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Russia March 27, 2008
 
There Will Be Krov: Oil-soaked Travels Through Azerbaijan
Blood, Oil, and Borat in Azerbaijan By Alexander Zaitchik Browse author Email
 
Page 4 of 7
 

Amoco helped [Aliyev] score his first meeting with President Clinton, and oil companies pushed for a resumption of U.S. aid to his government (which Congress had cut off during the war with Armenia). A pantheon of U.S. policymakers-turned-consultants also chipped in on behalf of the regime—men such as Brent Scowcroft, James Baker, and Zbigniew Brzezinski, as well as then-Halliburton CEO Dick Cheney and [Dick] Armitage, whose clients at the time included several Western companies looking to profit from the oil rush.

Texas Oil did end up profiting from this oil rush, but it wasn’t a U.S. company that won the lion's share. After the dust settled on the Azeri Caspian carve-up, BP emerged the biggest foreign player in Baku. They got there with a lobbying effort famous in the annals of oil for its bottomless entertainment expense account. According to a 2007 Daily Mail expose (which the paper pulled from its site the next day under pressure from Downing Street) the company, under the direction of Lord Brown and MI6, spent 45 million pounds sterling over a whore-and-caviar fueled four-month period to sweeten up Aliyev and his poorly tailored cronies. BP’s “make big party time with you” approach to Baku’s Power Borats paid off. There is now a chippy on the city’s main shopping boulevard, just around the corner from O’Malley’s Irish pub and its locally famous Yorkshire pudding. “The government doesn’t deal with countries,” an Iranian café owner told me. “It deals with oil companies. And BP has the biggest embassy.”

At the time of BP and Texas Oil’s slobbering courting of Baku, Caspian oil deposits were said to be large enough to shake the world, or at least OPEC. As CEO of Halliburton 1998, Dick Cheney articulated the conventional wisdom when he said, "I cannot think of a time when we have had a region emerge as suddenly to become as strategically significant as the Caspian."

That was then, anyway. These days the only place you’ll find the region at the center of world events is in the new Xbox game “Frontline: Fuel of War” where American teenagers battle Russian and Chinese troops for control of Caspian oil in 2024. According to gaming critics, the game sucks, and not just because the makers missed a golden pun opportunity by not calling it “The New Great Game.”

What happened to all those hundreds of billions of promised barrels? As a Hungarian oil analyst explained to me during an Aeroflot delay at Heydar Aliyev airport, everyone understood the Caspian was being hyped from the beginning. “There was [utility] in making the world think there was more oil than there was,” he said. The Caspian nation regimes wanted to make the West drool so much it forgot all about human rights and corruption; the oil companies wanted inflated proven-reserves numbers in order to jack up their stock prices. Win-win.

At its height, the Caspian hype-machine was a thing to behold. There was a time when you couldn’t open a newspaper or magazine without reading an article about how the Caspian basin was a second Saudi Arabia with 200-plus billion recoverable barrels. But the reality turned out to be closer to North Sea Junior. To the extent estimates can be trusted, Azerbaijan’s share of the Caspian booty is now estimated at between seven and 13 billion barrels. Hardly an OPEC-busting number, even when you figure in Kazakhstan’s Kashagan field, the largest Caspian field with nine to 16 billion barrels. “Azerbaijan and the rest of them are incremental suppliers, that’s all,” explained the Hungarian analyst. “They aren’t going to swing things or significantly relax growing tightness in supply.”

Among other things, all the 90s hype resulted in excess pipeline capacity, of which the heralded (and expensive) Baku-Ceyhan pipeline is a major part. The Clinton administration’s high-priority accomplishment will, when all’s said and done, wind up vastly underused, even when the Caspian fields are pumping at full speed in 15 years or so. But so much rhetoric was spewed for so long that when the day came in 2005 to smash the ceremonial bottle against Baku-Ceyhan, U.S. energy secretary Samuel Bodman felt obligated to continue the farce, declaring it "a day that will change the world."


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Zaitchik
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Alexander Zaitchik is an editor at The eXile. Email him at zaitchik@gmail.com
 
 
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