Azerbaijan blast strikingly similar to Gulf disaster. Firm was ‘fortunate’ to have evacuated staff safely

Striking resemblances between BP’s Gulf of Mexico disaster and a little-reported giant gas leak in Azerbaijan experienced by the U.K. firm only 18 months before have emerged from leaked U.S. embassy cables.

The cables reveal that some of BP’s partners in the gas field were upset that the company allegedly withheld information from them. They also say that BP was lucky that it was able to evacuate its 212 workers safely after the incident, which resulted in two fields being shut and output being cut by at least 500,000 barrels a day with production disrupted for months.

One cable reports for the first time that BP suffered a blowout in September 2008, as it did in the Gulf with devastating consequences in April, as well as the gas leak which the firm acknowledged at the time.

Written a few weeks after the incident, the cable said Bill Schrader, BP’s then head of Azerbaijan, admitted it was possible the company “would never know” the cause although it “is continuing to methodically investigate possible theories”.

According to another cable, in January 2009 BP thought that a “bad cement job” was to blame for the gas leak in Azerbaijan. More recently BP’s former chief executive Tony Hayward also partly blamed a “bad cement job” by contractor Halliburton for the Deepwater Horizon disaster in the Gulf of Mexico. The blowout in the Gulf led to the deaths of 11 workers and the biggest accidental offshore oil spill in history.

BP declined to answer questions about the cause of the Azerbaijan gas leak and who carried out the cement job, pointing to a general statement it had made about the cables.

The cable reveals that the company had a narrow escape. “Given the explosive potential, BP was quite fortunate to have been able to evacuate everyone safely and to prevent any gas ignition. Schrader said although the story hadn’t caught the press’s attention, it had the full focus of the [government of Azerbaijan], which was losing ‘$40-50m each day’” The leak happened at the Azeri-Chirag-Guneshi (ACG) field, Azerbaijan’s largest producing oil field in the Caspian where vast undeveloped gas reserves also lie. BP is the operator and largest shareholder in the consortium, which includes U.S. companies Chevron, ExxonMobil and Hess, as well as Norwegian firm Statoil and Azerbaijan’s state owned oil company Socar.

BP comes in for criticism for allegedly limiting the information it made available about the incident. Another cable records shortly after the incident, “ACG operator BP has been exceptionally circumspect in disseminating information about the ACG gas leak, both to the public and to its ACG partners. However, after talking with BP and other sources, the embassy has pieced together the following picture”. It goes on to say the incident took place when bubbles appeared in the waters around the Central Azeri platform, signalling a nearby gas leak. “Shortly thereafter, a related gas-reinjection well for Central Azeri had a blowout, expelling water, mud and gas.” The cable continues, “At least some of BP’s ACG partners are similarly upset with BP’s performance in this episode, as they claim BP has sought to limit information flow about this event even to its ACG partners. Although it is too early to ascertain the cause, if this shutdown was due to BP technical error, and if it continues for months (as seems possible), BP’s reputation in Azerbaijan will take a serious hit.” BP is in charge of Azerbaijan’s key energy projects, and has a significant influence across the region. In late 2006 discussions were taking place about when Turkey would be able to link up its own network to a new pipeline operated by BP transporting gas across the Caucasus from BP’s giant new Shah Deniz field in Azerbaijan. The new pipeline was seen as crucial as reducing the region’s dependence on unreliable gas supplies from Russia.

According to one cable, BP’s outgoing Azerbaijan president, David Woodward, said in November 2006 that BP thought it unlikely that Turkey would be able to complete its work before spring 2007. “However, he added that ‘it was not inconceivable’ that Botas [Turkey’s state pipeline company] could ‘rush finish’ the job so that it would be ready to receive gas shortly, although the pipeline would not meet international standards,” the cable said. In the end, BP said Turkey began receiving gas from Shah Deniz in July 2007.

The cables also reveal BP concerns on the lack of security at the time around its oil and gas installations, particularly in the Caspian Sea, which it believed made them vulnerable to terrorist attack. One cable from July 2007 records, “BP Azerbaijan president Bill Schrader has told U.S. officials in private conversations, ‘all it would take is one guy with a mortar or six guys in a boat’ to wreak havoc in Azerbaijan’s critical energy infrastructure.” The oil firm said BP “enjoys the continued support and goodwill of the government and the people of Azerbaijan”.

Copyright: Guardian News & Media 2010

More In: International | News