BP Operations in Azerbaijan

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Overview

BP has played an important role in Azerbaijan since the end of the Soviet era. It opened its office in Baku in 1992 and was a signing participant of the "Contract of the Century" for the Azeri-Chirag-Gunashli (ACG) fields in 1994. BP operates through a number of legal entities in Azerbaijan, principally BP Exploration (Caspian Sea) Ltd.

Activities

As of 2009, BP had stakes in five contract areas in Azerbaijan[1]:

In addition BP leads the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project and is the technical operator of the South Caucasus gas pipeline (SCP).[2]

BP's office in Baku is based at 'Villa Petrolea' on Neftchiler Avenue. At the end of 2011, BP permanently employed 2,701 people in Azerbaijan, of whom 2,321 were Azerbaijani citizens.[3]

History

According to documents found by pressure group Platform London, in July 1992 then-CEO of BP Sir David Simon, requested support for the company from UK Prime Minister John Major, before entering Azerbaijan. A visit by former PM Margaret Thatcher to Baku was also arranged in support of the deal. This was based on an understanding that it "was essential for us to be closely aligned with the UK government, as post-Soviet countries still found it easier to understand and accept government-to-government dealings."

When BP did open an office in Baku, there was not yet a British Embassy established in the city - so BP partitioned off an area to be used by British government representatives.[4]

2008 Blow-out

In September 2008, a major blow-out took place at the ACG fields although BP described it as merely a 'gas leak'. BP's internal report regarding the blow-out was never released and there was no public admittance of the leak. [5] According to leaked US diplomatic cable from 2008, "ACG operator BP has been exceptionally circumspect in disseminating information about the ACG gas leak, both to the public and to its ACG partners." Although the story hadn't caught the press's attention, it had the full focus of the government of Azerbaijan, which was losing '$40-50 million each day'." [6] Embassy cables reveal striking resembles between the blow-out of 2008 and the Deepwater Horizon oil spill, which took 11 lives in the worst oil spill in US history. The cable from January 2009 blamed the blow-out on a bad cement job, the same reason behind the spill off the Gulf of Mexico as was later revealed. [7]

References

  1. "Azerbaijan's Oil Revenues: Ways of Reducing the Risk of Ineffective Use" Coalition for Increasing Transparency in the Extractive Industries of the Republic of Azerbaijan January 2007.
  2. "BP in Azerbaijan" BP, retrieved 18 March 2013.
  3. "BP in Azerbaijan: At a Glance" BP retrieved 18 March 2013.
  4. "Thatcher in Baku: How BP broke into Azerbaijan" Platform London, 13 September 2012.
  5. "Dispatches: BP: In Deep Water" YouTube 28 March 2011.
  6. "WikiLeaks US Embassy Cables" The Guardian 15 December 2010.
  7. "BP blames gas leak on 'bad cement job'" The Guardian 15 December 2010.