Why does BP president meet Azerbaijani president so often?

On August 6, 2012 Azerbaijani President Ilham Aliyev received Robert Dudley, BP Executive Director, during his working visit to London in connection with the XXX Olympic Games.

Web site www.president.az reads that the sides expressed satisfaction with successful cooperation between Azerbaijan and BP. They have exchanged opinions on the second phase of the Shah-Deniz field development and course of implementation of other projects.

Web site reads that the sides expressed confidence that Azerbaijan and BP will keep on deepening cooperation in the future.

This is the fifth meeting between Ilham Aliyev and BP Group chief since November 2011. As Turan has been told, State Oil Company of Azerbaijan (SOCAR) and BP has disagreements on the Stage-2 project of development of Shah-Deniz gas condensate field. After the visit of BP chief Robert Dudley to Baku and his meeting with Azerbaijani President in April 2012, BP released a statement that preliminary cost of Stage-2 project will be $25 billion. However, later SOCAR's representatives disagreed with the data, because detailed engineering of the project has not been carried out. For this reason authorization of the project, which was expected in the first half of 2012 was postponed till quarter 1, 2013.

The same source told Turan that BP would like to expand its presence in the Azerbaijan and regional projects, where SOCAR plays a dominating role. "This is a normal desire of any company. But SOCAR and the government have their own interests and the negotiations continue to achieve success in this process," the same source added.

BP would like to get a share from SOCAR in the TANAP gas pipeline, construction of which is scheduled to begin in Turkey during the period from 2014 to 2017. BP offered SOCAR to sign a new production sharing agreement (PSA) to the deep-lying gas beds on Azeri-Chirag-Guneshli. The contract was planned to be signed in early 2012, but then was postponed till end of March 2012. SOCAR resident has recently announced a new date of signing of the agreement - end of this year.

According to the BP plans, from the deep-lying beds in Azeri-Chirag-Guneshli it could start production and export in 2018 and by that time export from the Stage-2 project will start. Export would have started first via the South Caucasus Pipeline (SCP) and then via TANAP. The idea is good, because it will allow European consumers increasing the volume of Azerbaijani gas deliveries within a short period. However, the issue of the commercial interests should be resolved.

The current course of the talks shows that Azerbaijan and BP have not found a "golden middle" in the commercial issues.-0---