.

For some weeks the Azerbaijani government prevaricated. The president wanted a large number of investors in order to protect the new state from Russian aggression, and he wanted to play the oil companies off against each other. Unusually, BP, Statoil, Amoco and the five other minor partners in the consortium remained united. Aliyev’s bluff was called. The country’s financial fate and his survival, he knew, depended on producing oil within four years. Even if oil remained at $15 a barrel, Azerbaijan’s income would be $100 billion over the field’s lifetime, a phenomenal windfall. The Azeri government blinked. The agreement, dubbed ‘the Billion Dollar Experiment’ by Exxon and ‘the Contract of the Century’ by Aliyev, justified a celebration. One thousand guests were invited to the signing ceremony and dinner on 20 September 1994 in Baku’s Gulistan Palace. The star guest would be John Browne. Others invited included William White, the US deputy secretary of energy, eagerly promoting Chevron’s and other American involvement in the region.

      Browne did not stay overnight in Baku, but left midway through the Azerbaijan government’s celebratory banquet following the signature of the ‘Contract of the Century’ to take his private jet back to London. ‘That was not good politics,’ President Aliyev later told BP’s local representative, who concurred with his view. Browne was unconcerned. A done deal meant moving on. The political settlement, he believed, was best executed by others: Aliyev would be invited to London in 1997 to meet Queen Elizabeth at Buckingham Palace. The local settlement between Azerbaijan, Russia and Turkey was delegated to Terry Adams, BP’s appointee to chair the consortium of 13 shareholders. ‘Without a pipeline there will be no development,’ said Adams, who had also advised against BP’s investment in Kazakhstan after anticipating Chevron’s problems with building a pipeline. While President Clinton unconvincingly posed as an ‘honest broker’, Adams chose to negotiate in Moscow. With the help of British diplomats, he successfully arranged in October 1995 to use the northern route pipeline through Russia to the Black Sea, and began planning a new pipeline, avoiding Russia, through Turkey to the Mediterranean. Piping Caspian oil and gas to Turkey became BP’s and Adams’s recurring problem. Ignoring the cost and the political complexities, President Clinton was determined to wrest control of Caspian oil from Moscow, regardless of the anger this aroused in the Kremlin. Turkey had become critical to the West’s strategic interests.

      In Washington, Bill White, the deputy secretary of energy, and Rosemarie Forsythe, the Caspian expert on the National Security Council, urged Clinton to adopt policies to divert the region’s oil to the West regardless of Russia’s historic links. Rejecting those who urged the administration to act generously towards Russia, Forsythe displayed petulant anger at Russia’s failure to provide a level playing field for Western oil companies. To outwit Moscow, she supported the construction of pipelines from Tengiz and Azerbaijan which bypassed Russia. Aggravating Moscow did not trouble Forsythe, who would be described as ‘Amoco’s ambassador to the NSC’. An alternative policy was advocated by Strobe Talbott, the president’s special envoy to Russia. To encourage Russia’s reformers to increase investment and to Westernise the country, he favoured a conciliatory approach. Securing Russia’s trust, he argued, would guarantee Russian oil supplies to the West over the long term. Forsythe rejected that measured approach. She was particularly irritated that ENI, the Italian energy company, seemed to enjoy favourable treatment compared to American oil companies. The Italian outsider had traditionally undercut the Seven Sisters’ cartel during the 1950s, first in Iran, and then in North Africa and Russia. Now, the Italians once again seemed to be exposing the oil majors’ vulnerability in the oil-producing nations. Clinton fought back. Unwilling to reconcile the contradictory policies among his staff, he pursued American interests regardless of the consequences during a meeting he and Al Gore held with Yeltsin soon after the signing ceremony in the Gulistan Palace. America’s oil companies, he told the Russian president, were entitled to Caspian oil. Resolutely, Yeltsin replied that the pipeline and Azerbaijan’s oil were Russia’s and not America’s interest.

      As proof of his influence, there was an outbreak of violence, murders and bomb blasts across Azerbaijan. President Clinton’s priority was to protect oil supplies, regardless of the background of those with whom he would have to deal to do so, and with American support Aliyev reasserted his authority. Clinton’s success encouraged the administration to further humiliate Russia. Seeking allies around the Caspian to separate the oil-rich countries from Russia and pipe their crude to the Mediterranean, Clinton and Gore encouraged Exxon, Chevron and other Western oil companies to act under the ‘shield of government’, blatantly antagonising Moscow. ‘Happiness is Multiple Pipelines’ read a bumper sticker handed out by American diplomats fizzing enthusiastically about ‘to the victor the spoils’.

      To transport Azerbaijan’s oil, Clinton had been urging BP to build the BTC pipeline from Baku to Ceyhan, a blue-water port on the Mediterranean, bypassing Russia. In Clinton’s opinion, completing the pipeline would put the seal on Russia’s defeat and American ascendancy in the region. BP refused the president’s entreaties until its technicians had determined whether Azerbaijan’s fields would yield five billion barrels, making it financially justifiable. That would not be established until 2001. BP’s experts would discover that the reservoirs were better than anticipated: they expected not five but 9.5 billion barrels of oil to lie beneath the Azeri seas, a true elephant.

      Clinton’s demands to build a pipeline for Kazakhstan’s oil would prove more difficult to fulfil. The ideal route to the Mediterranean, avoiding Russia, was through northern Iran. But American sanctions imposed in 1979 excluded that option. Classified as a rogue state, Iran, combined with Libya and Iraq, possessed 23 per cent of the world’s known oil reserves (923 billion barrels), but in 1996 contributed only about 6 per cent of global production (3.6 million barrels a day). The sanctions had proven to be counter-productive. Iran relied on oil for 90 per cent of its foreign earnings, yet was compelled to use 33 per cent of its production for domestic energy and to import electricity from Turkmenistan. In an attempt to relieve the nation’s poverty, the Iranian government was developing nuclear energy in order to release oil for exports, and was encouraging China to exchange nuclear and missile technology for oil. In 1997 Clinton was warned that China would increase its dependence on imported oil from 12 per cent in 1995–96 to 40 per cent by 2000, and would increasingly depend on Iran. That growth would inevitably impinge on America’s needs. Over half of America’s daily consumption of 18 million barrels of oil was imported, and about five million barrels came from the Gulf, which had 65 per cent of the world’s reserves. China’s increasing consumption of oil could be accommodated if Western oil companies were allowed to develop Iran’s natural gas fields in South Pars, an area bordering Qatar under 220 feet of water with an estimated 300 trillion cubic feet of gas and some oil. Initially, Clinton had agreed.