The Soviet republic of Azerbaijan (to which the autonomous republic of Nachičevan and the autonomous province of Nagorno Karabach, inhabited mainly by Armenians, continue to be administratively united) has tried to improve agricultural conditions by extending irrigated areas. On the Kura was built (1945) the Mingetčaur dam, 50 km E of Kirovabad, and the reservoir supplies both an electric power station and various irrigation channels; in the plain of Kura-Arasse the cultivation of cotton has been increasing more and more, mostly cultivated in rotation with alfalfa; instead in the Lenkoran depression, with a warm and humid subtropical climate, the cultivation of tea and citrus fruit spread. To improve the conditions of the pastures of In winter, drinking troughs and forage deposits were built in the driest areas. The Baku area continues to be important for oil extraction; in Sumgait (NW of Baku) the pipes necessary for the exploration, extraction and transport of oil are now being manufactured; the plants have been modernized and the wells deepened.
According to softwareleverage, the Azerbaijani economy is dominated by the oil sector (32.5% of GDP), which boasts an ancient tradition of exploitation dating back to the 19th century. The the Apsheron peninsula was in fact one of the first areas of the world to be affected by the extraction and commercialization of large-scale oil. Towards the end of the nineteenth century, the mining industry was joined by that of the refining and treatment of fossil fuels. In this period the Azerbaijan it produced half of the world’s oil and stood out as an integrated production system at the forefront of the technology of the time. With the entrance to the Azerbaijan in the USSR (1920) the oil sector experienced a phase of further expansion until the Second World War, coming to represent 70% of Soviet production. However, the increase in extraction costs made the fields of the Volga basin and Western Siberia cheaper, and Azerbaijani oil lost its dominance in the production of hydrocarbons in the Soviet context, to decline decisively in the early 1990s, coinciding with the dissolution of the USSR (1991). The ceasefire in Nagornyj Karabah (1994) and, above all, the keen interest of Western governments and oil companies then revitalized the sector: in 1994 the Baku government signed with the AIOC (Azerbaijan International Operating Company, a consortium to which the main oil companies of the planet adhere) an important agreement for the exploration and exploitation of the main offshore oil fields of the country (Azeri, Čirag, Gunešli), whose extraction potential is estimated at 4.3 billion barrels. In the following five years, at least another 20 agreements were signed involving 33 oil companies from 15 countries, confirming the international interest in Azerbaijan oil resources, estimated at 33 billion barrels in total. Between 2001 and 2006, Azerbaijani production exceeded 310,000 barrels per day, with a forecast of 1 million barrels by the year 2010. Also worthy of mention is large natural gas fields, still under-exploited compared to their potential. The main ones are those of Bakhar and Shah Deniz. An important aspect of the energy issue is that relating to hydrocarbon transport infrastructures, which involve in delicate diplomatic balances not only the countries of the region (A., Georgia, Turkey, Russia), but also the Western countries (the United States in the lead) interested in the exploitation of Azerbaijani energy resources and more generally in the Caspian region. There are two alternative routes for conveying Azerbaijani crude oil to European markets, which correspond to antagonistic geopolitical visions, the first Russian-centric, the second pro-Western: the northern route, towards thethe Russian terminal of Novorossijsk; the western routes, towards the Georgian port of Supsa and the Turkish port of Ceyhan, the Mediterranean terminal of the Baku-Tbilisi-Ceyhan oil pipeline, completed in 2005 and heavily sponsored by the United States.
As regards the manufacturing sector, the main sectors are those related to the transformation of hydrocarbons (refinery and petrochemicals), concentrated in the Baku area. Mechanics, construction materials and agri-food follow. The agricultural sector (15% of GDP) was greatly affected by the collapse of the Soviet Union, due to the disappearance of the traditional outlet markets for agricultural production. Only since 1996, as a consequence of the privatization policy initiated by the government, has there been a recovery in the sector, especially as regards cereal and vegetable production. Of some importance is the production of cotton.
In the context of exports, the share of hydrocarbons is absolutely prevalent (over 90%). Imports mainly concern equipment for the oil sector. The main trading partners are the Russian Federation, the countries of the European Union, Georgia and Turkey.