it all from inside out as part of the core leadership of a world superpower,” he said not long after taking power. He was now an Azeri nationalist. He was also a proven master of tactics and a brilliant strategist. He would use Azerbaijan’s oil potential to turn the country into a real nation, and to enlist key nations in support of its integrity, and, in the process of doing all of this, ensure his own primacy and control. But he also knew the Russians and the mentality of Moscow as well as anyone, and he understood clearly how to deal with the Russians and how far he could safely tread out on his own path.9
“THE DEAL OF THE CENTURY”
In September 1994, Aliyev assembled a host of diplomats and oil executives in the Gulistan Palace banquet hall in Baku for the signing of what he proclaimed the “deal of the century.” The signatories included ten oil companies—representing six different nations—that belonged to what was now the Azerbaijan International Operating Company (AIOC) plus the State Oil Company of Azerbaijan Republic (SOCAR), the Azeri state company. BP and Amoco were the dominant Western companies, but also, and of great significance, in the deal was Lukoil, the Russian company. Later the Japanese trading company Itochu joined the AIOC, bringing the number of national flags to seven. Given the complexities and uncertainties, some mumbled that a better sobriquet than “deal of the century” would be “Mission Impossible.” After all, how was this going to get done? And how was landlocked Azerbaijan ever going to get its oil to the world market? Yet as the CEO of one of the Western companies put it, “the oil had to go somewhere.”10
Moreover, even with Aliyev in power, the political situation was far from stable. Baku was under nightly curfew, and, shortly after the signing of the “deal of the century,” two of Aliyev’s closest aides were assassinated, including his security chief, to be followed by a failed military coup.
The object of the “deal of the century” was the huge Azeri-Chirag-Gunashli field (ACG) in the Aspheron trend, seventy-five miles offshore. It had been discovered prior to the collapse of the Soviet Union, but it was a mostly undeveloped project, and a very challenging one. Much of it had proved well beyond the technological capabilities of the Soviet oil industry. However, during Soviet times, development had started in a more shallow corner of the field, and if the platform could be successfully refurbished and upgraded to international standards, some early production would be possible. This would become known as Early Oil. It was desirable, because it would create an early income stream and, perhaps even more important, build confidence among the AIOC shareholders.
WHAT ROUTE FOR EARLY OIL?
But Early Oil was also highly contentious, for it would create a big and immediate problem. How to get the oil out? Once ashore, some of it could be shipped in railway tank cars, just as in the nineteenth century, but that was a limited and hardly satisfactory alternative.
The only obvious answer was a pipeline. And, with that answer, the Caspian Derby turned clamorous. By reversing directions, the oil could go north through the existing Russian pipeline system, which is of course exactly what the Russians wanted. But that would also have given Russia very considerable leverage over Azerbaijan’s economic and political fate, and the United States strenuously opposed it.
The other option for the Early Oil pipeline was to go west into Georgia and to the Black Sea, where tankers would pick up the oil and carry it through the Bosporus to the Mediterranean—a route that tracked what had been the main outlet for nineteenth-century Baku oil. But that would make Azerbaijan dependent on Georgia, which was wracked by separatist struggles and which had a very tense and uneasy relationship with Russia. This route would also be a great deal more expensive, entailing much more construction in difficult terrain. The AIOC was under great pressure to choose. The Azeris needed revenues ; the companies needed clarity. But the United States and Russia were at loggerheads. Yet something needed to be done. One way or the other, Early Oil was coming.
THE TWO-TRACK STRATEGY: “OFFEND NO ONE”
In a nondescript conference room in central London, some senior AIOC staff and a small group of oil and regional experts debated the choices—“Early Oil Goes North” and “Early Oil Goes West”—and the likely backlash to each. It was recognized that “an unequivocal choice in either direction would be