Winter 1998 (6.4)
Pages 93-95

AIOC: Current Developments

by Tamam Bayatly

AIOC's New President

On January 1, 1999, David Woodward became the fourth president of AIOC, succeeding John Leggate who will head one of British Petroleum's (BP) business units once the proposed merger with Amoco has been approved.
Woodward joined BP in 1970 as a petroleum engineer and has worked primarily outside the UK. He spent 11 years in the Middle East, including a period as general manager of the large consortium ADCO in Abu Dhabi where he succeeded Terry Adams, the founding president of AIOC.

"As Terry Adams' successor in ADCO, I built upon his legacy, especially in regard to training and developing the national staff," says Woodward. "At AIOC, training and developing national staff for key positions will also be a major priority."

Woodward's most recent assignment was in Moscow where he was responsible for exploration and production. Prior to that, he was senior vice president of BP Exploration in Alaska in charge of optimizing performance at Prudhoe Bay field that produced 800,000 barrels daily.

AIOC's new president has an MS degree in Physics and attended the Harvard Business School program for Management Development. He is a Chartered Engineer, a Member of the Institution of Mining and Metallurgy and a member of the Society of Petroleum Engineers. He is married with two children.

Left: Oil containment boom being deployed during an AIOC offshore oil spill response exercise.

Right: AIOC sponsored its Second Children's Mugham Festival (1998).

Main Export Pipeline
In its meeting on December 4, the Steering Committee reviewed the status report on progress associated with the selection of the route for the Main Export Pipeline (MEP). SOCAR and the Contractor Parties of AIOC continue to negotiate with the transit countries on the potential MEP routes. Both parties recognize that this is a complex but important process and that it will take time to find the best solution. SOCAR and the Contractor Parties each have a strong commitment to complete the ongoing negotiations and analyses so that a joint route selection can be agreed upon. The Steering Committee concluded that more time would be required to complete negotiations for the right solution.

Bob Erickson, AIOC Chief Operating Officer, said that "the decision regarding the MEP is critical and has a number of complex and interrelated issues. At the same time, the industry is forecasting that current low crude oil prices will continue for several years. Since our efforts are directed towards creating value that contributes to a prosperous future for Azerbaijan, it is critical that we weigh all alternatives and make the right decision."

John Leggate commented that, "AIOC appreciates the geopolitical sensitivities of the region. However, working to achieve short-term deadlines makes no sense in respect to the Main Export Pipeline that will operate for 30 years or more. There is a gap between geopolitical considerations and the reality of economics. Our goal is to bring these two factors together but this will take time. Progress is being made with the AIOC Contractor Parties now gaining a better realization of the political conditions in the region and politicians understanding the economic realities more fully."

Northern Pipeline-One Year
In October, AIOC celebrated one year of effective operation of the Baku-Novorossiysk Northern Pipeline system. The pipeline has operated with virtually no interruptions since October 25, 1997, when the first barrels of Azerbaijan oil were pumped across the border into the Russian segment of the pipeline. AIOC's first oil from Chirag crossed the Russia -Azerbaijan border on February 28, 1998.

Winners of the Young Scientist of the Year award with John Leggate (former AIOC President) and Academicians who were members of the selection committee. This award has become an annual event with AIOC.

The number of the Azerbaijan staff working on the Northern Pipeline has increased significantly since the pipeline has become operational. Some of them have been promoted to key management positions.

Meanwhile AIOC has worked closely with local authorities and the community in all eight Azerbaijan districts through which the pipeline passes. AIOC continues to sponsor programs, especially educational projects. Recently AIOC donated 400 new textbooks to the Shirvanovka Secondary School. AIOC has exported 2.5 million tons of crude oil via the Northern Pipeline including approximately 2 million tons of oil from Chirag. AIOC loaded 26 tanker loads of oil at Novorossiysk in 1998. (In addition, SOCAR's oil filled seven tankers).

Left: Einar Tressalt, AIOC VP of Health Safety and Environment projects, was recently awarded a gold medal by the International Ecoenergy Academy. Faramarz Maksudov, President of the Academy of Science presented the award.

Right: Faig Asgarov who has been promoted to the Environmental Manager as part of the AIOC Succession Planning Program.

Western Pipeline Route
On December 10, 1998, AIOC began filling its Western Route Export Pipeline (WREP). This pipeline, beginning at the Sangachal Terminal (near Baku) where new pumps as well as metering and control systems have been installed, extends to Supsa (Georgian port on the Black Sea). The WREP completes the Early Oil strategy by AIOC for crude oil export originating from the Chirag platform.

Natig Aliyev, President of SOCAR, and Gia Chanturiya, President of the Georgian International Oil Corporation (GIOC), pressed the button at Sangachal to begin pumping the oil into the pipeline. Guests included Zurab Gumberidze, Georgian Ambassador to Azerbaijan and Ahmad Zeynalov, SOCAR's VP of Construction. AIOC's management included VP of Oil Transportation John Hollis, Sangachal Terminal Manager Hikmet Islamov and Western Route Azerbaijan Project Manager Rick Harrelson.

Pumping this first supply of oil into the pipeline is a very significant milestone as it puts AIOC on track to deliver oil across the Georgian border by the end of this year and allows the first tanker to load up from Supsa in April 1999. The flexibility of having a second export route in addition to the Northern route will increase the reliability of delivering Azerbaijan's oil to Western markets.

At its peak, the WREP project employed more than 3,000 people, with Azerbaijani and Georgian nationals comprising more than 70 percent of the workforce. The principal construction contractors for the pipeline project in Azerbaijan, AZFEN-TEKFEN, achieved more than 2.6 million man-hours with no loss of time to injury.

Milestones
AIOC marked its fourth anniversary on December 12, 1998, celebrating the production of 2.35 million tons of oil. The Chirag platform currently produces 75,000 barrels (10,000 tons) per day from five production wells. Chirag's Well-7 is now operational, which will enable daily production volume to reach 90,000 barrels in a few weeks (12,200 tons), and Well-8 is being completed while Well-9 is being drilled.

Other AIOC Milestones

• Investment of $1.6 billion
  
• Sending four tankers per month to world markets
  
• Environmental and safety programs that meet world standards
  
• Completion of the Azerbaijani sector of the Western route
  
• Jobs and training for thousands of Azerbaijanis
  

Focus on Environmental Excellence
The AIOC-founded Caspian Environmental Laboratory provides environmental services in Azerbaijan to help the government and industry develop environmental standards geared specifically for the Caspian. AIOC has also contributed to the establishment of the Caspian Environmental Program whose administration center is currently being established in Baku. AIOC is now developing new Caspian toxicity procedures which will help the authorities to determine the level of the toxicity of chemicals used in oil industry-related activities offshore.

AIOC's Health, Safety and the Environment (HSE) projects also help raise environmental awareness in schools where young students are enthusiastic to learn about nature and ecology and take part in international environmental competitions. On November 14, 1998, Einar Tresselt, AIOC Vice-President, HSE, was awarded a gold medal by the International Ecoenergy Academy of Azerbaijan. The Academy gave the award "in recognition of his outstanding contribution to improvement of the environment of this country."

National Training
AIOC is committed to developing Azerbaijani staff and industry leaders. On November 1, 1998, Faig Asgarov was named the new Environmental Manager, taking the place of an expatriate. Prior to his promotion, Asgarov was the Environmental Coordinator. Salekh Rezazade became the second Azerbaijani to be promoted to a managerial position. At the end of December, he began heading the Permitting and Regulatory Affairs Department.
Oil Spill Training

AIOC held an exercise in September to train marine crews and the Briggs Marine Environmental Services Oil Spills Response Team in the use of equipment should an oil spill ever occur in the Caspian. The training took place offshore from AIOC's jetty at the SPS yard.

Drivers' Training
In November, Nikki Crowell, Manager of AIOC Administration, launched a campaign to draw attention to safe driving by presenting the first copies of AIOC's new Road Safety Handbook to the AIOC President, and his driver, Teymuraz Babayev. The handbook covers vehicle and driving standards and outlines a code of behavior to ensure safer driving.

AIOC is now launching a full campaign to ensure that everyone who drives on AIOC business, including contractors, adhere to the safest standards. AIOC's vehicles are also being put through comprehensive maintenance and inspection programs.

Children's Mugham Festival
On October 3, the final round of competition of the Second Children's Mugham (pronounced moo-GAHM) Festival was held in the Rashid Behbudov Song Theater. The concert featured the finalists of the traditional mugham competition held annually by AIOC. This year's event combined two major goals-first, to encourage and help the children of Azerbaijan maintain the traditional art of mugham performance and secondly, to honor Teachers' Day in Azerbaijan.

The Mugham Festival was the largest children's event ever to take place in Azerbaijan since independence (1991). Nearly 300 mugham and folk music performers under the age of 16 gathered from all parts of Azerbaijan for the competition. Most of the talented children were from displaced families [internal refugees] from war-occupied areas of Azerbaijan.

AIOC hopes to foster the rebirth of Azerbaijani national culture and encourage the children of Karabakh to maintain their identity despite the very difficult conditions.

The consortium is committed not only to produce and transport oil from the Caspian to world markets but also to act as a good corporate citizen, benefiting generations today and in the future.

Silk Route Art Exhibition
In early October, AIOC hosted an exhibition featuring artists' impressions of the Great Silk Route in the Vajiha Samadova Gallery at the Artists' Union. The artists were participants in the Fourth International Shaki Artists' Symposium which was sponsored by AIOC for the third time.

Each year, the Shaki Symposium invites about a dozen national and international artists who spend a month in Kish near the mountain town of Shaki exchanging experiences and interpreting scenes of nature. The untamed landscape and tranquility inspires the artists to explore their creativity. This year's 1999 calendar by AIOC is one of the results of this year's Shaki International Symposium.

Promoting Science
On October 8, AIOC held its second annual Young Scientist Award Competition. This annual event has become an important event in the scientific life of the Republic, supporting the development of young scientists and students of Azerbaijani universities. The competition is held in cooperation with the Ministry of Education, the Academy of Sciences, relevant research institutes and the Oil Academy.

Twelve winners (six young scientists and six students) were selected. The papers of the winners have been published by AIOC in a book entitled "Oil and Azerbaijan's Future."

AIOC's Anniversary Concert
To celebrate its fourth birthday within the Azerbaijan community, AIOC sponsored a concert on December 11 featuring the famous opera singers Lutfiyar Imanov (People's Artist of Azerbaijan) and Mukhtar Malikov (Honored Artist).

Children's New Year Celebration
AIOC hosted New Year Celebrations for about 1,200 children from various orphanages in and around Baku, including children of displaced families and Karabakh war victims. The children were treated to a cultural program and New Year's gifts. This is the third year AIOC has ushered in the New Year for hundreds of Azerbaijani children.

Tamam Bayatly is Media and Government Affairs Specialist, AIOC.

From Azerbaijan International (6.4) Winter 1998.
© Azerbaijan International 1998. All rights reserved.

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