Análisis descriptivo Tabla 6

The topic of security risks is best understood as a category of risk that relates holistically to the broader array of risks already addressed. Due to the international (and sometimes geopolitical) importance of transboundary oil and gas pipelines, their security is important not only from the commercial perspective (ie, prevention

34 BOTAS is the wholly Turkish stated-owned oil and gas pipeline company that functioned as the lump-sum turnkey construction project management company and its subsidiary, BOTAS International, Ltd, now functions as the physical operator of Baku–Tbilisi–Ceyhan within the territory of the Republic of Turkey.

35 See Article VI of the Baku–Tbilisi–Ceyhan intergovernmental agreement.

of revenue disruption), but also from a local supply and physical and national security perspective.³⁶ Some developing country jurisdictions lack the manpower, resource and training to provide adequate physical security. Others place such a high degree of emphasis on physical security that other risks are created for local communities and pipeline owners and operators. In the case of Baku–Tbilisi–Ceyhan, both dimensions of government security were encountered and required careful management.

The Baku–Tbilisi–Ceyhan pipeline was constructed and now operates through a geopolitically fluid part of the world proximate to actual conflicts zones (eg, South Ossetia in Georgia, the Kurdish region of south-eastern Turkey and Nagorno Karabakh, and the frozen conflict zone between Azerbaijan and Armenia). In the case of Georgia, and to a certain extent Azerbaijan, government security services were inexperienced in providing adequate security to the pipeline. In the case of Turkey, government security providers are highly skilled and trained, but have a legacy (particularly among international human-rights civil society organisations) that raised concerns. Accordingly, what began to be understood in the context of Baku–Tbilisi–Ceyhan security was that the pipeline owners and operators needed to pay increasing attention not only to security risks posed to the pipeline but also to the risks which the security measures (and other project impacts such as environmental impacts, treatment of local landowners and ethnic groups, employment practices and delivery of tangible benefits to local communities) themselves posed. These risks can in turn exacerbate physical security risks to a pipeline project and are, therefore, best understood holistically. They can also give rise to areas of legal liability if not adequately understood and managed.³⁷

When considering the management of security risks, lawyers are well advised to pay careful attention to the Voluntary Principles on Security and Human Rights.³⁸ In the case of Baku–Tbilisi–Ceyhan, considerable attention was paid to security and human rights risks both by civil society organisations and by the international financing institutions. Accordingly, the BTC lawyers took steps to have the Voluntary Principles on Security and Human Rights formally incorporated into the prevailing legal regime via a Turkish-government-sponsored intergovernmental agreement, known as the Security Protocol. In addition BP, as operator of Baku–Tbilisi–Ceyhan, formally entered into detailed security protocols with the governments of Georgia and the Azerbaijan Republic to ensure that a broad spectrum of security risks were appropriately and periodically monitored and analysed. The Baku–Tbilisi–Ceyhan project ensures, through both internal and independent external monitoring processes, that its interface with public and private security providers takes careful account of the project’s impacts on people, communities and

36 Indeed, the Russian military action in South Ossetia and in the territory of Georgia (within close proximity to both the Baku–Tbilisi–Ceyhan, South Caucuses Gas Pipeline and Western Export Route Pipelines) in August 2008 were actions with geopolitical significance.

37 The US Alien Tort Claims Act has given rise to more than 60 civil actions against multinational companies for their actions in developing countries. The most frequent ground for such actions is the alleged complicity of the multinational company in the perpetration of human rights abuses against local community members impacted by a project, and abused by government security forces.

38 See www.voluntaryprinciples.org.

the environment and is taking steps to minimise these impacts with a view to reducing overall security risks.

4.9 Operations

As operations are the final (and longest) phase of any project, they also represent perhaps the key risk that will determine the success and long-term sustainability of any transboundary pipeline project. Many of the risks cited above remain throughout the life of a project, ebbing and flowing depending on the relevant stage of the project, the focus of activities at any given point, the state of the local economy, the political environment including regional dynamics, and a variety of other factors as they exist from time to time. Assuming the risks set out above have been adequately managed, what defines the sustainability of the project over its life?

The key areas ultimately determining sustainability are commercial and technical longevity and managing local impacts over the life of the project. As regards the fiscal and commercial risks noted above, which focus on the near-term feasibility of a project, a long-term view of the integrated commerciality of a project must be carefully planned, initially established and maintained. If circumstances change dramatically, there must be a recognition that sustainability risk has commensurately increased. This may need to be promptly acknowledged and addressed. Alternatively, it may be an issue over which a ‘watching brief’ is established. In any event, close scrutiny must be maintained over the original commercial trade and its effect on stakeholders over time. If the deal remains profitable for stakeholders across the investment and there is no significant change in the circumstances of those parties, then the chances are good that the project will remain commercially stable throughout its anticipated life. Technically, sustainability depends on solid, international-standard operations. With Baku–Tbilisi–Ceyhan, BP is the nominated operator and brings with it a wealth of applicable experience and trained resource.

Its expertise, coupled with a robust nationalisation programme, should underpin successful operations and long-term maintenance.

Finally, environmental and social impacts that have been carefully identified and sensitively managed during the development and construction phase of a project must also be treated with continuing care in order to ensure long-term sustainability.

Baku–Tbilisi–Ceyhan is fairly typical in the array of risks it attracts as a significant transborder infrastructure development. Further, the project developers were innovative in responding to those risks in an era not nearly as developed as that faced by today’s infrastructure developers. Thus, Baku–Tbilisi–Ceyhan’s identification of risks and mitigation techniques remains valid, but should be carefully examined through a lens informed by developments over the past decade.

The risks cited above also remain valid (and there are undoubtedly further variations on those elaborated above), but today’s developer or investor will be faced with empowered emerging states who will not only be full participants in, but also drivers of, the development process and will have initiated their own local or national solutions to those risks. Investors and those advising them will be required to be creative in dealing with perceived risks, and in some instances may be required to accept risk that in the BTC negotiation era was considered unacceptable.

5. Conclusions

With the current global economic downturn (and the dramatic fall in demand for oil and, therefore, oil prices), it would be natural to assume that there will be a slowdown in capital expenditure for upstream developments and associated infrastructure, including transboundary oil and gas pipelines. However, most upstream resources are now controlled by states and not the private sector, and we can assume that states will continue to forge access to markets for oil and gas. Indeed, without counter-cyclical investment, the chances that oil prices might well rebound and exceed the recent peaks reached in July 2008 are high. Accordingly, we would anticipate that transboundary pipeline developments will continue and that we will see still further developments by state companies in other jurisdictions, sometimes in partnership with other states, and frequently in partnership with the private sector. As these novel forms of partnership develop, the risks examined in this chapter will continue to change, and the degree of international and domestic regulation of these activities will evolve and become more comprehensive.

1. Introduction

Where a party holds an entitlement to develop natural gas reserves, it may commercialise such reserves in various ways. Typically, these include transporting the natural gas to an adjacent market via a pipeline, implementing a gas-to-liquids conversion project, using the natural gas as a feedstock for a local power-generation or petrochemicals project or developing a liquefied natural gas export project. As most of the world’s natural gas reserves are located in areas having insufficient domestic demand, many host countries are turning to liquefied natural gas (LNG) projects to monetise these otherwise stranded gas reserves. This chapter provides an introduction to LNG and outlines recent developments in the LNG sector.