Friday, December 17, 2010

BP had similar well blowout in Azerbaijan 18 months before Deepwater Horizon disaster: Wikileaks

WikiLeaks cables: BP suffered blowout on Azerbaijan gas platform
Striking resemblances between BP's Gulf of Mexico disaster and a little-reported giant gas leak in Azerbaijan experienced by the UK firm 18 months beforehand have emerged from leaked US embassy cables.
The cables reveal that some of BP's partners in the gas field were upset that the company was so secretive about the incident that it even allegedly withheld information from them. They also say that BP was lucky that it was able to evacuate its 212 workers safely after the incident, which resulted in two fields being shut and output being cut by at least 500,000 barrels a day with production disrupted for months.
Other cables leaked tonight claim that the president of Azerbaijan accused BP of stealing $10bn of oil from his country and using "mild blackmail" to secure the rights to develop vast gas reserves in the Caspian Sea region.
WikiLeaks also released cables claiming that:
• Senior figures in Thailand are concerned about the suitability of the crown prince to become king, citing rumours that he has lovers in several European capitals in addition to his wife and son in Thailand.
• American energy firm Chevron was in discussions with Tehran about developing an Iraq-Iran cross-border oilfield, despite US sanctions against Iran.
The leaks came as the whistleblower site's founder Julian Assange prepared for another night in jail ahead of tomorrow's high court challenge to the decision to grant him £200,000 bail. Swedish authorities, who want to question Assange on allegations of sexual assault, believe he should remain in custody as he is a flight risk.
On the Azerbaijan gas leak, acable reports for the first time that BP suffered a blowout in September 2008, as it did in the Gulf with devastating consequences in April, as well as the gas leak that the firm acknowledged at the time.
Written a few weeks after the incident, the cable said Bill Schrader, BP's then head of Azerbaijan, admitted it was possible the company "would never know" the cause although it "is continuing to methodically investigate possible theories".
According to another cable, in January 2009 BP thought that a "bad cement job" was to blame for the gas leak in Azerbaijan. More recently, BP's former chief executive Tony Hayward also partly blamed a "bad cement job" by contractor Halliburton for the Deepwater Horizon disaster in the Gulf of Mexico. The blowout in the Gulf led to the deaths of 11 workers and the biggest accidental offshore oil spill in history.
BP was also criticised for not initially sharing all its information with the US authorities about the scale of the Gulf spill. The gas field in the Caspian Sea was in production when the leak and blow out occured, unlike the well in the Gulf which was being drilled to explore for oil.
BP declined to answer questions put by the Guardian about the cause of the Azerbaijan gas leak and who carried out the cement job, pointing to a general statement it had made about the cables.
The cable reveals that the company had a narrow escape. "Given the explosive potential, BP was quite fortunate to have been able to evacuate everyone safely and to prevent any gas ignition. Schrader said although the story hadn't caught the press's attention, it had the full focus of the [government of Azerbaijan], which was losing '$40-50m each day'."
The leak happened at the Azeri-Chirag-Guneshi (ACG) field, Azerbaijan's largest producing oil field in the Caspian where vast undeveloped gas reserves also lie. BP is the operator and largest shareholder in the consortium, which includes US companies Chevron, ExxonMobil and Hess (formerly Amerada Hess), as well as Norwegian firm Statoil and Azerbaijani state owned oil company Socar.
BP comes in for criticism for allegedly limiting the information it made available about the incident. Another cable records shortly after the incident: "ACG operator BP has been exceptionally circumspect in disseminating information about the ACG gas leak, both to the public and to its ACG partners. However, after talking with BP and other sources, the embassy has pieced together the following picture." It goes on to say the incident took place when bubbles appeared in the waters around the Central Azeri platform, signalling a nearby gas leak. "Shortly thereafter, a related gas-reinjection well for Central Azeri had a blowout, expelling water, mud and gas." BP's annual report last year referred to a "comprehensive review of the subsurface gas release" having taken place and remedial work being carried out.
The cable continues: "At least some of BP's ACG partners are similarly upset with BP's performance in this episode, as they claim BP has sought to limit information flow about this event even to its ACG partners. Although it is too early to ascertain the cause, if in fact this production shutdown was due to BP technical error, and if it continues for months (as seems possible), BP's reputation in Azerbaijan will take a serious hit."
BP is in charge of Azerbaijan's key energy projects, and has a significant influence across the region. In late 2006 discussions were taking place about when Turkey would be able to link up its own network to a new pipeline operated by BP transporting gas across the Caucasus from BP's giant new Shah Deniz field in Azerbaijan. The new pipeline was seen as crucial as reducing the region's dependence on unreliable gas supplies from Russia, particularly amidst rising gas prices.
According to one cable, BP's outgoing Azerbaijan president, David Woodward, said in November 2006 that BP thought it unlikely that Turkey would be able to complete its work before spring 2007. "However, he added that 'it was not inconceivable' that Botas [Turkey's state pipeline company] could 'rush finish' the job so that it would be ready to receive gas shortly, although the pipeline would not meet international standards," the cable said. In the end, BP said Turkey began receiving gas from Shah Deniz in July 2007.
The cables also reveal BP concerns on the lack of security at the time around its oil and gas installations, particularly in the Caspian Sea, which it believed made them vulnerable to terrorist attack. One cable from July 2007 records: "BP Azerbaijan president Bill Schrader has told US officials in private conversations, 'all it would take is one guy with a mortar or six guys in a boat' to wreak havoc in Azerbaijan's critical energy infrastructure."
BP officials also complained about a shortage of Navy and Coast Guard boats – mostly Soviet era and built in the 1960s and 1970s – to patrol the waters around the platforms. It was also not clear which government agency or branch of the military was in charge, meaning a "response to a crisis offshore could be problematic" , one cable in August 2008 recorded.
The oil firm said BP "enjoys the continued support and goodwill of the government and the people of Azerbaijan".
The oil firm said in a statement that: "BP continues to have a successful and mutually beneficial partnership with the government of Azerbaijan. This cooperation has produced and contunues to produce benefits to all parties involved and most importantly to the nation of Azerbaijan.  The Government of Azerbaijan has entrusted us with the development of its major oil and gas development projects on the basis of Production Sharing Agreements (PSAs) that are enacted as laws in Azerbaijan. The operatorship of PSAs of this scale and size  require cooperation and alignment between contractors and the Government.  BP in Azerbaijan enjoys  the continued support and goodwill of the Government and the people of Azerbaijan to meet its obligations. As part of maintaining this successful partnership we meet and discuss business related matters with relevant parties including our partners, SOCAR, and the Government. These discussions are confidential and as such we will maintain that confidentiality and not comment on specifics."

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15 December 2010 9:38PM
Interesting that when the Gulf spill was in full swing and BP was blundering away in its approaches to fix it not one US official mentioned anything along the lines of "again" or "happened before"... does the US govt. not read it's own cables? You would think it would be a likely thing to be mentioned... weird...

  • KingLudd
    15 December 2010 9:40PM
    It's a leak leak!
    Did you read how Shell in Nigeria was reluctant to talk about anything confidential with the US govt cos Shell said they were 'leaky'?
    Oh, the irony.
  • BarkingMad
    15 December 2010 9:41PM
    Drop, drip, drip. Im sure we will have people along shortly to tell us that they already knew all this and it's not surprising and we should instead go watch an X-Factor repeat whilst Wikileaks release something they can get really excited about, and then forget about. The cumulative effect of these reports however I feel are going to be telling in the long run.
    I hope it inspires journalists to rediscover investigative journalism and to stop being the mouthpieces for governments.
  • andrewfisk
    15 December 2010 9:43PM
    Oil companies have carte blanche. We have seen them arm militia, act like vultures once our governments have invaded countries and wreck environments.
    Removing our car dependency will go some way to cutting their throats.
  • icurahuman2
    15 December 2010 9:44PM
    The looming energy crunch seems to be behind the need to cut corners...With oil now trading in the US$90 range, while the U.S. economy is dragging itself along, god help us all should their economy suddenly "improve".
  • trevorgleet
    15 December 2010 9:49PM
    MrEurope 9:38
    Interesting that when the Gulf spill was in full swing and BP was blundering away in its approaches to fix it not one US official mentioned anything along the lines of "again" or "happened before"... does the US govt. not read it's own cables?
    Indeed. If there's anything more striking than the quality of information and insight US diplomats have evidently been sending home all these years, it's that despite 3M people having access to it, they don't seem to be capable of making intelligent use of it.
  • ozzydave
    15 December 2010 9:51PM
    To lose one platform may be regarded as a misfortune... to lose two seems like profit reigns over all else.
    apologies to Mr Wilde.
  • jeefberkey
    15 December 2010 9:52PM
    I'm on this forum where a load of Americans roam, they all seem to hate Julians guts. The propaganda machine in the US must be running over time.
  • Nodders
    15 December 2010 9:54PM
    Remember that US citizens are heavily bombarded with spin all day - most of them can't handle it bless 'em
  • PurpleMage
    15 December 2010 9:56PM
    Thank you guardian, this is just the sort of article I expected could result from the Wikileaks data.
    The third world has always been treated roughly by the Western Oil industry, and blackmail and pollution as well as low safety standards are always part of that.
    @icurahuman, i agree we are entering very dangerous times indeed for the ecology of the planet as oil companies try to reduce anti-polution standards to squeeze oil from the rocks.
  • Barnesy10
    15 December 2010 10:06PM
    Which US firm did BP contract to do the drilling in the Gulf of Mexico?
    Practically everyone within the UK oil industry understands that the US oil companies are not particularly happy with BP encroaching on their turf - via the acquisition of Amoco in 1998. The Gulf of Mexico crisis was the perfect opportunity to squeeze BP even though two US firms were also involved - in the drilling and the cementing - but these facts were rarely reported.
    BP are not blameless and I have little sympathy; but does the US governments zeal with which they went after BP have anything to do with their rights to drill for oil in certain parts of Alaska? Undertakings which didn't seem cost effective to certain US oil companies at the time; but now appear that they may bear fruit.
    As always, all is not what it seems.
  • dadric
    15 December 2010 10:13PM
    One is left with the impression that if you spilled a cup of coffee, many of you would be quick to blame the U.S.
    I'm on this forum where a load of Americans roam, they all seem to hate Julians guts. The propaganda machine in the US must be running over time.
    Interesting. Selection bias, perhaps? I don't know what forum you're at, so it's impossible to tell. All I know is that of the Americans I've discussed it with that have paid much attention to the situation, feelings on Assange himself are mixed, but most seem to disregard him as more of a distraction from the real issues; Wikileaks and the underlying speech and press concerns. Most of them have been relatively supportive of Wikileaks and would prefer that a few of our government officials chill out, as they're actually doing damage to the perception of America, whereas these cables haven't really said much either way about the US.
  • snix
    15 December 2010 10:19PM
    Corruption and fraud riddles the Governments,banks and large corporations.It has been this way since the piracy of the east india trading companies(dutch and british).
    The question is what can be done about it when it crosses all political divides.
    Voting is a joke and protesting will bring about martial law
    Purchasing power can harm large corporations however they are busy buying up all competition they can .The secret bailout from the fed which the first releases of accountability from the fed show went to many international banks and businesses aid that fraud.
    I am reminded of a verse in the bible .Ephesians CH6 12
    For we wrestle not against the flesh and blood,but against principalities,against powers,against the rulers of the darkness of this world,against spiritual wickedness in high places.
  • Atomiclock
    15 December 2010 10:20PM
    Assange officially labelled "enemy combatant" by American spokesperson in conversation with Bianca Jagger on BBC World Service Radio today.
    The real truth emerges...
  • LostintheUS
    15 December 2010 10:23PM
    Thank you WikiLeaks and Julian Assange.
    It was Halliburton that did the cement "job" on the Deepwater Horizon.
    This report is typical of BP. They are about the sloppiest of the mendacious oil companies.
    'S'cuse me, re Americans hating Julian Assange...who put up his bail? Which, by the way, the British court didn't honor apparently.
    As usual, stereotyping doesn't work. They only indicate lazy thinking.
  • Gunderic
    15 December 2010 10:23PM
    Replying to Barnesy10 15 December 2010 10:06PM
    Have you noticed how it's all gone quite regarding the blow out preventer. I believe it was taken to a NASA facility in Louisiana for examination. Odd how we haven't heard anything about it since then. Almost a news blackout.

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