In the 21st-century equivalent of the "Great Game", it seems that some Azeri ministers knew that there is likely to be only one winner in pipeline politics – BP.

Azerbaijan will become even more important in the future in supplying Europe with energy as new pipelines are planned to transport the vast oil and gas reserves in the Caspian Sea region westwards. But the US diplomatic cables show that in reality, despite threats and bluster from the government, it is BP who holds the key to how, when and where Azerbaijan's reserves are developed.

In a cable written in April 2007, the country's energy and industry minister, Natiq Aliyev, complains that "for much, if not most, of the GOAJ's [government of Azerbaijan] gas production, 'we depend on BP.'"

Discussing the progress of future pipeline plans, he stresses "that the GOAJ is ready and willing to co-ordinate and co-operate with European customers, but the GOAJ has no ability to fulfill (sic) BP's obligations. We can't answer Europe (re availability of gas) without BP".'

Bemoaning the "three to four years" delay in the completion of the Baku-Tbilisi-Ceyhan pipeline (BTC), operated by BP, and how Azerbaijan had not been able to fulfil its promise to supply Turkey with gas, developed by BP, in 2006, the minister says, according to the cable, "we can't punish them [BP] or make claims against them." The cable goes on: "BP provides gas production estimates to the GOAJ, but 'these aren't obligations, and BP can change them anytime.'"

Another cable from November 2006 also shows that during the visit to Azerbaijan of then BP head of exploration and production, Andy Inglis, "BP had given both President [Ilham] Aliyev and [Azeri state owned oil company] SOCAR president Abdullayev a copy of a BP 'white paper' on the way forward for Azerbaijan in the energy sector."

BP apparently was unafraid to use its considerable clout more directly if needed. One executive seems to threaten in October 2007 to report the increasingly acrimonious row with the government over BP's key production sharing agreement to credit rating agency Moody's. "BP … said that Moody's was planning to come to Azerbaijan in two weeks, and had asked to talk with him about Azerbaijan's investment climate, and he mused aloud as to what he should tell them given the consortium's current difficulties."

There is no suggestion that the BP executive did carry out the veiled threat, but he – and the US ambassador – would know that a negative report from such a influential company like BP would do immense damage to Azerbaijan's reputation among foreign investors, and could even raise its cost of borrowing.



Captcha image