Azerbaijan's Aliyev blasts BP

Tough talk: Azeri leader incensed by BP "mistakes"

BP remains “committed” to Azerbaijan despite the country’s president accusing the supermajor of making “false promises” and “erroneous forecasts” about production at its plays.

President Ilham Aliyev has demanded the British giant take action over its continued failure to meet production targets which he maintained have left the country’s coffers $8.1 billion short.

BP is Azerbaijan’s largest foreign investor and operates the largest oilfield in the country’s sector of the Caspian Sea, Azeri-Chirag-Deepwater Gunashli (ACG), as well as its largest offshore gas and condensate field, Shah Deniz.

According to Azeri news service Trend, at a meeting of cabinet ministers on Wednesday, Aliyev said: “Oil production began to decline sharply on the Azeri and Chirag fields due to serious mistakes committed by the consortium over the past few years. This is not the first year, when oil production decreases.”

He added that “for some reason” production declined after share distributions in the projects changed in favour of Azeri investors.

“The forecast for 2012 is 35.6 million tonnes. Given current production, it can be assumed that BP will not be able to extract more than 33 million tonnes of oil from Azeri and Chirag by the end of the year,” Aliyev said.

Although he pointed out that investments such as those made by BP had made Azerbaijan “one of the fastest growing countries in the world,” he warned: “Investments have no charity functions.”

“This is a specific business project. Up to now, the BP-led consortium invested $28.7 billion in the Azeri and Chirag oilfields and made revenue of $73 billion. So, quite big profit has been made,” he contended.

“I believe that all promises and presented forecasts should be fulfilled. I should note that this unexpected drop occurred only due to harsh mistakes by BP, which leads the consortium that operates the Azeri and Chirag fields,” the president alleged.

“We have cooperated with BP for many years. At all times we have supported their activity. We supported them in their most difficult days. We expected adequate treatment. These erroneous forecasts given to us are unacceptable. The false promises given to the State Oil Company [Socar] are unacceptable. In the business world, there is no place for such relationship, it is impossible.”

Aliyev alleged that these “mistakes” were “admitted” by BP which also promised that “significant changes” would be made, including holding those responsible for the issues to account.

“Almost a month has passed from that time, but I do not see the implementation of these commitments,” he continued.

BP issued a one-line statement in response to a request for comment on the issue, saying: "We are fully committed to Azerbaijan. We are working with Socar to address Azeri Chirag Gunashli (ACG) production issues as quickly as possible."

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