Back in 1994, when the so-called “Contract of the Century” was signed, forming an international partnership to develop the giant Azeri-Chirag-Guneshli (ACG) oil field, lots of experts believed that Azerbaijan would not have to worry about money for a long time.
But just 23 years later, Azerbaijan’s government finds itself wrestling with revenue dilemmas. Today, Azerbaijan still holds roughly 7 billion barrels of proven oil reserves and produces 841,000 barrels on a daily basis. Yet that volume represents a significant drop from peak output of 1.1 million barrels a day in 2010. Lower yields, rising concerns about the depletion of reserves and falling world oil prices have sent Azerbaijan searching for alternative sources of revenue.
Baku’s chief hope is to develop its natural gas potential.
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Marika Karayianni is a Caspian energy expert based in Athens, Greece.