WikiLeaks cables: BP sufferedblowout
on Azerbaijan gas platform
Embassy cables reveal energy firm 'fortunate' to have
evacuated workers safely after blast similar to Deepwater
Horizon disaster[h2
• The Guardian, Thursday 16 December 2010
Eleven people died
when BP's Deepwater Horizon rig exploded and it caused the worst oil spill in US
history. Photograph: AFP/Getty Images
Striking resemblances between BP's Gulf of Mexico disaster and a little-reported giant
gas leak in Azerbaijan experienced by the UK firm 18 months beforehand have
emerged from leaked US embassy cables.
The cables reveal that some of BP's partners in the gas field were upset that the
company was so secretive about the incident that it even 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.
Other cables leaked tonight claim that the president of Azerbaijan accused BP of
stealing $10bn of oil from his country and using "mild blackmail" to secure the rights
to develop vast gas reserves in the Caspian Sea region.
WikiLeaks also released cables claiming that:
• Senior figures in Thailand are concerned about the suitability of the crown prince to
become king, citing rumours that he has lovers in several European capitals in
addition to his wife and son in Thailand.
• American energy firm Chevron was in discussions with Tehran about developing an
Iraq-Iran cross-border oilfield, despite US sanctions against Iran.
The leaks came as the whistleblower site's founder Julian Assange prepared for
another night in jail ahead of tomorrow's high court challenge to the decision to grant
him £200,000 bail. Swedish authorities, who want to question Assange on allegations
of sexual assault, believe he should remain in custody as he is a flight risk.
On the Azerbaijan gas leak, a 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 that the firm acknowledged at the time.
"Due to the blowout of a gas-injection well there was 'a lot of mud' on the platform,
which BP would analyze to help find the cause of the blowout and gas leak," the cable
said.
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 was also criticised for not initially sharing all its information with the US
authorities about the scale of the Gulf spill. The gas field in the Caspian Sea was in
production when the leak and blow out occured, unlike the well in the Gulf which was
being drilled to explore for oil.
BP declined to answer questions put by the Guardian 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 US companies
Chevron, ExxonMobil and Hess (formerly Amerada Hess), as well as Norwegian firm
Statoil and Azerbaijani 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 gasreinjection
well for Central Azeri had a blowout, expelling water, mud and gas." BP's
annual report last year referred to a "comprehensive review of the subsurface gas
release" having taken place and remedial work being carried out.
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 in fact this production 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, particularly amidst rising gas prices.
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 US 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."
BP officials also complained about a shortage of Navy and Coast Guard boats –
mostly Soviet era and built in the 1960s and 1970s – to patrol the waters around the
platforms. It was also not clear which government agency or branch of the military
was in charge, meaning a "response to a crisis offshore could be problematic" , one
cable in August 2008 recorded.
The oil firm said BP "enjoys the continued support and goodwill of the government
and the people of Azerbaijan".
The oil firm said in a statement that: "BP continues to have a successful and mutually
beneficial partnership with the government of Azerbaijan. This cooperation has
produced and contunues to produce benefits to all parties involved and most
importantly to the nation of Azerbaijan. The Government of Azerbaijan has entrusted
us with the development of its major oil and gas development projects on the basis of
Production Sharing Agreements (PSAs) that are enacted as laws in Azerbaijan. The
operatorship of PSAs of this scale and size require cooperation and alignment
between contractors and the Government. BP in Azerbaijan enjoys the continued
support and goodwill of the Government and the people of Azerbaijan to meet
its obligations. As part of maintaining this successful partnership we meet and discuss
business related matters with relevant parties including our partners, SOCAR, and the
Government. These discussions are confidential and as such we will maintain that
confidentiality and not comment on specifics."
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