Book Reviews

Azerbaijan, The Next Big Oil Play, by David Thomas, London, Financial Times Energy Publishing, 1996, ISBN
1 85334 5369, 153 pages

Azerbaijan is, next to Russia and Kazakhstan and before Turkmenistan, one of the major places for oil and gas investment in the former Soviet Union.

Once, in the latter 19th century, one of the major hubs of the world oil industry - when Josef Stalin was imprisoned in Baku for fomenting strikes in the oil industry, its importance fell significantly in the latter decades of the Soviet Union. With foreign investment and modern, deep-drilling and offshore technology, it promises to become again a major oil producing country. Its problems lie in the mutually destructive and as
yet unsettled war with Armenia, mainly over the Nagorny-Karabagh enclave, in the loss of its former secure market for oil industry products in the no longer existing Soviet Union and its need to establish and maintain a stable and functioning political system replacing six decades of Russia/Soviet rule.

Foreign investors - notably the AIOC consortium planning to achieve 700000 barrels per day at the Chirag, Azeri and Guneshli fields - are very keen - as is reflected in the several hundred million US$ paid to the government as contract bonuses by US, European and Turkish petroleum companies. A major drawback is the difficulty of exporting through pipelines - lines through Russia, Georgia, Armenia, Iran, Turkey are being discussed; all lines are subject to political problems ranging from the Chechnya war over Russian opposition to non-Russian lines to US veto over linkages with Iraq and environmental impediments of transit through the Bosphorus. A further impediment is the as yet unsettled legal and political status of the Caspian sea where Russian (and Iranian) claims for con-dominium and joint decision-making are opposed to now mainly Azeri claims for a sectoral split. This new Financial Times Business Report - similar to, but professionally improved, a similar report on Kazakhstan reviewed earlier in JENRL - provides useful information on the history, petroleum industry, pipeline projects and Caspian Sea issues relevant to petroleum development. Relying on information provided in a 1993 World Bank report and international accountancy firms, it surveys as well the political, economic, industrial, social and fiscal/monetary situation. It includes some relevant intelligence on logistics, infrastructure, telecommunication, government leaders and addresses. It does, surprisingly, not provide requisite advice on visa and travelling requirements and possibilities nor does it have a satisfactory list of agents, translators, lawyers and other initial helpers for foreign business people. This report can only serve as a starting point for companies considering commercial involvement in Azerbaijan. Information is neither always up-to-date nor complete. Important players (e.g. in Socar) are often not mentioned nor is the interaction between the various Western governments much analysed. While the report has some comparatively good sections (notably the Caspian sea dispute, the AIOC and the pipeline situation), it is very thin on legal issues: The report incorrectly suggests that Azerbaijan did not sign the Energy Charter Treaty (it did, on 14 December 1994) and has no discussion on the legislative framework. The article by Nasibov/Seck in JENRL 1995 and the (though now somewhat dated) book by Andrew Seck provide a needed complement to this introductory survey of relevant petroleum investment intelligence on Azerbaijan.

T. Waelde, CEPMLP/Dundee