Azernews.Az

BAKU – Fresh US diplomatic cables released by the WikiLeaks website claim that President Ilham Aliyev had accused BP of using "mild blackmail" to win contracts to develop Caspian Sea energy reserves, in a bid to exploit Azerbaijan’s "temporary troubles" during a gas shortage in December 2006.

President Aliyev allegedly said BP wanted an extension to its lucrative production sharing agreement on the Azeri-Chirag-Gunashli (ACG) offshore block it operates in Azerbaijan to tap into deepwater gas reserves -- in return for providing more associated gas for domestic consumption. Aliyev is quoted as saying that BP’s presenting as a single package a host of issues, including the PSA extension, ACG deepwater gas reserves and the arrangements on transportation tariffs, was wrong. The president said that BP resorted to "mild blackmail" and called on the London-based company to proceed "in goodwill". He allegedly ordered officials to tell BP that if it does not support the associated gas issue, it will not see a PSA extension and a solution of the ACG deepwater gas issue, said the cable, reportedly sent by the former US Ambassador to Azerbaijan Anne Derse on December 5, 2006.

The cables released by WikiLeaks also claimed that BP suffered a major explosion on a gas platform in Azerbaijan in 2008. The incident reportedly resulted in two fields being shut after a gas leak and disrupted production for months, with output being cut by at least 500,000 barrels a day.

In one of the cables, BP Azerbaijan President Bill Schrader is reported as saying the "red button" was pressed after detection of the gas leak on the Central Azeri platform in September 2008.

The subsequent evacuation of 211 workers was BP's largest emergency evacuation at the time.

The cable says that given the explosive potential the company was quite fortunate to have been able to evacuate everyone safely and prevent any gas ignition.

Schrader notes that the incident had escaped media attention, but added it had the "full focus" of the government of Azerbaijan, which was losing $40-50 million a day because of the shutdown.

A later cable revealed that BP believed a "bad cement job" was to blame for the Azerbaijan leak.

That echoes comments by former BP Chief Executive Tony Hayward that partly blamed a "bad cement job" by contractor Halliburton on the Deepwater Horizon rig.

In one cable from 2007, the state-controlled oil company SOCAR threatened to have Schrader put on trial for "stealing $10 billion worth of Azerbaijani oil" and to go public with its complaints.

Commenting on the diplomatic cables, Tamam Bayatly, the spokesperson for BP Azerbaijan, told Radio Liberty that BP Azerbaijan has been maintaining a successful and mutually beneficial partnership with the Azerbaijani government and this is still the case.

"The government of Azerbaijan has vested operation of its large-scale oil and gas development projects in BP under production sharing agreements. The BP company enjoys consistent support from both the government and people for delivering on its commitments in Azerbaijan," Bayatly said.

According to her, BP Azerbaijan holds meetings with its partner companies, including SOCAR, and the government to discuss business issues. However, the gist of these discussions is not disclosed.

"Such discussions are confidential, and in keeping with that, we do not disclose their details."

BP is the biggest shareholder in the $4 billion Baku-Tblisi-Ceyhan pipeline, which carries up to 1 million barrels of oil a day from the Caspian Sea to Turkey. It is also the largest shareholder and operator of the ACG field, Azerbaijan’s largest producing oil field in the Caspian reserve.