In Terms of Commercial Attractiveness, "Azeri-Chirag-Guneshli" Has Proven to Be The Most Appealing Oil Project in the Caspian Basin

In two days, it will be 30 years since the signing of the "Contract of the Century" - the production sharing agreement (PSA) for the deepwater Caspian fields of "Azeri-Chirag-Guneshli". The contract was initially signed for 30 years. However, on September 14, 2017, it was extended until 2050. Production of the first oil began in early November 1997.

According to bp-Azerbaijan (the project's operator), as of July 1, 2024, approximately $56.7 billion had been invested in the ACG project (of which $45.5 billion were capital expenditures). As a result, 4.39 billion barrels of oil have been produced.

Is this amount of expenditure for the ACG project high or low? This question can be answered by comparing ACG with another Caspian project - the Kazakh mega project "Kashagan" (discovered in 2000, with recoverable reserves estimated at around 1.3 billion tons of oil, and production only began in October 2016). For the Kashagan project, approximately $56 billion in capital expenditures was invested to extract the initial volumes of oil. Another comparison can be made with the “Tengiz” field development project, located onshore in Kazakhstan (discovered in 1979, with reserves of over 1.1 billion tons, development began in 1985, and the Kazakh government signed an agreement with foreign investors in April 1993). The capital expenditures alone for the expansion project of the “Tengiz” field (from 26 million tons to 38 million tons) exceed $46 billion.

It should be noted that during this time, 229.9 bcm of associated gas have also been produced at the ACG contract area. Of these volumes, only 56.9 bcm have been converted into marketable volumes, while 173 bcm have been reinjected into oil wells to maintain reservoir pressure.

According to the contract, associated gas at the Sangachal terminal is transferred to the State Oil Company of Azerbaijan free of charge.