The Oil Road

by James Marriott

  Within weeks of the Deepwater Horizon rig exploding, BP’s share price had fallen by 40. per cent. Its credit rating was downgraded, banks refused to lend the company money and suppliers demanded payment up-front and in cash.2 Staff morale at BP crashed. Employees shifted from a silent belief in the company to an off-the-record questioning of the board’s capabilities.

  On both sides of the Atlantic, public outrage grew at BP’s failure to respond adequately, its repeated downplaying of the disaster and its perceived arrogance. New campaigns demanded accountability and justice. Globally, protestors blockaded petrol station forecourts and company offices. In London, Greenpeace ‘rebranded’ BP, scaling the company’s headquarters and replacing the corporate flag with one that bore the words ‘British Polluters’. Liberate Tate mounted actions at the Tate Modern and Tate Britain, questioning why public bodies should take corporate sponsorship from the company. In Washington, senators stood up to the oil industry in a way rarely seen before, and President Barack Obama was caustic in his criticism of Tony Hayward, CEO of BP. The latter only exacerbated the situation with a series of infamous public relations gaffes.

  The Macondo disaster revealed not only the perilous nature of BP’s daily operations, but also the frailty of the entire company. Even after the corporation managed to secure renewed political backing from both the British and US governments, there was constant speculation in the financial sectors of London and New York that the company would not survive.

  With investors clamouring for reassurance, Hayward embarked on a whirlwind tour – to Moscow, Baku, Abu Dhabi and Luanda. Each visit consisted of a round of meetings in which the CEO tried to reassure governments key to the company’s future. In Baku, Hayward briefed staff in Villa Petrolea before meeting Ilham Aliyev. The Azeri president emerged from their discussions stressing the ‘successful long-term cooperation between BP and Azerbaijan’ and ‘confidence that this partnership will expand more in the future’.3 The two parties signed an agreement for the new Shafaq and Asiman offshore gas fields, committing themselves to a thirty-year project.

  In order to claw back the company’s credit rating and pull the share price up from the depths to which it had sunk, BP had to raise over $22 billion as quickly as possible. Demonstrating the severity of the crisis, oilfields and pipelines in Egypt, Colombia, Vietnam, Pakistan and Venezuela were sold off. In Azerbaijan, the company mortgaged its share of the output from the ACG field, setting it against a loan of $2.5 billion provided by the Royal Bank of Scotland (RBS).4

  At that, we halt this section of our story and guide our group along Moorgate and into Finsbury Circus. Dominated by the bare branches of tall plane trees, the square is sedate and away from the traffic. We arrive at an imposing office block of 1920s neo-classicism, Britannic House. Designed by Sir Edwin Lutyens and festooned with carved heads, some in Middle Eastern headscarves, this was the headquarters of the Anglo-Persian Oil Company and BP until 2003. It was in this building in 1932 that company chairman Basil Jackson fretted that the Soviets were undermining APOC’s European sales through cheap exports from Baku. Maurice Bridgeman, Maurice Banks and Alastair Down worked here in the 1960s and planned the expansion of refining and marketing that led to the financing of TAL and the Vohburg refinery.5

  We get the group to stand at the foot of the steps made of Portland stone, imagining the comings and goings of all the actors in the company’s drive into Azerbaijan: John Browne arriving as the new head of BP’s Exploration and Production division, bringing with him his lieutenant Tony Hayward; Rondo Fehlberg, reporting back with his findings from Moscow and Baku; all the presidents of BP Azerbaijan, from Terry Adams to David Woodward; and those from lesser ranks such as Şükran Çağlayan and Tamam Bayatly, reporting to head office.

  On the morning of 4 January 1999, John Browne, by then promoted to the position of BP’s chief executive, walked out onto these steps with Larry Fuller, the former head of Amoco – ‘former head’ because Amoco had just ceased to exist. The two men posed for the press, holding the new ‘BP Amoco’ logo that would replace the BP shield. Browne, rather shorter than Fuller, stood one step higher. This was a significant day for Azerbaijan. For the previous eight years, BP and Amoco had been the fiercest of rivals in Baku, competing with each other for key contracts. Now, the combined company became the undisputed master of the Western Caspian oil scene. The corporate merger announced on the steps of Britannic House dramatically weakened the hand of Azerbaijan. It also tied the foreign policy of Britain, the US and the EU closer still to BP. This building changed the Caucasus and the Caspian, yet the vast construction project has left no mark on this building; there is no plaque here to commemorate it.

  Had BP gone bust in summer 2010 as a result of the Deepwater Horizon disaster, its bankruptcy would have been accompanied by a sale of assets. Who would have purchased BP’s holding in the ACG oilfield, the BTC pipeline, the Shah Deniz gas field and the SCP pipeline? While BP was struggling, Russia’s Gazprom intimated that it was keen to buy the company’s share of Shah Deniz. Such a purchase might have meant that Azeri gas exports to Western Europe would fall under Russian control. Alternatively, if a Chinese national oil company had bought BP’s stake in Azeri oil production, could such an acquisition have led to the piping of crude eastwards, away from BTC? And even if they did not alter the material flows of the Oil Road, substantial Russian or Chinese investments in Azerbaijan would have redirected the flow of finance and politics, of profit and influence.

  Had BP declared bankruptcy, the sale of its tanker fleet, its percentage share of the TAL and AWP pipelines, or its stakes in Bayernoil and the Karlsruhe refinery, would have had a far smaller geopolitical significance than the sale of its Azeri assets. A shift of Azerbaijan into Moscow or Beijing’s sphere of influence is something governments in London, Washington, Berlin, Paris and Brussels are keen to avoid. The collapse of BP would have created a political earthquake in Azerbaijan, shaking the foundations of the Aliyev government.

  From the calm of the square, we lead the group towards Broadgate. The scene is busy with city workers carrying ipads, hurrying this way and that, the dark colours of their suits and skirts making the plaza a sombre place. By contrast, the melee in Liverpool Street Station is vibrant with colour. We pass through the crowds on the concourse and emerge into Bishopsgate. Immediately on our left lies the entrance of RBS. A walkway that runs along the front of the building is gloomy, but it shelters us from the cold wind of the street. Somewhere above us, the Oil and Gas division are hard at work. Perhaps Baba Abu, who received the notification of the drowning of Kubilay and Nurullah in the pipeline trench at Yaylacı, is here. Standing in the passageway, we explain that RBS is still in the Lender Group for BTC, that the loan agreements signed in February 2004 were set to last for twelve years. So the bank is still generating interest off this debt, which will not be fully repaid until 2016.6

  We point out the European Bank of Reconstruction and Development, occupying the same block of offices as RBS, just a little further along the walkway. We describe our meeting with Jeff Jeter when we came to speak with him about Mansura Ibishova’s home in Qarabork, how Manana and Mayis also visited bank officials here, and how Friends of the Earth built a mock pipeline running down Bishopsgate and back along to the headquarters of BP in Finsbury Circus to highlight the threat to Borjomi.

  It is a struggle to get our group through the crowds on the pavement of Bishopsgate. Beside us the traffic is, as so often, at a standstill. A lane has been closed off for building work again. Construction is constantly underway here, as another skyscraper rises up, driven by a property company working on the assumption that the City will keep growing as a centre of global finance. We stop at the unmarked place in the street where the Camp for Climate Action set up its tents during the G20 Summit of April 2009. The Credit Crunch had hit, and RBS and several other banks had been rescued from collapse with money from the state. Widespread public anger led to protests such as the Camp, which described a visio
n of an alternative future for the City – not as a hub for the world’s oil industry, but as a place where the limitations of the climate and needs of the planet’s population would be prioritised. Thousands had filled the streets outside the European Climate Exchange and the Bank of England, demanding that a better world was possible. Mehmet Ali was in the crowd that night. Frightened, penned in by the police, he was almost arrested, but yanked his arm away and ran. As evening set in, the riot police charged the crowd repeatedly, battering hundreds and killing Ian Tomlinson.

  We turn west and make our way to no. 33 Old Broad Street and the offices of the Lloyds Banking Group. This is where Rory Sullivan of Insight Investment told us in January 2009, prior to our journey, that the BTC pipeline was ‘finished now… it’s a done deal’. Three years on, Insight Investment has gone, sold by Lloyds to the Bank of New York Mellon. Along with 200 other staff, Rory was made redundant. We explain that this change echoes broader shifts in the financial industry, and suggests that the socially responsible investment sector is being particularly affected by the long recession that has followed the Credit Crunch.7

  Climbing on board a number 15 bus, we escape the hectic bustle of the City and head towards Trafalgar Square. Diesel exhaust issues from the back of the vehicle. In response to a question from one of our group, we explain that it is possible that this fuel was refined from crude extracted in the Caspian. Some of the tankers that depart from Ceyhan do deliver their loads to refineries such as Coryton in Essex or Fawley in Hampshire. But the amount of physical oil delivered to the UK from the Caspian is, and will remain, fairly insignificant. Rather than crude, it is financial and political capital that is extracted and transported to London.

  Sitting on the top floor of the bus, we get a good view of St Paul’s as we travel down Cannon Street. At the foot of the main steps to the Cathedral, some fifty tents are huddled tightly together. The Occupy London protest camp has survived much of the winter and is in the final throes of an eviction battle with the Corporation of London. The Occupy movement has been constantly criticised for failing to provide ‘answers’ or ‘solutions’ to the financial crisis, as if this was the only way to approach the problem. Despite this dismissal, it has sparked imagination and forced a renewed questioning of capitalism into the mainstream media.

  Recently, Liberate Tate began their latest unofficial performance here, ‘Floe Piece’. Four veiled figures dressed in black lifted a heavy chunk of polar ice, brought to London by an Arctic researcher, onto a sledge. Walking in silent procession, they carried the 55-kilo block across the Millennium Bridge and into the Tate Modern’s Turbine Hall. The frozen block was then left on the gallery floor to melt slowly, accompanied by a plaque with the performance title. The piece highlighted BP’s sponsorship of the Tate and the latter’s role in helping to build the profile of the company. But its intention was also to proclaim that a time is coming when it will no longer be publicly acceptable for so many of London’s cultural institutions to be sponsored by the oil industry – that a shift is taking place, that the metropolis is moving away from its long stasis as an oil city.

  Our group jumps off when the bus pulls up by Trafalgar Square. Large icicles are hanging from the fountains, and the basins are partially frozen over. Banners adorn the square. Egypt and Syria solidarity activists have joined to call for the downfall of long-lasting regimes. There are placards demanding that Britain drop Egypt’s debt and build support for the grassroots uprisings.

  Passing down Whitehall towards Westminster, the wide pavements are far easier than the City to navigate with the group. Civil servants dart in and out of the imposing building while tourists saunter past. After the frenzied construction on Bishopsgate, this avenue has an air of calm continuity, overlooked by statues of imperial figures such as Nelson and Earl Haig.

  Over the past hundred years, the buildings here – the Ministry of Defence, the Office of the Prime Minister, the Foreign and Commonwealth Office, the Treasury – have hosted many of the key scenes in the history of the Oil Road. From the government of the Marquess of Salisbury agreeing to the passage of kerosene through the Suez Canal to Lord Curzon’s deliberations over the British expeditionary force in the Caucasus; from the chancellor of the exchequer agreeing to BP’s investment in the refineries of Bavaria to the Foreign Office’s assistance to Mrs Thatcher’s visit to Baku. Behind the high gates of Downing Street and its heavily armed police, decisions were made that assisted the interests of oil companies and asserted Britain’s dominance over the energy resources of other countries.

  We round the corner of Parliament Square and stop outside Portcullis House, full of offices for members of parliament. Over the roar of the traffic on the Embankment, we tell of the World Bank’s plan to finance BTC and the popular campaign to stop the Department for International Development from supporting this move. We explain how civil servants were put on the back foot, and how the president of the bank rang John Browne, CEO of BP, at home, worried that the deal would not go through, as the decision went down to the wire. Battles like these show how the British government’s alliance with the oil corporations is repeatedly challenged. Behind this lies a deeper questioning of what role London should play in the world, and whether its long reign as an oil city is coming to a close.

  We guide the group across the road and down to the calm of Westminster Pier, jutting out into the River Thames. A passenger ferry soon arrives and we step aboard. Once we are heading downstream towards Greenwich, we close the morning’s exploration with a final story.

  In the wake of the fall of the Berlin Wall, as Azerbaijan, Georgia and other states asserted their independence, there was a wave of articles and discussions as to how the great, and seemingly eternal, monolith of the Soviet Union could suddenly melt into thin air. The German writer, Hans Magnus Enzensberger, wrote about the figure of President Gorbachev. He declared him to be a modern hero: ‘A hero of a new kind, representing not victory, conquest and triumph, but renunciation, reduction and dismantling.’8

  Enzensberger explained that the most difficult of all manoeuvres was retreat – the art of withdrawing from an untenable position. Gorbachev had assisted the process of withdrawing from the untenable structures of the Cold War, of two opposing nuclear armed blocs, and of Mutually Assured Destruction. The head of the USSR had understood that the only way forward was by retreating.

  He went on to write that the West must undertake ‘the most difficult retreat of all, from the war against the biosphere which we have been waging since the Industrial Revolution. Certain large industries – ultimately no less threatening than one-party rule – will have to be broken up’; that this task would require courage and conviction.

  On the boat there is something timeless about this winter day: the tide pouring out towards the sea; the brown river so unruffled, so unanxious, unstriving.

  We talk about the state of the Thames itself – one of the cleanest ex-industrial rivers in the world, with over 115 species of fish. The river is a metaphor of what can be done, and a reminder that things can change. A survey of the Lower Thames in 1957 found no sign of life except for eels, which can breathe at the surface of the water. Downstream of Tower Bridge, the river was entirely devoid of oxygen. Salmon had been extinct for over a century. The seventy miles of the tidal Thames had been given up for dead – a position of devastation. And yet a retreat in that war against the Thames has taken place, through a myriad of small and large acts. Some for the best of reasons and some not. The decline of industry on the banks of the river probably means that these factories have been transplanted to other, cheaper, less regulated places in the world.

  And yet a retreat has happened: the Thames has come back to life. We watch a flock of terns, brilliant white, flying over the Pool of London. We proclaim that we can retreat from our untenable position in the war against the biosphere and the atmosphere. With enough bravery, we can retreat from the Carbon Web and enable a different future for this city.

  A smart-ph
one is passed around the group. The screen shows a map with the current location of the Dugi Otok. Her position is indicated by a red arrowhead in the northern Adriatic, heading for Muggia. She is a climate bomb, partly commissioned by our city. We can defuse her.

  BIBLIOGRAPHY

  BOOKS

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  Amnesty International UK, Human Rights on the Line: The Baku–Tbilisi–Ceyhan Pipeline Project, 2003.

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  Bagiyev, Taleh, and Tale Heydarov, Azerbaijan: 100 Questions Answered, Anglo-Azerbaijani Youth Society (Baku), 2008.

  Bamberg, James, The History of British Petroleum Company, Vol 2: The Anglo-Iranian Years, 1928–1954, CUP, 1994.

  ———The History of British Petroleum, Vol. 3: The Challenge of Nationalism, 1950–1975, CUP, 2000.

  Barry, Andrew, Political Machines, Athlone Press, 2001.