BATHING IN OIL: Patients in baths of Naphtalan in the Socar Clinic in Baku. Patients pay up to $300 for 20 days treatment with Naphthalan oil, a petrol based miracle cure (Photo by Sipa Press / Rex Features)

BY ARA KHACHATOURIAN

BAKU—Once again, Azeri President Ilham Aliyev has blamed the “Armenian Lobby” for its troubles. This time, according to the president, the “Armenian Lobby” is to be blamed for perpetuating a dispute between Baku and the British Petroleum, the largest investor in Azerbaijan’s oil industry.

Bloomberg reported that production at the BP-led Azeri-Chirag-Guneshli oilfield fell 12 percent in the first half of the year, prompting Aliyev to call on the London-based company to fix “grave mistakes.” BP has since replaced regional managers and brought in technicians to address “challenges” at the Caspian Sea field, which provided 78 percent of Azerbaijan’s total output in 2011.

On Wednesday, Azerbaijan and BP inked a new deal, which was hailed by Aliyev who said, “Starting from next year, our oil production will stabilize and sustainable oil production will continue for many years.”

Following his remarks about BP, Aliyev went on to point the finger at “external forces disliking Azerbaijan, the Armenian lobby, and, unfortunately, internal opposition, which is on the same side with them,” for blowing the dispute out of proportion.

“Let the Armenian lobby, external forces that dislike us and do not accept the successful development of Azerbaijan, not to be happy,” added Aliyev.

Oil Viability
Speaking at an event of the Caspian-European Integration Business Club on Wednesday, US Ambassador to Azerbaijan Richard Morningstar urged Azerbaijan to diversify its economy to become less dependent on oil, reported contact.az.

Morningstar said that the Azeri-Chirag-Guneshli oilfield reserves will be depleted resulting in reduced revenues from the energy sector. For that, he stressed the importance of diversification of the country’s economy and implementation of projects in the non-oil sector.

He urged Azerbaijan to development the non-oil sector in the next 10 years and abandon its dependence on oil and gas revenues.

The viability of the Azeri oil was documented in very well-researched article in the January 2011 Harvard International Review by Alec Rasizade who predicted that Azeri oil reserves will be depleted by 2019 if it continues the current rate of its output. He also said that the decline will begin in 2011.

Rasizade said the “second Baku oil boom of 2005-2013 is doomed to end in a few years without any significant economic achievement as all the petrodollar revenue is being spent in a construction frenzy on ostentatious “white elephants” without modernizing even the city’s basic infrastructure, such as the water and sewage systems, let alone creating non-petroleum industries that might become useful in the future with the end of big oil. Almost all the factories and manufacturing plants, left over from the Soviet industrial past, have been grazed down to clear the ground for economically useless hotels and convention centers, magnificent mosques and shopping malls, and opulent office and residential buildings for Azerbaijan’s new petrodollar elite. This leaves little room to live or work for the rest of population, which is emigrating in large numbers: presently 3 million of Azerbaijan’s 9 million citizens live and work abroad.”

He cites that while explorations have yielded new reserves in Kazakhstan its Caspian littoral neighbor Azerbaijan has not identified new reserves since 1992.

Read the entire Harvard International Review article.

Bathing in Shady Azeri Oil
In recent weeks, there have been several media reports highlighting Azerbaijan’s “shady” oil business and highlighting that the profits from the country’s oil industry wind up in Aliyev’s pockets rather than national coffers.

In an article published in November, the UK-based Mail Online’s Will Stewart explored the Azeri oil industry and claimed that the country’s rich heiresses bathed in oil, due to its abundance.

“Oil generated £19 billion in revenues last year, yet much is believed to have gone straight into the pockets of President Ilham Aliyev and his family,” reported Stewart who also highlighted the brutality to which opposition elements in Azerbaijan were exposed.

Read the entire Mail Online article.

On December 14, Terry Macalister of the London-based Guardian reviewed a new book, “The Oil Road” by James Marriott and Mika Minio-Paluello, who follow the route of BP’s $4 billion pipeline running from the Caspian sea to the Mediterranean and “tell an unwholesome tale of shadowy deals and displaced communities.”

The two authors have spent a decade campaigning against British involvement in the Azeri oil trade.

“BP’s interconnectedness with the Aliyev regime goes beyond underwriting it with revenues. The company’s cooperation with the repressive regime operates on multiple levels: local executive powers in villages, the Azeri secret service, and the troops of the Special State Protection Service of Azerbaijan,” write the authors of “The Oil Road.”

Read the entire Guardian article.

Is the “Armenian Lobby” to blame for the decline in Azeri oil reserves and Aliyev’s usurpation of the national wealth?