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Financial Times: BP’s future in Azerbaijan could be clouded

12 October 2012 12:58 (UTC +04:00)

Addressing the Azeri cabinet, Ilham Aliyev accused the BP-led consortium operating a huge field in the Caspian Sea called Azeri-Chirag-Guneshli, or ACG, of â€œgrave mistakesâ€, which had led to an â€œunexpectedâ€ decline in production.

He said the company had failed to honour promises made almost a month ago to keep output stable. The president said that since 2009, the consortium running ACG failed to meet its production targets and that as a result, Azerbaijan had missed out on $8.1bn in oil revenues. He called the missed targets â€œunacceptableâ€ and threatened â€œstrict measuresâ€.
The intervention of Mr Aliyev, the authoritarian ruler of Azerbaijan for nine years, is troubling to BP which has enjoyed good relations with the Azeri authorities. â€œThe vehemence of the attack in such a core area of BPâ€™s operations should raise eyebrows,â€ said Peter Hutton of RBC Capital Markets. ACG accounts for four per cent of BPâ€™s global oil output.

The intervention of Mr Aliyev, the authoritarian ruler of Azerbaijan for nine years, is troubling to BP which has enjoyed good relations with the Azeri authorities. â€œThe vehemence of the attack in such a core area of BPâ€™s operations should raise eyebrows,â€ said Peter Hutton of RBC Capital Markets. ACG accounts for four per cent of BPâ€™s global oil output.

The attack comes at a sensitive time for BP. The company is trying to settle civil and criminal liabilities with the US justice department arising from the 2010 Deepwater Horizon spill. It is also engaged in negotiations to sell its 50 per cent stake in its Russian joint venture, TNK-BP. Its share price is still a third below it was before the Macondo incident.