by Jon Mainwaring, Senior Editor, EMEA
Last month, my job took me to the Caspian Oil & Gas Conference in Baku, Azerbaijan. It was my first trip to the Caucasus and it was an opportunity to learn a little about what’s happening with the oil and gas industry in the Caspian Sea and the wider Central Asia region.
Baku is a city that has seen a lot of development on the back of Azerbaijan’s recent hydrocarbons-led economic boom, which began in the mid-90s when the country signed a deal to open up exploration and development to Western oil companies. Today, the skyline is dominated by the “Flame Towers”: three skyscrapers completed in 2012 that turn into huge LED-lit screens at night time in order to resemble fire. A walk along the promenade next to Baku Bay, or a visit to the cafes, bars and restaurants of the city’s historic Old Town, reveals that Baku is not just a town for foreign oil company workers and tourists, but one that is also seeing the development of an Azerbaijani middle class.
I saw further evidence of the development of a professional middle class in Azerbaijan thanks to meetings with Azeri engineers working not only for state-owned oil company SOCAR (State Oil Company of Azerbaijan Republic) but for Western firms such as BP plc. These companies have been investing much money into the education, training and development of Azeri nationals in order to provide them with the expertise they need to work in the oil and gas industry. Since 2006, SOCAR has sponsored hundreds of Azeri students studying at universities in the West, for example.
While I was in Baku the city was gearing up to host the first edition of the European Games. That the inaugural European Games were being held in Baku was seen as controversial by some media commentators in the West, who were concerned about what they see as an autocratic Azerbaijani government with a poor human rights record.
However, any advocate of realpolitik will know that it makes a lot of sense for the West – and Europe in particular – to continue to work closely with Azerbaijan in the light of recent Russian aggression towards neighbors that were once in Russia’s sphere of influence but which are now looking more towards the West.
In the 19th Century, and for the early part of the 20th Century, the British and Russian empires were engaged in the Great Game: the strategic struggle for supremacy in Central Asia as Russia’s expansion into the region threatened British India. Today, there is a new Great Game emerging in which Russia appears to be looking to use its energy wealth – particularly its natural gas supplies – as a way of exerting influence on its neighbors, while the European Union (the world’s largest market for natural gas) plans to get around Russia by achieving gas supply from Central Asia and the Middle East.
A major role will be played by TANAP (the Trans-Anatolian Natural Gas Pipeline) – a key component of the Southern Gas Corridor through which the EU plans to transport gas from the Caspian to Europe. Initially TANAP will transport gas produced by the Shah Deniz field in Azerbaijan to European markets via Bulgaria and Italy, but other countries in the Central Asia region like Turkmenistan and even Iran could also play a part in the project.
Of course, it would be wonderful if one day Azerbaijan could fully resemble a modern democratic society that is devoid of any autocracy or corruption. But I can’t think of one Western democracy that functions perfectly and, for now, Europe needs friends like Azerbaijan.