BP Construction Gas Pipe Line
THE ROLE OF BP IN THE CONSTRUCTION OF THE BAKU-TBILISI-ERZURUM
The Baku-Tbilisi-Erzurum gas pipeline is a massive project that involves three countries — Azerbaijan, Georgia and Turkey. It is a project that is based on the natural gas deposits, of more than one trillion cubic meters, in Azerbaijan’s portion of the Caspian Sea, an area known as the Shah-Denz gas field- 12km in width and 30km length of a stripe of the Caspian Sea. The stripe has a depth of 50m on the northern side and 500m on the southern side. The deposit is the biggest gas deposit situated in Azerbaijan sector of the Caspian Sea. This pipeline was constructed being parallel to the Baku-Tsibili-Cyehan oil pipeline that runs from Azerbaijan to the Mediterranean coast of Turkey. The BTE pipeline is also known as either South Caucasus (gas) Pipeline or Shah Deniz pipeline. The construction project was allocated U.S. 900 million dollars and it covers a total of 980km in length with a 42 inches diameter, found in Azerbaijan and Georgia only since it only reaches the boarder of Turkey at Erzurum. When the gas gets to Erzurum, it joins the Turkish natural gas network (Petersen 2007).
The pipeline became operational in December 2006 and then it had a capacity of 6 bcm per year but there are efforts currently aimed at increasing this capacity. It is expected to have a life san of 40 years. Many Western leaders have termed the BTE as the most important project of the twenty first because it has ensured it has increased the level of energy security since supply of gas -and also oil through the BTC pipeline- is not under the control of Russian and Iranian governments. The EU mostly was full of support for the project at both discussion and implementation stages because it relied mostly on energy provided or transported through Russia.
BP was the leading company, 2003, in conjunction with Statoil from Norway in the development of the offshore Shakh- Denzi gas and condensation field and construction of the planned and 900 million dollar gas pipeline. These two companies have the largest amount of share in the “Shadenic” project with a fraction of 25.5%. However, BP had the total responsibility for the construction and operation of the pipeline. BP played a very crucial role for the realization of the project which seemed to attract a lot of political, social and economic attention.
Taking a look at the course of the project portrays clearly the huge role that BP played to ensure the construction of the Baku- Tbilisi-Erzurum gas pipeline. For instance, before starting the actual construction activities, BP saw it necessary to find a competent enough and experienced consultation company that it can entrust to carry out the social impact assessment studies for the area where the pipeline would pass through. This was a necessity because the project was of almost unimaginable capital value and would affect an array of people from almost three continents (Shenoy, Gulen and Foss, Analysis Suggests Economic Viability of Trans-Caspian Sea Gas Line 1999).
The Environmental Resource Management won the contract to carry out not only the social impact assessment studies but also environmental impact assessment in the three countries. The ESIAs are usually a standard requirement in the industrial development sector especially if it is hoping to gain financial support from public funds, such as those provided by the World Bank or a national government. This was a consultation company that BP had worked with in previous projects like in Angola and China. So it was an indication of the level of commitment to success BP had placed on this project by choosing a company that had a proven track record. ERM in partnership with two local consultation companies visited villages along the pipeline’s path and asked several questions while requesting the residents to fill a questionnaire prepared after consultation with BP. The questionnaire only focused on the positive sides of the project and the BP as the coordinators of the project made it sure that questions that had the potential to result in negative feedback was not included. This was aimed at convincing the citizens of the three countries that the project had their interest at heart by avoiding any controversial topics. This strategy shows the limits BP had decide to go to; to make sure the idea of building this pipeline did not die at its infancy stage.
Will we see a growth in traffic?
“It is likely that areas near to camps or pipe yards, and their connecting roads, will experience a significant increase in traffic flows. To deal with this issue, traffic management plans will be developed to avoid congestion and maximize safety. BP puts safety before profit, and is therefore serious about this issue,” (Muttitt and Marriott 2002).
This is an example of the material contained in the leaflets handed out by ERM and it indicated the positive side of the project the residents of the areas along the pipeline were being enticed to understand.
In addition, during the summer of 2002 BP and ERM took on road shows through the villages that were intended to be consultation period lasting for 60 days. After this the amendments necessary will be made for a month and them the proposal handed to the relevant authorities for approval. BP and its partners also held several consultative meetings and seminars with non-governmental organizations in the region.
During this seminars and consultative meeting BP was so cunning in the use of discussion topic related to the project. The focus of the issues discussed was mainly based on the technical aspects of the project and because of its experience in this field it was very sure it will dominate the discussions leading to the adoption of conclusion that it was preferred. For example, questions like ‘should we build a pipeline on this route?’ And ‘should we build a pipeline at all?’ were avoided at all costs. Meanwhile topics like ‘how can we build the pipeline better?’ were the mainstay of the seminars and also art of the road show consultative program because their answers were restricted to the positive side of the project acceptance. (Muttitt and Marriott 2002)
In order to ensure that the project once stated runs to completion, BP negotiated contract that ensured that the three countries involved will be a the implementation table till the end. It did this by increasing the reimbursement fee it would be aid so that the amount of loss incurred by any party wishing to withdraw was unconceivable. Through this tactic, BP ensured that there will be continued support through out the project lifespan.
To also increase the peoples acceptance of the project BP together with its partners ensure that the benefits from the huge some of money invested would be spread to widely so that the average citizens enjoy them. An improvement in people’s lives would surely act to benefit the project. This approach was carried out in terms of both short-term and long-term initiatives. The short-term initiative involved investment of ten of millions of dollars in community environmental and social projects (Baloghlanov 2009). On the other hand, the long-term initiatives involved the formation of regional development initiative which would be tasked with creation of jobs and sustainable economic development after the construction of the pipeline was complete. Through the RDI a sum of around $25 million was allocated to be used as grants or loans and with the rummies of other partners joining the initiative was predicted to eventually have around $100 million. These initiatives were meant and did help maximize BP’s positive impact in the region. (Shenoy, Gulen and Foss, Caspian Pipeline Prospects Hinge 2000)
To ensure security is provided during the project process BP together…