Environmental Impact of extractive industries in Azerbaijan

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Overview

According to a paper by academic Parviz Salimov, the years of neglect of the oil and gas industry under the Soviet Union have had severe environmental impacts on onshore and offshore zones of Azerbaijan, including high levels of air, water and soil pollution. The rising level of the Caspian Sea over recent years has contributed to the problem by flooding existing and abandoned oil wells,[1] as has the use of old and outdated drilling equipment. Declining populations of sturgeon, the fish which produce eggs for the Caspian's caviar exports, are an example of the effect of water pollution. The sturgeon population decreased from 30,000 tons in 1985 to only 2,100 tons in 1994. The deterioration of air quality has also been identified as a concern, partly a consequence of natural gas flaring.

A 2005 report by Stanford University details the human impact of the environmental damage in Azerbaijan, including a rise in the death rate of pregnant women and newborns, contaminated drinking water supplies, and fewer wealth creation options given the difficulties caused by soil and water pollution to the local fishing industries. The report looks to international oil companies to ease the environmental problems being experienced by the Azerbaijani oil industry, as they would replace poor quality Soviet drilling equipment with better quality rigs that would be subject to scrutiny by environmental inspectors.[2] However, a US diplomatic cable released in 2010 revealed the British oil major BP in fact suffered a blowout of a gas injection well at the Azeri-Chirag-Gunleshi (ACG) oil fields in 2008, a incident described as a "narrow escape" for the company.[3]

According to the US State Department, several environmental organizations exist in Azerbaijan, yet few funds have been allocated to begin the cleanup and prevention programs required.[4]

Environmental Impact Assessments (EIAs)

Environmental Impact Assessments (EIAs) are tools used in the industry to examine the possible environmental consequences of the implementation of projects, programmes and policies.[5] EIAs were applied in many New Oil and Gas Projects (NOGP) in Azerbaijan between 1997-2004, according to research carried out by Parviz Salimov in 2005. However this research concluded that this process in Azerbaijan did not meet best practice criteria, and the absence of clear and specific EIA legislation was identified as a major drawback. NOGPs in Azerbaijan are instead developed within the legal framework of Production Sharing Agreements (PSAs) that include EIA requirements.

Salimov notes that, as in many former Soviet countries, the evolution of the EIA system followed a different path than that "classically" followed. During the Soviet period, these concerns were addressed using a procedure called State Environmental Review (SER), whereby committees reviewed or appraised projects and plans, or by OVOs ("assessments of environmental impacts"). The Law of the Azerbaijan Republic on Environmental Protection introduced in 1999 still reiterates SER as central to the national environmental assessment system, despite an EIA 'handbook' issued in 1996.[6]

References

  1. EIA in the new oil and gas projects in Azerbaijan – comparison with best practiceUniversity of East Anglia, May 2005.
  2. The Caspian Oil ReservesStanford University, Winter 2003.
  3. Wikileaks cables: BP suffered blowout on Azerbaijan gas platformGuardian, 16 December 2010.
  4. Background Note: AzerbaijanUS State Department, 23 March 2012.
  5. Glossary of Statistical TermsOECD, retrieved 24 August 2012.
  6. EIA in the new oil and gas projects in Azerbaijan – comparison with best practiceUniversity of East Anglia, May 2005.