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In 1996, CIECO established ITOCHU Oil Exploration (Azerbaijan) Inc., a wholly-owned subsidiary, to acquire a 3.9205 % interest in a Production Sharing Agreement (PSA) for three fields in the South Caspian Sea. Azeri, Chirag and he deepwater Gunashli fields (ACG) are located approximately 120 kilometers southeast of Baku, Azerbaijan.
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CIECO's participation in the ACG Project marked the first time that a Japanese or East Asian company had ever become a partner to a PSA for this region.
A multinational consortium of nine international oil companies, the "Azerbaijan International Operating Company (AIOC)" is conducting the operations in the ACG fields. Parties to this PSA include the State Oil Company of the Azerbaijan Republic (SOCAR) and international oil companies from the U.K., U.S., Norway, Turkey and Japan.
Often referred to as the "Contract of the Century" because it is expected to involve investment of approximately US $14 billion, the PSA has a thirty-year term and covers an offshore contract area of 432 square kilometers. The PSA grants the oil companies the right to develop the ACG fields and to market the produced oil.
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In November 1997, first oil was produced from Chirag-1, the initial platform in the ACG fields, and was delivered through the Northern Export Route pipeline to a terminal at Novorossiysk, on the Russian coast of the Black Sea. The first ACG lifting occurred at Novorossiysk in March 1998.
ACG full field development was conducted from August 2001. In February 2005, oil production was started from Central Azeri Platform - Phase 1, as part of the ACG Full Field Development. In addition, West Azeri and East Azeri production began in December 2005 and October 2006 respectively as the part of the Phase 2, followed by Deepwater Gunashli as Phase 3 in April 2008. In March 2010, for the purpose of further incremental oil recovery, new field development of Chirag Oil Project which constructs additional production platform in West Chirag was sanctioned.
In August 2010, acquisition of an additional interest was performed by purchasing the stake held by Devon Energy who decided withdrawal from ACG and the CIECO's operating interests was increased from 3.9205% to 4.2986%.
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