet Republic

Advancement in drilling and logging practices

World War II

Beginning of offshore exploration

Oily Rocks Saga

Offshore exploration in the 1960s and 1970s

"Contract of the Century" and following years

External Links

Further reading