Big Oil Comes Back To Baku

Natural History, March, 1999 by Mark Jacobson

International dealers have flocked back to post-Soviet Azerbaijan to cash in on its great store of Caspian Sea oil. The big question is when the Azeri people, including one million war refugees, will benefit.

THE TEMPLE OF CAPITAL The central Asian republic of Azerbaijan--with its venerable Mediterranean-style capital, Baku--has always been a crossroads, a place to pass through. At the margin of Europe and Asia, wedged between Russia and the Caucasus Mountains to the north and Iran to the south, Azerbaijan served historically as a key point on the trade route between the Caspian and Black Seas. A tramping ground for a murderer's row of conquerors (Cyrus the Great, Alexander the Great, Pompey, Genghis Khan, Tamerlane, and Peter and Catherine the Great are just a few who have sacked this place), and for seventy-one years a Soviet socialist republic, Azerbaijan is now hosting a reprise of what Rudyard Kipling once referred to as The Great Game: the nineteenth-century scramble by England, Russia, and other countries for geographic position in central Asia. Now a new breed of foreign presence--bearing the standards of Exxon, Chevron, Pennzoil, et al.--has arrived in Baku, seeking to conquer geology. The 5.5-million-year-old sand and clay sediments of the Middle Pliocene Productive Series of the Caspian Basin seabed have been determined to contain the earth's largest relatively accessible petroleum cache. In our hydrocarbon-addicted, forever consuming world, which many geologists believe has already used up more than half its oil reserves, the game--at least for now--is here.

Upward of $40 billion has been slated by various corporations for mining the underwater oil reserves of the Caspian Sea, but this figure is likely to go up, since littoral Caspian nations, such as Azerbaijan, Kazakhstan, and Turkmenistan are still very much in the "early oil" stage. Much remains to be settled. Arguments over whether the Caspian, the world's largest inland body of water, should be called a sea or a lake (an issue of huge legal and economic import for the littoral states, which will divvy up the potential oil bounty) have yet to be decided. Another bone of contention is pipeline politics--that is, how and by which route the prospective oil will be brought to gas guzzlers everywhere, once it is slurped up from beneath the Caspian's floor. Maps of the Caucasus region show numerous criss-crossing lines denoting various pipeline paths: working, nonworking, proposed, and discarded (see "Pipeline Politics," page 59).

The touchiest question of all is exactly how much oil lies under the choppy Caspian waters. Churlish petrol geologists put the hydrocarbon potential at a mere 75 billion barrels of crude (1 barrel = 42 U.S. gallons; 7.4 barrels = 1 ton), similar to the North Sea reserves. The government of Azerbaijan and international business sources, in a decidedly more glass-half-full mode, are fond of quoting U.S. Deputy Secretary of State Strobe Talbott, who gushes about there being at least 200 billion barrels, a bounty akin to a junior-league Kuwait. Until the well "drill strings" pierce the Caspian's sedimentary layers, no one will know for sure how "big" the sea will be; several sites on the Absheron ridge have proved disappointing or have yielded only gas, which is much more difficult to extract and more expensive to bring to market than oil. But suffice it to say that no impoverished, war-torn ex-Soviet republic ever attracted foreign investment by underestimating its oil reserves.

Oil--and its fire--have been a defining force in Azerbaijan for thousands of years. It was near here, in the Caucasus Mountains (said the ancient Greeks) that the Titan Prometheus stole fire from the gods for the use of mankind. The connection between fire and oil was made by the followers of the prophet Zoroaster, who was born in northern Iran (called South Azerbaijan by Azeri nationalists) nearly three thousand years ago. Postulating a dualistic universe overseen by opposing godheads of Light (Ahura Mazda) and Darkness (Ahriman), Zoroastrians saw fire as a sign of divine power and purity. In their fire temples, Zoroastrian priests, called magi, kept a flame permanently burning.

Then word came, from a place to the north (the Absheron Peninsula, site of Baku), of a magical black liquid that bubbled from the ground and burst into flame when hit by lightning. Once ignited, its fires (which were fed by surface-level oil and gas hydrocarbon deposits) would burn for years. Indeed, it seemed they would burn forever, thereby becoming what the magi imagined to be an eternal flame. For Zoroastrians, this made Azerbaijan--the home of the atesh adran, the oil-fed "fire of fires"--a holy place.

Other early travelers to take note of Baku's oil were of a more utilitarian mind. In the thirteenth century, Marco Polo, passing this way en route to the Far East, noted that a kind of "black gold," or neft, as it was called locally, was being extracted from the ground in the Absheron area. "One could load up to a hundred poods [a Russian measure equaling thirty-six pounds] of this neft at a time," the explorer reported. "It's inedible, but it can be burned or smeared on camels suffering from scabies and sores. People come here from afar for this oil, and it is burned all over the country." By 1479, when Venetian ambassador Iosafat Barbaro passed through, oil use had grown more sophisticated. Barbaro was amazed to find "a mountain which pours out this very stinking black oil which is used in lamps at night." Further progress was noted by the German physician Engelbert Kaempfer in 1683. By that time, there were hand-dug wells from which oil was extracted in sheepskin buckets raised and lowered by horse-drawn winches.