In November 2024, climate advocates, government representatives, corporate executives, and oil and gas lobbyists will gather in Baku, Azerbaijan for the Twenty-Ninth Conference of the Parties (COP29) under the United Nations Framework Convention on Climate Change (UNFCCC).
With attention on Azerbaijan ahead of COP29, media should note that the host is a significant fossil fuel exporter. Major Western fossil fuel companies profit from the country’s oil and gas resources. Azerbaijan’s regime relies on revenues from hydrocarbons to fuel its gross human rights violations and current unprecedented crackdown on civil society. Azerbaijan’s energy policies, while claiming to be green, also exacerbate climate change.
This list of basic information on key players in the Azerbaijan fossil fuel industry, including Azerbaijani and Western companies, is not exhaustive; it reflects the most influential fossil fuel companies and rapidly emerging renewable energy companies in Azerbaijan. Though green energy in Azerbaijan is rapidly developing, the industry’s role in the energy sector has emerged as a greenwashing technique linked to the country’s official agenda to use renewable energy as a means to save natural gas for increased export capacity.
Representatives from Crude Accountability are available for interviews.
bp
bp has operated in Azerbaijan for 32 years, and its total investment in the country amounts to USD 35 billion, making it Azerbaijan’s largest foreign investor.
The company’s main assets are Azeri-Chirag-Deepwater Gunashli (ACG) and Shah Deniz fields, Sangachal and Ceyhan terminals, the Baku-Tbilisi Ceyhan (BTC) pipeline, South Caucasus Pipeline (SCP), and Jabrayil Solar PP.
Limited official environmental testing has been conducted near the Sangachal Terminal. Unofficially, villagers report significant flaring, smoke, breathing problems, and a negative impact on subsistence farming. Shah Deniz is connected to several explosions, including a July 2021 fire on the Caspian Sea. Azeri-Chirag-Guneshli Oil Field is the site of significant accidents resulting in worker deaths.
bp was accused of inaction in a corruption scandal involving SOCAR and its subsidiary related to bp’s Shah Deniz 2 project.
Jabrayil solar power plant will provide power to the Sangachal terminal, allowing bp to export more gas.
bp Azerbaijan profit for the 2022 financial year was USD 5 billion.
State Oil Company of Azerbaijan (SOCAR)
SOCAR is Azerbaijan’s state-owned oil and gas company with total assets of USD 42 billion as of Dec 31, 2023. It is Azerbaijan’s largest company and taxpayer. SOCAR has been criticized for receiving more from the state budget than it has contributed. SOCAR was accused of embezzling USD 1.7 billion.
LUKOIL
Lukoil-Azerbaijan was established in 1993. It holds a 19.99% share in the Shah Deniz field and is the third largest gas producer in Azerbaijan. Despite international sanctions against Russia, the company is projected to earn $7 billion over the next decade. Lukoil lent 1.5 billion dollars to SOCAR to allow its Turkish STAR refinery to process Russian crude oil, thus bypassing the sanctions.
TotalEnergies
TotalEnergies, a French multinational energy company, has been present in Azerbaijan since 1996. It owns 35% of the Absheron field and 5% of the Baku-Tbilisi Ceyhan (BTC) pipeline.
Equinor
Norway’s Equinor (formerly Statoil) invested in Azerbaijan for 30 years and divested from the projects it was involved in in December 2023. Equinor sold its 7% shares in Azeri-Chirag-Guneshli, 50% in Karabakh, and 8% in the Baku-Tbilisi-Ceyhan pipeline to SOCAR. As a result of the transaction, Equinor expects to lose between USD 300 and 400 million. According to the company, the official reason for divestment is to reshape the company’s international portfolio.
State Oil Fund of Azerbaijan (SOFAZ)
SOFAZ was established to transform hydrocarbon reserves into financial assets and safeguard and manage them for present and future generations of Azerbaijani citizens.
The Empty Bucket of the State Oil Fund of Azerbaijan: Profits and Profiteering report focuses on the economic, social, and political implications of Azerbaijan’s oil revenues over the past two decades. It pays particular attention to the operations of SOFAZ, established in 1999, to manage Azerbaijan’s oil wealth. The report highlights SOCAR’s shortcomings in meeting its stated goal of safeguarding oil wealth for Azerbaijan’s future.
European Bank for Reconstruction and Development (EBRD)
EBRD is the only international financial institution with a political mandate in Article 1 of its Establishing Agreement. Thus, development projects financed by the EBRD should also support market economies in the context of multi-party democracy and political pluralism.
EBRD has financed 190 projects in Azerbaijan and invested 3,714 billion euros in the country, including 893 million euros in current projects.
The institution’s investments include USD 500 million in the Southern Gas Corridor. EBRD also provided three loans to the Shah Deniz Stage 2 gas field (USD 200 million, USD 250 million, and USD 100 million). Crude Accountability filed a complaint to EBRD regarding Shah Deniz 2 due diligence and community rights violations.
EBRD began investing in renewable projects without conducting adequate due diligence. Two projects include the Alat Solar Power Plant and the Azerbaijan Kizhi-Absheron wind power plant. According to the EBRD and the government of Azerbaijan, the solar power plant will increase domestic gas for exports. The mentioned wind and solar power plants are co-financed by the Asian Development Bank.
Masdar
Masdar, or the Abu Dhabi Future Energy Company, is an Emirati state owned renewable energy company and the EBRD’s borrower in the Alat Solar Power Plant (SPP) project. The project raised greenwashing concerns because the energy from the SPP will not replace energy produced from natural gas but instead increase Azerbaijan’s export capacity of natural gas to Europe. The company plans to bring 10 GW of renewable energy to Azerbaijan. The following planned projects will be the Bilasuvar Solar Photovoltaic (PV) Project, the Neftchala Solar PV Project, and the Absheron-Garadagh Onshore Wind Project.
ACWA Power
ACWA Power is an emerging Saudi Arabian renewable energy company in Azerbaijan. It is a borrower at EBRD for its current Kizhi-Absheron Wind PP project. ACWA plans to realize up to 2.5 GW of Azerbaijan’s renewable energy capacity.
International Finance Corporation (IFC)
IFC—a member of the World Bank Group and the largest global investment institution–lent USD 250 million to the Baku-Tbilisi-Ceyhan pipeline. Since Azerbaijan became a member of the IFC, the corporation has invested around USD 500 million in the country.
Southern Gas Corridor (SGC) Company
SGC was established in 2014 by the state of Azerbaijan and SOCAR to consolidate, manage, and finance the Azerbaijan state’s interests in Shah Deniz (SD2), South Caucasus Pipeline Expansion (SCPX), Trans-Anatolian Pipeline (TANAP), and Trans Adriatic Pipeline (TAP) projects.
Azeri-Chirag-Guneshli (ACG) Shareholders
ACG is the largest oilfield in the Azerbaijani section of the Caspian Sea. It is the site of numerous accidents and a source of significant and frequent gas flaring. Over five years of monitoring ACG, the project accounts for over half the gross flaring from bp operations in Azerbaijan. Participating interests in ACG are bp (30.37%), SOCAR (25%), MOLGROUP (9.57%), INPEX (9.31%), Equinor (7.27%), ExxonMobil (6.97%), Turkiye Petrolleri (5.73%), ITOCHU (3.65%), ONGC VIDESH (2.31%).
Shah Deniz Shareholders
Shah Deniz is one of the world’s largest gas condensate fields and the largest gas discovery made by bp. Its capacity is around 10 billion cubic meters of gas annually. Several explosions took place on the Shah Deniz field, including a fire in the Caspian Sea in 2021. Gas from the field is transferred to the Sangachal terminal. Communities in close proximity to the terminal reported health harms and environmental concerns they believed were caused by the activities at the terminal. Shah Deniz participating interests are bp (29.99%), Southern Gas Corridor (21.02%), Lukoil (19.99%), Turkiye Petrolleri (19%), NICO (10%).
Disturbing Choice of the COP Host
COP29 is the third consecutive climate summit to be held in a country with significant oil reserves. Even as host of COP29, Azerbaijan has pledged to continue its dependence on fossil fuels. With fossil fuels making up 90% of the country’s exports, investments in oil and natural gas continue to expand. The alarming trend of holding major climate negotiations in a petrostate should give the world pause as we close in on the COP 29 meetings.