eia in the new oil and gas projects in azerbaijan – … · 2020. 7. 28. · barrels of proven oil...

EIA IN THE NEW OIL AND GAS PROJECTS IN AZERBAIJAN – COMPARISON WITH

BEST PRACTICE

by

Parviz Salimov

Thesis presented in part-fullfilment of the degree of Masters of Science in accordance with the regulations of the University of East Anglia

School of Environmental Sciences University of East Anglia University Plain Norwich NR4 7TJ May 2005

© 2005 Parviz Salimov

This copy of the dissertation has been supplied on the condition that anyone who consults it is understood to recognise that its copyright rests with the author and that no quotation from the dissertation, nor any information derived therefrom, may be published without the author’s prior written consent. Moreover, it is supplied on the understanding that it represents an internal University document and that neither the University nor the author are responsible for the factual or interpretive correctness of the dissertation.

ACKNOWLEDGEMENTS I would like to express my gratitude to Dick Cobb for his continuous advice during

the research and for his support during rather difficult period in my life that

unfortunately coincided with the dissertation time.

Sincere thanks to Alan Bond for understanding my circumstances and granting me

extra time for completion of the work.

Thanks to all people who were involved in the interviews and who responded to the

questionnaire.

I am also grateful to my 5-year old daughter Nigyar for her patience and for letting me

go so many times in the middle her important games.

i

ABSTRACT With the string of the multi-billion investments starting in the middle of the 1990s,

Azerbaijan with already long-history of the oil exploration and production, is once

more becoming an important region for oil and gas exploration production. Many

foreign oil companies signed Production Sharing Agreements (PSA) to explore and to

develop offshore and onshore oil and gas fields in Azerbaijan.

Hazardous nature of the exploration and production activities requires careful

planning around many aspects of oil and gas projects, including environmental. To

comply with the legislation as well as to help with the project decision-making,

Environmental Impact Assessment (EIA) has been applied in many New Oil and Gas

Projects (NOGP) in Azerbaijan between 1997-2004. Whether or not this application

followed the best practice was the objective of this research to study. This was

achieved through comparison of the current EIA practice for the NOGPs with the

evaluation criteria for the best practice EIA that was developed as part of the research.

Comparison was carried out for each main stage of the EIA process. In the course of

this comparison, the research was also able to review the current practice of the EIA

application in the NOGPs in Azerbaijan and to identify issues the process is faced

with at the moment.

The research identified that the EIA process in the NOGPs in Azerbaijan does not

fully meet the best practice criteria. The absence of clear and specific EIA legislation

was highlighted as a major drawback. There are also a number of issues identified in

the various stages of the EIA process such as Environmental Baseline Study (EBS),

the consideration of alternatives, the impact identification, public involvement and

EIA follow-up. However, the research also evidenced a number of good practices

such as involvement of the stakeholders into the scoping, set up of the dedicated web-

site for the communication of the environmental documentation for the oil and gas

projects. Overall, EIA for the NOGPs in Azerbaijan is evolving and the

recommendations made as part of this research will help with further improvement of

its application.

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TABLE OF CONTENTS

ACKNOWLEDGEMENTS ........................................................................................ I

ABSTRACT.................................................................................................................II

1. INTRODUCTION................................................................................................1

1.1. Environmental issues in oil and gas industry in Azerbaijan ..........................1 1.2. Exploration and production projects in oil and gas industry .........................2 1.3. Azerbaijan and oil and gas industry...............................................................3 1.4. Best practice EIA ...........................................................................................5 1.5. Evolution of the EIA system in Azerbaijan ...................................................8 1.6. Aims and objectives.....................................................................................10

2. METHODOLOGY ............................................................................................11

2.1. Preliminary interviews .................................................................................11 2.2. Literature review..........................................................................................11

2.2.1. Best practice EIA - literature review ...................................................11 2.2.2. EIA system in Azerbaijan ....................................................................13 2.2.3. Review of EISs for new oil and gas projects in Azerbaijan ................14

2.3. Evaluation criteria ........................................................................................14 2.4. Questionnaire ...............................................................................................16 2.5. Follow-up Interviews ...................................................................................17 2.6. Participants...................................................................................................17 2.7. Workshop on effectiveness of EIA system in Azerbaijan ...........................18 2.8. Limitations of the methodologies ................................................................19

3. RESULTS AND DISCUSSION ........................................................................21

3.1. Results of the questionnaire survey .............................................................21 3.2. EIA legislation .............................................................................................22

3.2.1. Overview of EIA legislation of Azerbaijan .........................................24 3.2.2. EIA Timing ..........................................................................................25

3.3. Screening......................................................................................................27 3.4. Scoping ........................................................................................................29 3.5. Consideration of alternatives .......................................................................30 3.6. Environmental Baseline Study.....................................................................35 3.7. Impact identification and evaluation............................................................37 3.8. Public involvement ......................................................................................39 3.9. EIA reporting ...............................................................................................43 3.10. Mitigation measures and monitoring .......................................................44

4. CONCLUSION ..................................................................................................47

4.1. Comparison with the best practice - summary.............................................47 4.2. Final conclusion ...........................................................................................49

REFERENCES...........................................................................................................50

APPENDIX 1 – NEW OIL AND GAS PROJECTS IN AZERBAIJAN...............55

APPENDIX 2 - QUESTIONNAIRE.........................................................................58

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1. INTRODUCTION

1.1. Environmental issues in oil and gas industry in Azerbaijan

Depending on the characteristics and the environment, oil and gas projects could

create many environmental impacts. They include human, socio-economic, cultural,

atmospheric, aquatic, terrestrial and biosphere impacts. (Exploration and Production

Forum (E&P Forum) and United Nations Environment Programme (UNEP), 1997).

In Azerbaijan, years of neglect in oil and gas industry during Soviet Union have left

the environment onshore and offshore in a deteriorating condition. Oil and gas

extraction, along with transportation and industrial production, has been the source of

severe air, water, and soil pollution in Azerbaijan. Many abandoned oil production

fields has left behind vast areas of wasteland, with standing oil ponds, rusty derricks,

poisoned soil and water, pools of oil scum, uncontrolled well fires and severely

contaminated soil (Energy Information Administration of United States (EIA-US),

2004). The rise of the Caspian Sea level in recent years has exacerbated the problem

by flooding existing and abandoned oil wells. As some of the wells have not been

abandoned and sealed properly, it is difficult to accurately estimate the extent of

seepage from oil wells in the sea (Caspian Environmental Programmer (CEP), 2001).

The long history of contamination, combined with present economic pressures to

produce more oil could worsen the situation with environment in Azerbaijan (EIA-

US, 2004). However there is a hope that the involvement of Western energy

companies using more modern technology should result in an improvement in the way

oil and gas is extracted in Azerbaijan. Drilling and production from new offshore

fields developed by international oil companies and follow generally acceptable

standards (CEP, 2001). The legacy of negative environmental performance in

developing the oil and gas fields in Azerbaijan in the past puts even more pressure on

Foreign Oil Companies (FOC) to ensure adequate environmental performance while

developing the new oil and gas fields nowadays.

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The FOCs brought with them practice of application of Environmental Impact

Assessment (EIA) to the New Oil and Gas Projects (NOGP) in Azerbaijan. As result,

many EIAs have been carried out for the NOGPs in 1997-2004. The use of EIA, EMS

in their “classic” western model by FOCs helps with the integration of such tools into

the oil and gas industry in Azerbaijan. By carrying out EIA for exploration drilling or

production development projects, the FOCs also increase the level of EIA experience

and knowledge in the country amongst local scientists and consultants.

1.2. Exploration and production projects in oil and gas industry

The oil and gas industry has a big scope and include range of activities starting from

exploration and production, through transportation of oil and gas and ending with

refining and petrochemicals.

While Azerbaijan has a spectrum of oil and gas activities, this research concentrates

on exploration, production and transportation projects developed by the FOCs during

period of 1997-2004 when Azerbaijan has experienced the biggest level of

investments within short period of time. The scope of those projects could be shortly

described as follows:

• OIL AND GAS DEVELOPMENT—OFFSHORE

This category includes exploration, development and production of offshore oil and

gas projects. Major development phases include the initial geophysical surveys of

broad regions to identify exploration targets, drilling wells from ships or temporary

platforms to test likely targets, spaced development drilling from fixed production

platforms, and construction of the transportation and processing infrastructure.

Transport is usually by pipeline, occasionally by barge or tanker, to shore-based

refineries and/or gas processing facilities (World Bank, 1999).

• OIL AND GAS DEVELOPMENT—ONSHORE

This category includes prospecting, exploration, development and production of

onshore oil and gas resources. Production facilities include wells and pumps spaced

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over the field, gathering and transportation lines, storage tanks, and some primary

processing units (World Bank, 1999).

• OIL AND GAS PIPELINES

Oil and gas pipeline projects include the construction and operation of offshore,

nearshore and/or overland pipelines. They can range in length from several kilometers

to hundreds of kilometers. Overland and nearshore pipelines are generally buried.

Offshore pipelines are generally located on the seafloor in waters as deep as 350 to

450 meters, but subsea pipelines have been laid below 1,500 meters in special cases

(World Bank, 1999).

1.3. Azerbaijan and oil and gas industry Azerbaijan Republic (see map in figure 1.1) is the country in the South Caucasus that

regained its independence in 1991 after the collapse of the Soviet Union. The country

has a territory of 86,000 square kilometres and population of eight million.

Azerbaijan

remarked o

of daily life

By the 19th

industry. In

Figure 1.1: Map of the Azerbaijan Republic (Encyclopaedia Britannica, 1998)

has been linked with oil for centuries. Medieval travellers to the region

n its abundant supply of oil, noting that this resource was an integral part

there (Mir-Babayev, 2002).

century, Azerbaijan was by far the frontrunner in the world's oil and gas

1846 - more than a decade before the Americans made their famous

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discovery of oil in Pennsylvania - Azerbaijan drilled its first oil well in Bibi-Heybat.

By the beginning of the 20th century, Azerbaijan was producing more than half of the

world's supply of oil (Mir-Babayev, 2002).

In 1920, when the Soviet Army captured Azerbaijan, all private property - including

oil wells and factories - was confiscated. After that, the Republic's entire oil industry

was directed toward the purposes of the Soviet Union, including a tremendous output

of oil for the World War II effort (Mir-Babayev, 2002).

At present, oil and gas is a major industrial sector in Azerbaijan, accounting for more

than 70% of the total industrial output in the country (State Statistical Committee of

Azerbaijan Republic (SSCAR), 2003). Overall, crude oil production has been

increasing since the late 1990s because of foreign investment and new technologies

and oil accounted for about 90% of total export from Azerbaijan in 2001 (SSCAR,

2003). More than 80% of the oil production of Azerbaijan is now from offshore fields

in the Caspian Sea. Azerbaijan presently has in the range of four and thirteen billion

barrels of proven oil reserves (EIA-US, 2004). Oil production is projected to peak

between one and half and two million barrels per day between the years 2010 and

2015 (US Embassy in Baku, 2000). Azerbaijan has in the range of 11-30 trillion

cubic feet (Tcf) of proven natural gas reserves (EIA-US, 2004). However, there is

insufficient infrastructure to move associated gas from many of the Caspian offshore

oil fields and some of it is being flared.

The development of oil and gas fields is a key to Azerbaijan’s economic future. Since

middle of the 1990s, Azerbaijan attracted significant amount of investments into the

development and exploration projects in oil and gas industry. Azerbaijan has since

signed 22 major Production Sharing Agreements (PSA) involving about 33 FOCs,

resulting in more than four billion US dollars billion investment in Azerbaijan's oil

sub-sector (Azerbaijan International, 2002).

Within last 10 years, almost all new major oil and gas contracts in Azerbaijan have

been functioning under the legal provision of PSA. The PSA is a contractual

agreement between Contractor Party (normally, foreign oil companies) and

Azerbaijan Government (normally represented by State Oil Company of Azerbaijan

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Republic (SOCAR) for exploration or development of oil and gas fields. The PSAs

for the NOGPs in Azerbaijan get ratified by Milli Majlis (the National Parliament).

After ratification by the parliament, PSA constitute a law of Azerbaijan Republic and

takes precedence over any other current or future law, decree or administrative order

of the Azerbaijan Republic. This way a Contracting Party (i.e. FOC) enjoy the super-

domestic legislative status that PSA provide them (EIA-US, 2005).

The biggest project in Azerbaijan at the moment is the development of Azeri, Chirag

and Deep-water Gunashli (ACG) fields that is undertaken by the consortium of FOCs

Azerbaijan International Operating Company (AIOC). There are other large projects

like the development of offshore Shah Deniz (SD) gas field, construction of the Baku-

Tbilisi-Ceyhan (BTC) and South Caucasus (SCP) pipelines in Azerbaijan.

The projects developed by FOCs during 1997-2004 in Azerbaijan under the term of

conditions of PSA are the subject of this research and are referred as the New Oil and

Gas Projects in this thesis. The detailed list of these projects that include offshore and

onshore developments, offshore exploration and onshore rehabilitation projects, are

provided in Appendix 1.

1.4. Best practice EIA EIA is defined as a process of identifying, predicting, evaluating, and mitigating the

biophysical, social, and other relevant effects of proposed projects and physical

activities prior to major decisions and commitments being made (Sadler, 1996). The

main purpose of EIA is to facilitate sound, integrated decision making in which

environmental considerations are explicitly included. The EIA process is also directed

toward achieving or supporting ultimate goals of environmental protection and

sustainable development (Sadler, 1996).

EIA process for oil and gas projects should begin during the early planning stage and

continue, as an iterative process, throughout project feasibility and specification

phases, detailed design, construction and operations (E&P Forum/UNEP, 1997). If

EIA is integrated well into the project planning, many potential environmental

5

impacts can be mitigated or removed with proper design considerations. Well-

integrated EIA should also pick up any changes into the project specification and re-

assess them as appropriate.

In order to be successful in achieving a real shift in the weight given to the

environmental decisions, the EIA procedure needs to interact positively with its

jurisdictional context (Wood, 2003). Environmental assessment should have a clear

legislative mandate and provisions vested in law, have specific and enforceable

requirements (Sadler, 1996). Although this is more relevant to overall EIA system on

a country level, the provision for clear EIA legislation and compliance with it is

considered to be essential for the best practice EIA.

There are many projects that could be subject to EIA. Without screening, the large

number of actions would be assessed unnecessarily and/or actions with significant

adverse impacts would not be assessed (Wood, 2003). Although oil and gas projects

normally qualify for the EIA, the screening process is not always clear in case of

major modification to the projects that had already been subject to EIA process.

Scoping is important to focus the EIA on the most important issues, eliminating

irrelevant impacts but making sure that indirect and secondary issues are not missed

(Wood, 2003). The scoping is also an important because it enables the limited

resources of the team preparing an EIA to be allocated to best effect, and prevents

misunderstanding between the parties concerned about the information required in an

EIS (Glasson et al., 2001). Scoping establishes the framework of approach in the EIA

process (Sadler, 1996). It is also important how the scoping is carried out during EIA

and if the appropriate stakeholders are involved into the process. Good practice would

be to bring the stakeholders together in a working group or meetings with the

developer (Glasson et al., 2001).

EIA process should address design, locational, and technological alternatives to the

proposal (Sadler, 1996). The comparative analysis of alternatives should be a

thorough, systematic and documented process involving all stakeholders and utilising

a “solid platform of evaluation criteria” (Marriott, 1997). The consideration of

alternatives is often called “the heart of the environmental impact statement” (Glasson

6

et al., 2001). The important aspect during the consideration of alternatives in oil and

gas projects is the timing when it is carried out to influence the concept and design. It

is also important to involve the interested parties in this stage of the EIA to ensure that

“best practical environmental option” is selected in the end taking all applicable views

into account.

Environmental Baselines Study (EBS) is normally integral component of the EIA. It is

important that it takes place at early stage of the EIA process to be able to understand

all sensitivities relevant to the project (Glasson et al., 2001). The EBS covers both the

present and likely future state of the environment, assuming that a proposed project is

not undertaken, taking into account changes resulting from other human activities

(Glasson et al., 2001). The EBS components should include both the biophysical and

socio-economic environment.

The oil and gas projects quite often are massive undertakings in terms of scale and

resources involved. Therefore it is sometimes difficult to understand a full extent of

all environmental impacts associated with projects. However, for the EIA process to

follow the best practice, it is important to capture all significant actions in the project

and assess their impacts on the environment (Wood, 2003). The best practice EIA

should result in accurate and appropriate assessment of predicted environmental

impact based on the nature, likely magnitude, and significance of potential effects,

risks, and consequences of a proposed undertaking and alternatives (Sadler, 1996).

The determination of significance during impact evaluation should be objective, based

on scientific and credible technical and other relevant information (Sadler, 1996).

The EIA report (or EIS) is the face of the EIA process (Wood, 2003). The EIA report

should be comprehensive and meet the prescribed requirements, as minimum. The

EIA should be kept as brief as possible while still presenting the necessary

information (Glasson et al., 2001). The EIA report should document clearly and

impartially impacts of the proposal, the proposed measures for mitigation, the

significance of effects, and the concerns of the interested public and the communities

affected by the proposal (International Association for Impact Assessment (IAIA),

1999).

7

The EIA process normally gets finalised by recommending various mitigation

measures and monitoring actions for the project execution stage. For oil and gas

projects, it is usually a combination of one-off actions and the actions for the life of

the project. These recommendations are useful only insofar as they are implemented

(World Bank, 1995). It is important for the projects to implement these

recommendations, and it is equally important to establish a feedback process between

implementation stage and the actual EIA to enable verification of predictions made

during the EIA process. Best practice EIA should provide a basis for follow-up

requirements that are based on the significance of potential effects, and on the

uncertainties associated with prediction and mitigation (Sadler, 1996). The feedback

process also represent an opportunity to learn from experience how EIA practice

might be improved in the future (World Bank, 1995).

One of the objectives of the best practice EIA process should be improvement of the

quality of environmental decisions, which many believe could not be achieved

without obtaining the views of people most likely to be affected by the project

(Woods, 2003). The effective public consultation enhances development process and

increases local ownership of projects (World Bank, 1995). Early integration of public

values, views and perceptions into the EIA process helps project proponent in

achieving ultimate successful and non-contentious development of the project.

1.5. Evolution of the EIA system in Azerbaijan As in most of the Former Soviet Union (FSU) countries, the EIA system that

developed in Azerbaijan took off in a direction that was different from “classic” EIA.

EIA in the FSU countries is based on a procedure developed in the 1980s called State

Environmental Review (SER). In a SER, expert committees review or appraise

projects or plans. The process is mandatory not only for concrete development

projects, but also for strategic developments, e.g., virtually all land-use and sector

plans, federal and regional programs and polices, and new products and technologies

(World Bank, 2002).

8

Another procedure developed in the FSU is OVOS (Otsenka Vozdeistvia na

Okrujaiusciu Sredu, which means “assessment of environmental impacts”) that

described the environmental effects of the proposed project and the anticipated

mitigation measures. The two processes combined are referred to as SER/OVOS and

are the FSU analogue to the classical EIA (Cherp, 2000).

There are a number of significant differences between the classic and FSU EIA

systems (World Bank, 2002):

• SER/OVOS uses much broader screening criteria that results in almost all

projects requiring a SER.

• SER/OVOS is dominated by the state in reviewing and decision-making.

• SER/OVOS has a relative lack of transparency and public participation.

The main legislative document in Azerbaijan, stating SER as the main EA procedure,

is the Law on Environmental Protection which is not a specific EIA-related legislative

document (Caucasus Environmental NGO Network (CENN), 2004). As in former

Soviet legislation, this law provides the economic activities with certain limits for

using natural resources rather than mechanisms to achieve minimal environmental

impacts through preventive and mitigation measures (CENN, 2004).

At the same time, EIA handbook issued in April 1996 (United Nations Development

Programme (UNDP), 1996) was the first formal EIA provision in Azerbaijan

outlining a “classic” EIA procedure (Bektashi & Cherp, 2002). However, the Law of

Azerbaijan Republic on Environmental Protection that was developed in 1999 still

reiterates SER as the central part of the national environmental assessment system.

Although this law was developed and came into the force when EIA handbook was

already in place, it did not reference “classic” EIA elements mentioned in the

handbook. Despite experience gained in the previous years of application, since issues

the EIA handbook has not been revised. The former State Committee of Ecology

(SCE) attempted to revise the EIA Handbook, but its abolishment and formation a

new Ministry of Environment and Natural Resources (MENR) delayed this initiative.

9

The introduction of EIA in its “classic” form in 1996 coincided with the start of the

development of many NOGPs by FOCs in Azerbaijan. Currently, EIA practice in

Azerbaijan is largely associated with projects in the oil and gas sector (Bektashi &

Cherp, 2002).

1.6. Aims and objectives The overall objective of this research is to compare the EIA practice in the NOGPs in

Azerbaijan with best practice EIA. This will be achieved through review and analysis

of main stages of the EIA process in the NOGPs in Azerbaijan and comparison with

the best practice EIA evaluation criteria developed as part of this research.

Due to the potential of oil and gas project to create significant environmental impacts,

but at the same time, because of a great importance of oil industry for future growth

and sustainable development of the country, it is important that EIA process is applied

in the best practical way during the development of the NOGPs in Azerbaijan. This is

important for EIA to add value, to be efficient and to achieve its ultimate goal of

aiding decision-making process by assessing “the impact of planned activity on the

environment” (United Nations Economic Committee, 1991).

The specific aims of the research are as follows:

• To study the current practice for main stages of the EIA process in the NOGPs

in Azerbaijan;

• To evaluate the extent by which the current EIA practice for the NOGPs in

Azerbaijan compared with the best practice EIA practice;

• To identify the issues that the EIA process for the NOGPs are currently faced

with in Azerbaijan;

• Make recommendations on further improvements and strengthening EIA

process for the NOGPs in Azerbaijan.

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2. METHODOLOGY This chapter describes the combination of methods used by this research to achieve its

aims and objectives. Preliminary interviews and literature review were used as a basis

for development of best practice EIA evaluation criteria and for the questionnaire to

conduct the survey. Follow-up interviews were carried out for further investigation of

particular areas of the EIA process. The results of literature review, the questionnaire

and the interviews have then been used to compare the EIA application in the NOGPs

in Azerbaijan with the best practice EIA evaluation criteria.

2.1. Preliminary interviews There were around 15 preliminary interviews conducted with the EIA specialists,

scientists and Non-Governmental Organisations (NGO) representatives during

December 2003 – April 2004 in Baku, Azerbaijan. The main purpose of the

preliminary interviews, which were carried out as general discussion rather than

interview, was to have an initial understanding of issues in the EIA process for the

NOGPs in Azerbaijan. The interviewees were asked to share their general opinion

about EIA process for the NOGPs and about main issues in that process.

2.2. Literature review The literature review as part of this research was focused on the following main

subjects:

1) Best practice EIA

2) EIA system in Azerbaijan

3) Review of EISs for the NOGPs in Azerbaijan

2.2.1. Best practice EIA - literature review The number of literature sources have been reviewed in order to establish evaluation

criteria for this study. While there is a considerable amount of literature about EIA,

not many of those sources specifically studied best practice in EIA.

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In comparative review of EIA systems of various developed countries, Wood (2003)

established evaluation criteria that could be treated as best practice evaluation criteria

of the EIA systems. He suggests that evaluative framework could be constructed by

analysing the extent to which various principles are met by EIA systems. However, his

evaluation criteria primarily aim to assess EIA legislation and requirements in various

developed countries, when this study concentrates on EIA application in the particular

industrial sector. His evaluation criteria are also developed for more in depth analysis

of EIA systems that is not practically possible within restricted scope of this MSc

research. This research examines the current practice of EIA application in the

NOGPs in Azerbaijan and compares this practice with the high level evaluation

criteria developed based on the main EIA principles. However, stage-by-stage

approach in analysing the EIA system and many elements of the criteria developed by

Wood (2003) were used as a benchmark in developing the best practice evaluation

criteria for this research. This includes criteria to assess EIA legislation, consideration

of alternatives, impact assessment, EIA report requirements.

The most specific source referring to the best practice EIA that was identified during

the literature review was IAIA’s “Principles of Environmental Impact Assessment

Best Practice”. The document was developed as a result of recognition “the need for

principles of, and guidance on, impact assessment in response to an emerging interest

in international standards”. The principles were described as “broad, generic and non-

prescriptive”. Due to the limitations of the MSc research to conduct in-depth study on

the EIA application in oil and gas projects in Azerbaijan, these principles were

deemed quite applicable to use as a basis in developing the evaluation criteria for this

study. IAIA identifies principles of EIA best practice and outlines EIA operating

principles. These operating principles have also been referenced by UNEP in EIA

Training Resource Manual (Sadler & McCabe, 2002).

There were also some other articles about the best practice in various stages of the

EIA process that have also been looked into. J. Art et al. (2001) summarised good

practice in EIA follow-up based on the results of IAIA’s workshop on this subject in

2000. The case studies from Hong Kong, Canada and Netherlands discussed in that

12

paper highlighted the importance various key aspects for future directions for EIA

follow-up as a good practice.

2.2.2. EIA system in Azerbaijan There is obvious lack of literature about EIA in Azerbaijan. This is most likely due to

the EIA being relatively new subject for environmental scientists and practitioners to

research in the country. Nevertheless, several articles and research papers that directly

or indirectly discuss EIA in Azerbaijan were analysed during the research.

Perhaps, the only literature source that is directly aimed at studying and discussing

current EIA system in Azerbaijan is “EIA in Azerbaijan” article by Bektashi & Cherp,

published in Impact Assessment and Project Appraisal journal in 2002. The article

looked into the EIA system in Azerbaijan overall by investigating each stage of the

EIA process, concentrating on provision of legislative framework. Although the study

is generalised on a country level, not on a particular industry, it is only strictly EIA

study in Azerbaijan that has been found and used during this research.

CENN commissioned a regional study with support from European Subsidy Program

for Environmental Cooperation and the Netherlands Commission for Environmental

Impact Assessment. The literature review for this research reviewed the draft report

on Assessment of Effectiveness of EIA system in Azerbaijan that was published by

CENN as part of the regional study.

Other publications related to the EIA system in Eastern Europe and Central Asia that

contain some information about EIA in Azerbaijan also have been looked into during

the research. These include publications by World Bank, Central European

University, etc. These sources cover many common themes and issues in EIA system

in Newly Independent States (NIS) of the FSU that includes Azerbaijan too.

The research also reviewed Azerbaijan’s environmental legislation, including

provision for EIA as part of it. The environmental sections of PSAs and Host

Governmental Agreements (HGA) for some of NOGPs have been analysed to

13

understand requirements for EIA in those projects. The following main legislation

sources were reviewed:

1) EIA handbook, (SCE/UNEP, 1996)

2) The Law on Environmental Protection (Azerbaijan Republic,1999)

3) ACG PSA (Azerbaijan Republic,1994)

4) Shah Deniz PSA (Azerbaijan Republic,1996)

5) BTC HGA (Azerbaijan Republic, 2000)

2.2.3. Review of EISs for new oil and gas projects in Azerbaijan There have been many EISs prepared by NOGPs in Azerbaijan. However, not all of

them are easy to access for review. This research managed to review EISs for the

following projects:

1) Early Oil Project of ACG (AIOC, 1997)

2) Shah Deniz Stage 1 (BP, 2001)

3) BTC pipeline, Azerbaijan section (BTC, 2002)

4) ACG Phase 1 (BP, 2001)

5) ACG Phase 2 (AIOC, 2003)

6) ACG Phase 3 (AIOC, 2004)

2.3. Evaluation criteria The evaluation criteria for the research were developed based on the results of the

preliminary interviews and the literature review. Table 2.1 outlines criteria and also

show the references to the literature sources used while developing it

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Table 2.1: Best practice evaluation criteria EIA process Woods EIA system

evaluation criteria Principles of EIA best practice, Operating Principles, IAIA

EIA in Azerbaijan, Bektashi, Cherp evaluation criteria

Evaluation criteria for this study

EIA legislation Asks the question if the EIA system is based on clear and specific legal provisions

Does not contain any requirement on compliance with EIA legislation

Studies legal provisions for EIA systems in Azerbaijan

Clear and specific legal provision for EIA for the NOGPs in Azerbaijan

Screening Screening of all actions for environmental significance take place

EIA process should provide for screening to determine whether or not a proposal should be subject to EIA and, if so, at what level of detail.

Investigates screeningrequirements in EIA system in Azerbaijan

Screening the NOGPs take place

Scoping Scoping of theenvironmental impacts of actions take place

EIA process should provide for scoping to identify the issues and impacts that are likely to be important and to establish terms of reference for EIA.

Examines scopingrequirements in EIA system in Azerbaijan

Scoping of the NOGPs take place

Consideration of alternatives

Evidence of theconsideration of alternatives must be demonstrated by the proponent

EIA process should provide for an examination of alternatives to establish the preferred or most environmentally sound and benign option for achieving proposal objectives.

Analyses the consideration of alternatives in EIA system in Azerbaijan

Proponents demonstrate evidence of consideration of alternatives options for the NOGPs

EBS Does not contain a specific evaluation criteria for baseline study stage of the EIA process

Does not contain a specific evaluation criteria for baselines study

Does not analyse the baseline study in EIA system in Azerbaijan

Baseline environmental conditions are studied and integrated into EIA process

Impact identification and evaluation

The relevant impacts of all significant actions be assessed

EIA process should provide for impact analysis to identify and predict the likely environmental, social and other related effects of the proposal.

Does not analyse impact assessment in EIA system in Azerbaijan

Relevant environmental impacts of all significant actions have been assessed

Public involvement

EIA reports must be publicly reviewed

EIA process should provide for provide for the involvement and input of communities and industries affected by a proposal, as well as the interested public

Analyses provisions for public review of EIA reports, public consultation and participation in EIA system in Azerbaijan

Provision for public review of EIA review, public consultation and participation have been followed by the project proponents

EIA reporting EIA reports must meet prescribed contentrequirements

EIA process should provide for preparation of environmental impact statement (EIS) or report to document clearly and impartially impacts of the proposal, the proposed measures for mitigation, the significance of effects, and the concerns of the interested public and the communities affected by the proposal.

Analyses the EIA report content requirements

EIA reports meet prescribed requirements

Mitigations measures and monitoring

The mitigation of action impacts must be considered and the monitoring of action impacts must be undertaken

EIA process should provide for: mitigation and impact management to establish the measures that are necessary to avoid, minimize or offset predicted adverse impacts and, where appropriate, follow-up to monitor the impacts of development and the effectiveness of mitigation measures

Analyses the monitoring requirements and follow-up in EIA system of Azerbaijan

Clear provision for monitoring requirements and follow-up during project execution

15

The comparison is made for each stage of the EIA process. How an evaluation criterion is

met is presented using “yes”, “partially” or “no” as a result of comparison.

Although the evaluation criteria cover all main stages of the EIA process, they are very

broad. Therefore, as well as using the main evaluation criteria as a basis for comparison,

there were a set of evaluation factors (table 2.2) developed under each criterion to be able to

delve into and investigate potential issues EIA process is experiencing in the NOGPs in

Azerbaijan. The selection of these factors was primarily based on the preliminary

interviews held at the beginning of the research. The evaluation factors were also used to

devise the questionnaire that was used to conduct the survey as part of this research. Table 2.2 Evaluation factors

Evaluation criteria for this study Evaluation factors Clear and specific legal provision for EIA for the NOGPs in Azerbaijan

EIA requirements in PSAs versus EIA handbook Compliance with EIA timing


Screening for the major modification to NOGPs that have already been subject to EIA Methodologies used during screening

Scoping of the NOGPs take place Compliance with the legislative requirements for scoping Public participation during thescoping Communication of the results of scoping


Timing of the consideration of alternatives take place during the EIA process in oil and gas projects in Azerbaijan Extent of the impact of the consideration of alternatives on oil and gas projects Involvement of the interested parties during the consideration of alternatives


Integration of the baseline studies into the EIA process Methodologies used during the EBS in the NOGPs Communication of the EBS results externally

Relevant environmental impacts of all significant actions have been assessed

Consideration and evaluation of all environmental impacts from all project stages in the EIA process


Extent of the public participation Public disclosure of EIA Influence of public opinion on decision making


Guidelines used by oil and gas companies to define EIA report requirements

Clear provision for monitoring requirements and follow-up during project execution

Implementation of the mitigation and monitoring actions at the project execution stage Communication of the monitoring results

2.4. Questionnaire

16

The study used a questionnaire that was sent to respondents by e-mail. The questionnaire

consisted of 34 questions in total. The questions were developed based on the results of the

preliminary interviews and the evaluation factors developed based on those interviews. The

main purpose of the questionnaire was to gather information on the EIA process for oil and

gas projects in the new oil and gas projects in Azerbaijan. The questionnaire contained

multiple choice questions and closed questions allowing “Yes”, “No” or “Don’t know”

answers. Some multiple choice questions also allowed respondents to comment further as

necessary. The questionnaire was split into eight sections and covered all main stages of

EIA process.

The estimated time for completion was 15 minutes. The questionnaire was accompanied by

a cover letter that explained the purpose of the research and provided some guidance to

respondents how to fill it in. The cover letter also indicated the anonymity of the survey.

The copy of the questionnaire is attached in Appendix 2.

2.5. Follow-up Interviews There were four interviews carried out following the receipt of the responses to the

questionnaire. The purpose of the interviews were to follow-up on the results of the

questionnaire and also understand the current practice for few more areas of EIA process in

oil and gas projects in Azerbaijan that were deemed important for comparison with the

evaluation criteria. These areas were as follows:

• EIA legislation

• EIA timing

• Impact Assessment

• EIA reporting

2.6. Participants The participants for preliminary interviews, questionnaire survey and follow-up interviews

were selected amongst environmental specialists that have been involved with EIA process

for the NOGPs in Azerbaijan within last seven years. The respondents were selected from

17

several organisations to avoid potential biased views and to reflect difference in opinions.

The respondents were from the following organisations:

1) Oil and gas companies

2) Environmental consultancies

3) Regulator

4) Non-governmental organisations (NGO)

5) Lending Institutions

Three out of four follow-up interviews were carried out amongst the same people who

responded to the questionnaire (see table 2.3). One interview was done with an EIA

specialist from one of the oil and gas projects in Azerbaijan who did not initially participate

in the survey with questionnaire. All interviewees had more than five years of experience

with EIAs for the oil and gas projects in Azerbaijan.

Table 2.3: List of interviewees for the follow-up interviews

Location Organisation

Interviewee #1 Baku, Azerbaijan Oil and Gas company

Interviewee #2 UK Environmental Consultant

Interviewee #3 Baku, Azerbaijan Oil and Gas company

Interviewee #4 UK Independent scientist

2.7. Workshop on effectiveness of EIA system in Azerbaijan CENN organised a workshop in Baku on Effectiveness of EIA System in Azerbaijan, as

part of the regional study in the South Caucasus states. The workshop took place in January

2004 in Baku, involving representatives of the MENR, Milli Majlis, NGOs, oil and gas

companies, scientists and environmental consultancies. The subject of the workshop was

related to this study and therefore it was attended in order to understand the objectives of

the research conducted by CENN as well as to gather up-to-date information about the EIA

system in Azerbaijan.

18

2.8. Limitations of the methodologies There is a sizable scope for further research into many particular aspects of the EIA process

in the NOGPs in Azerbaijan. This research was kept on fairly high level as the objective of

the study was to carry out overall review of the EIA process in the NOGPs in Azerbaijan

based on the best practice EIA evaluation criteria. In addition, the limited scope of the MSc

dissertation did not allow for more detailed analysis of the various issues in the EIA process

for the NOGPs.

The research was not able to conduct more detailed legislation review, particularly on

PSAs, that are important legal source as far as the EIA process in Azerbaijan is concerned.

This was partially because many PSAs were not available through Internet or libraries.

Another limiting factor was the number of EIA specialists in the country who were

involved with the NOGPs in Azerbaijan. Although the research covers the last seven year

period, the number of people involved into the EIA process for the NOGPs was limited. It

was possible to involve considerable number of out of those people into the survey and the

interviews. However, there were not many people amongst participants with the experience

of the EIAs in early NOGPs in Azerbaijan, i.e. 1997-1999.

There is a limited literature specifically related to the EIA process in Azerbaijan. This is

partially to do with the EIA being comparatively new process in the country and also with

the limited number of people studying this particular subject in the country.

There was also logistical difficulty experienced during the research. Although the research

started in Azerbaijan, but move to London in June 2004 created geographical constraint to

engage NGO community into the survey because only means of communication was an e-

mail through third party network. Obviously, if the research had taken place in Azerbaijan,

there would have been better chances of having face-to-face meetings or interviews with

some other interested parties including NGOs and scientists that no doubt would have

positively contributed to the research.

19

It was also difficult to gain an access to the EISs in Azerbaijan. Although EISs for the

major projects such as ACG, SD are published on Internet, there are a number of other EISs

that are not available through that route. They could only be obtained from the oil and gas

companies in Azerbaijan or in the libraries in Baku that do not normally lend them.

Although the questionnaire survey included people who were involved into many of those

EIAs, review of more EISs could have helped the study.

20

3. RESULTS AND DISCUSSION

3.1. Results of the questionnaire survey The response rate to the questionnaire was generally good. 16 out of 20 respondents have

completed and submitted the questionnaire. The only group that was not active in

responding to the questionnaire was NGOs. Although Regional Environmental Centre

(REC) Caucasus distribution list that covers many NGOs in Azerbaijan has been used to

disseminate the questionnaire to the maximum number of NGOs, there was no response

back. The questionnaire was translated into Russian to ensure that non-English speakers

could also respond to the questionnaire. Most likely explanation to that is that the

environmental NGOs in Azerbaijan are not generally active in comparison to NGOs in

western countries. Some of these organisations often have limited information on the EIA

process in general and in Azerbaijan in particular.

The first section of the questionnaire was to establish the experience of the respondents in

EIA projects for oil and gas developments in Azerbaijan.

024

68

1012

1416

Pre 1997 1997-1999 2000- 2001 2001-2002 2002-2003 2003-2004

Number of respondents

Figure 3.1: Number of respondents involved with EIA.

The response demonstrated gradual increase in a number of respondent involved in EIAs

between 1997 and 2004 (figure 3.1). That is explained by the increase in a number of

21

NOGPs over the same period. Six respondents indicated that they were involved with one

to three EIAs, the same number of respondents indicated three to ten EIAs and four

respondents selected more than 10 EIAs answer. This demonstrated that the respondents

had a good experience in EIAs for the NOGPs in Azerbaijan.

Most respondents (15) were involved with offshore NOGPs, when 13 were also involved

with onshore and 11 with pipeline projects.

The roles of the respondents in the EIA process varied (figure 3.2). The roles primarily

depend on which organization respondents represent (e.g. oil and gas company,

environmental consultancy).

Number of respondents (out of 16 total)

4

5

10

12

Stakeholder reviews andconsultationsEIA project management

EIA preparation

EIA review (both officialand unofficial)

Figure 3.2: Role of the respondents in EIA

3.2. EIA legislation The examination of ACG and SD PSAs demonstrates that they contain requirements for

carrying out EIAs. These requirements are largely based on a “classic” EIA model and

contain specific references to key stages of EIA such as baseline study, consideration of

alternatives, monitoring, although there is no explicit requirement for public participation.

The PSA’s make a reference to Contractor Parties complying with all present and future

Azeri laws and regulations with regards to the protection and restoration of the

environment. PSAs contain the further provision that the foregoing obligations applies only

22

to the extent that the Azeri laws and regulations are no more stringent than those standards

currently in place in the International Petroleum Industry.

Although the PSAs contain specific environmental standards, they set a precedence of a

superior law, when the Contracting Party do not have to comply with any other active

environmental legislation in the country and thus could create some problems. For example,

while reviewing EIAs for the seismic data acquisition offshore by Elf in Lenkoran-Talysh-

Deniz and by Agip in Kurdashi blocks, the specialists of the former SCE decided that in

order to avoid misjudgement, it is necessary to conduct further specific studies to

understand the impact of the seismic acquisition project in the Caspian that would require

extra time and resources and could have impacted the project schedule as committed in

already ratified PSAs (Gelman, 2000). Although this problem was resolved through

compromise between former SCE and the above-mentioned oil companies, it revealed an

issue when the superiority of PSAs could jeopardise proper decision-making process during

EIA process.

All but one interviewee during follow-up interviews said that PSAs and HGAs for pipeline

projects were primary source of compliance as far as environmental aspects and EIA

requirements are concerned. BTC HGA also requires oil and gas companies demonstrate

compliance with European Union (EU) Environmental Directives that is quite unique for

the oil and gas projects in Azerbaijan. This is primarily due to the presence of large number

of external lending agencies from EU involved in financing of the pipelines projects in

Azerbaijan. According to the follow-up interviews, although the projects do not currently

consider the national environmental legislation as compliance criteria, the approval of EIAs

by MENR establishes compliance framework including environmental standards that a

particular oil and gas project should adhere to. As MENR is an environmental regulatory

authority in Azerbaijan, the commitments and standards included in EIA become a primary

source for environmental compliance on the national level.

According to the follow-up interviews, international standards still form a basis for

compliance requirements in EIAs. The absence of applicable design, construction and

operation environmental standards in the current environmental legislation is given as a

main reason. PSAs providing a choice of applying international standards versus national

23

ones create precedence where the government has no incentive to develop environmental

standards specific to the oil and gas industry in Azerbaijan.

The research also identified some ambiguity in defining the status of the EIA handbook as

legislation source. Bektashi & Cherp (2002) states that though the EIA handbook is

considered as “mandatory guidelines” by the MENR, the document clearly lacks the

authority of a legislative act. Cherp indicates that Azerbaijan has no national EA legislation

(Cherp, 2001).

CENN report (2004) on EIA effectiveness in Azerbaijan also states that the EIA handbook

has not yet received an official status of a legislative act in the country. However, when that

report was presented in the workshop organised by CENN in January 2004 in Baku, the

representative of Milli Majlis disagreed with this result, making reference to the various

sections of the Law on Environmental Protection of Azerbaijan Republic that, according to

him, allow MENR to produce normative acts regulating particular issues for environmental

protection and management in Azerbaijan Republic. And according to him, the EIA

handbook is normative document. Therefore, the EIA handbook has a full legally binding

force in Azerbaijan. The representative of MENR and few NGO representatives also agreed

with this statement.

Nevertheless, Law on Environmental Protection was enacted in 1999, after the EIA

handbook had been issued, but still failed to address EIA process specifically and still refers

to the old Soviet system of State Environmental Expertise.

3.2.1. Overview of EIA legislation of Azerbaijan In order to understand the current EIA legislation for the NOGPs in Azerbaijan better, table

3.1 was developed to demonstrate how the EIA Handbook and EIA requirements in PSAs

in Azerbaijan relate to the stages of “classic” EIA process.

24

Table 3.1: Comparison of EIA legislation

EIA Handbook Production Sharing Agreements Screening No clear screening criteria, however

developer is required to submit application to determine if EIA is required

No requirement

Scoping Requirement for Scoping Meeting involving NGOs and interested parties as well as experts Provides a guidance on expected content of EIA document

Some PSAs contain (ACG, BTC HGA) contain specific requirements on EIA content

Baseline studies

Requires EBS as part of EIA document Some PSAs contain a requirement to carry out EBS (ACG, BTC HGA)

Consideration of alternatives

Requires to include the description and assessment of all the potential adverse environmental impacts of the proposed activity

Not explicitly. However, ACG PSAs contain requirements for technology assessment and cost-benefit analysis.

Description of impact assessment

Requires the developer to include the description and assessment of all potential adverse environmental impacts of the proposed activity

ACG PSA, SD and BTC HGA contain specific requirements for impact evaluation. SD PSA does not have this requirement.

EIA report requirements

Requires the EIA report to describe the proposed development, the environment likely to be affected by this development, and to identify potential impacts and suggest ways to minimise these impacts (Paragraph 3.2.2)

No specific requirement

Public participation

Requires informing public about the planned activities. Reviewing authority and project proponent are expected to seek the advice and opinion of the affected parties, including general public and NGOs

ACG and SD PSAs – no requirement BTC and SD HGAs contain specific section (Appendix 3, Section 3.9, (iii)) with the detailed procedure for EIA public review and comments.

Monitoring The Developer is responsible for continuous compliance with the conditions of EIA approval through a monitoring programme. The Developer is responsible for notifying the Environmental Authority and taking necessary measures to mitigate any inconsistencies with the conditions of the EIA approval.

BTC and SD HGAs contain a requirement to implement and to report the results of the mitigation and monitoring activities, as per EIA approval. (Appendix 3, section 3.11) ACG PSA states that the Contractor shall conduct ongoing environmental monitoring of its operations. (Article 26.4. (a)) SD PSA – has no explicit requirement, although has a requirement to develop the field-specific Environmental Standards with an assumption of further monitoring.

3.2.2. EIA Timing As per the definition, EIA should be carried out “prior to major decisions being taken and

commitments made” (Sadler, 1996). The literature review of publicly available sources has

revealed some inconsistencies in following this fundamental practice in carrying out EIA.

ACG Phase 1 project was internally approved by the project proponent in September 2001

(BP, 2005) when the approval of the MENR for the Environmental and Social Impact

Assessment (ESIA) for the project was received only in February 2002. The similar

inconsistency was revealed for the ACG Phase 2 development when the project was

25

internally approved by the project proponent in September 2002 when the ESIA approval

for the project by the MENR was granted in 2003. Although it is likely that these ESIAs

have influenced the projects during various stages of the decision-making, sanctioning

project by the operator before the final verdict by the regulator is clearly not the best

practice EIA application.

The research further elaborated on this issue during the follow-up interviews and the

interviewees were asked the following two questions:

1) Have EISs been approved by the regulator before the actual start of the project?

2) Have EISs been approved before the internal sanction by the proponent?

It was interesting that although almost all interviewees gave a confident positive answer to

the first question, they either could not answer the second question or they answered that

some projects had been sanctioned before the EIA approval was secured. The approval of

EIA versus the project start and the internal sanction varied from project to project. Some

followed best practice of obtaining EIA approval before making key decisions with regards

to the development, when some did not, following internal project management model as

they did not see the absence of EIA approval to be a big problem. At the same time, there

seems to be a conflict between the project management model employed by oil and gas

companies and the requirements by MENR with regards to the level of details in EIA

reports at submission. As highlighted by one of the interviewees, usually MENR requires

much more details in the EIA report than it is possible to provide at the stage when the

company is prepared to make key decisions about the projects as per the internal project

delivery model.

Comparison with the best practice

The NOGPs in Azerbaijan are developed within legal framework of PSAs that include EIA

requirements. However superior status of PSAs provides project proponents with immunity

against national environmental legislation that sometimes create problem for the authorities

while reviewing EIAs. The ambiguous interpretation of the EIA handbook status causes

confusion with regards to its legislative power. The research also revealed negative practice

in the industry when the key decisions in the NOGPs are made before the final EIA

26

approval is obtained. All foregoing suggests that the NOGPs in Azerbaijan are not provided

with clear and specific EIA legislation at the moment and this does not meet the best

practice evaluation criterion.

3.3. Screening The EIA handbook in Azerbaijan does not specifically refer to this stage of the EIA process

as screening, although has a procedure in place to do that (EIA Handbook, section 2.5).

This provides a basis for screening process as an initial stage of an EIA process in

Azerbaijan. As per that procedure, almost all NOGPs require EIA. However, it is not clear

if this approach to screening is also applied in case of major modifications for the existing

oil and gas facilities. Although section 2.1 of the EIA handbook says that “the EIA process

is applied to all development proposals in principle”, there is no definition what

development means and if the modifications/changes to the existing facilities should also go

through EIA process. It is often the case that oil and gas facilities go through modifications

that usually involve significant changes in the operating conditions without involving any

new construction or design. This may subsequently also change situation with the

environmental impact of the project.

The questionnaire asked three questions, specifically focused on the screening process with

regards to the major modifications to the NOGPs.

Most of the respondents (eight) who have been involved with the screening and the scoping

as part of the EIA process indicated that they referred to the international EIA guidelines,

internal company requirements and consultation with the EIA regulators during screening.

Two respondents additionally indicated that the previous experience of other oil and gas

operators in the country were also used.

In terms of approach used during the screening, six respondents selected “case-by-case”

approach as a method for screening, one respondent selected thresholds and two

respondents indicated both approaches were used.

27

In addition, two respondents gave more elaborated and specific answers with regards to the

methods used for the screening of the major modifications in NOGPs in Azerbaijan:

• comparison of predicted modifications, their impacts, emissions and discharges

against the original EIA project description and predictions;

• review of the sensitivity of the receiving environment ;

• consideration of the possible reputation profile of the modification;

• consideration of the socio-economic and social impact of the project;

• consideration of the age of the original ESIA;

Many FOCs that operate in Azerbaijan are international companies with the experience of

conducting oil and gas exploration activities around the globe. Apart from the

environmental legislation in the countries of operation these companies normally have their

internal corporate environmental standards and practices that would require EIA process

applied to their activities.

Another aspect driving the screening process in EIA for the NOGPs is an influence of the

international lending institutions. Several NOGPs in Azerbaijan such as EOP, ACG Phase

1, BTC pipeline, SD Stage 1 had to go through the screening criteria specified by the

lending institutions such as International Finance Corporation (IFC), European Bank of

Reconstruction and Development (EBRD), etc. This means that the oil and gas companies

have an incentive in carrying out EIA according to the international practice for the projects

if they intend to apply for the external financing.


The study was not able to determine if an EIA is performed for the all major modifications

to the existing oil and gas projects in Azerbaijan. However, the response to the

questionnaire demonstrated that there is a process in place using which oil and gas

companies apply the screening process in case of major modification in the projects that the

EIA has already been carried for. This is a good practice and meets the best practice

criterion for this research.

28

3.4. Scoping Most of the questionnaire respondents (10 out of 16) demonstrated experience with the

scoping stage in EIAs they have been involved with. Their awareness about the regulatory

requirements with regards to the scoping was also assessed and seven out of 10 respondents

acknowledged that the scoping was a regulatory requirement during the EIA process.

Almost all but one respondent noted that the scoping stage was supported by a formal

scoping meeting involving interested parties. Although the EIA handbook states that the

Environmental Authority should hold a scoping meeting involving the developer, experts

and representatives of the concerned public, according to the preliminary interviews these

meetings are organised and facilitated by FOCs themselves.

Jones (1999) says that a scoping report may be prepared and circulated for comments to the

parties involved in the EIA. According to eight respondents, the communication of the

scoping results normally happens through preparation of a formal scoping report. The

report is normally submitted to the MENR. According to two remaining respondents, the

scoping report has not been prepared in the EIAs they were involved with.

Review of the scoping reports for some EIAs (i.e. SD Stage 1, ACG Phase 2) demonstrated

a good level of attention to the preliminary impact identification and to the concerns of the

interested parties.

The issues raised during preliminary interviews followed with further investigations during

the research revealed that some EIA statements contain a lot irrelevant information, are

voluminous and not well organised. Major oil and gas developments like ACG, SD and,

particularly, BTC involved various stakeholders including general public, project partners

and the lending institutions. Trying to satisfy many interests during scoping stage may

actually result in EIA statements becoming voluminous and exhaustive document with

unnecessarily comprehensive data (Sadler, 1996). The preliminary interviews and further

investigations during the research revealed an example of ACG Phase 1 EIA report that has

been criticised for being “too big” and “badly organised” document. Although the research

has not made any in depth analysis of the issue, but lack of right balance and dialogue in

identifying key issues during the scoping stage could have been one of the problems here.

29

According to the results of the questionnaire, the EIA specialists find the scoping as quite

effective (figure 3.3). Early involvement of the scientists, NGOs and other interested parties

into the scoping process reflects positively on the rest of EIA process and ultimately

contributes to the success of the EIA project.

0 1 2 3 4 5 6

Not answered

Not effective

Effective

Very effective

7

Figure 3.3: Opinion of the respondents on effectiveness of scoping


The research identified that the scoping is required by the EIA handbook and, is conducted

in many NOGPs in Azerbaijan. The project proponents conduct scoping meetings involving

various stakeholders. The results of the scoping are communicated externally. All foregoing

suggests that scoping is integrated stage of the EIA process for the NOGPs in Azerbaijan

and generally meets the respective best-practice evaluation criterion.

3.5. Consideration of alternatives The identification, analysis, and comparison of alternatives to the proposal are key to

creative, proactive, decision-relevant assessment. Project EIA should compare locational

and technical alternatives to establish the most environmentally-friendly or of best

practicable environmental option (Sadler, 1996).

The EIA reports reviewed during the research include a chapter discussing the alternatives.

Most questionnaire respondents (14) also agreed that the consideration of alternatives was

30

part of the EIA process they were involved with. This demonstrates evidence that

consideration of alternatives is part of the EIA process for the NOGPs in Azerbaijan.

As the preliminary interviews raised a concern about the timing of the consideration of

alternatives during the EIA process, the questionnaire asked respondents which stage of

NOGP planning a consideration of alternatives was carried out at. The responses were

evenly split between the various choices provided for this question (figure 3.4).

0

1

2

3

4

5

6

Projectappraisal

Conceptselection

Designengineering

Don't know

Figure 3.4: Stage of EIA when the consideration of alternatives is carried out

Although the concept selection and design engineering stages were selected more by the

respondents, their responses were quite different from each other. When some respondents

chose only concept selection or design engineering, some actually selected both or all

provided answers. One respondent gave a comprehensive response indicating that the

timing when the consideration of alternatives took place varied considerably from project

to project, and was always a difficult issue to effectively tackle unless addressed during the

project appraisal stage. The earlier in the project the alternatives are considered, the

greater the ability to design out significant impacts. This comment is consistent with the

results of the questionnaire where respondents selected various stages of the project. This

variation in answers does not exactly mean that the consideration of alternatives did take

place at one stage but not in other ones. The important factor is which stage it has started at

to be able to influence the decision-making process in the project. One of the respondents

31

also added that the consideration of alternatives actually continued during actual

construction stage of the project.

The respondents were also asked if the consideration of alternatives influenced various

areas of the project.

0

10

20

30

40

50

60

70

80

Location of theproject

Designconcept

Scale of thedevelopment

Process andequipment

Site layout Operatingconditions

in %

YES

NO

Don'tknow

Figure 3.5: Project stages influenced by the consideration of alternatives

The location and the site layout are two aspects that according to the results of the

questionnaire are not much influenced by the consideration of alternatives (figure 3.5).

Although consideration of alternative locations/sites is essential in the planning for any

project, constraints operate to limit choice as the oil and gas exploration is only feasible

where sufficient deposits exist (Jones, 1999). Normally, the well location or the location of

production facilities is more dictated by the results of the seismic and geological data.

However, oil and gas projects such as pipelines and onshore processing terminals are not

comparatively much bound to a particular location and therefore could be more influenced.

In line with that, one of the respondents clarified that for some projects the location was a

given due to pre-existing infrastructure. With reference to [oil or gas] export pipelines,

EIA studies played a significant part in defining the pipeline route.

As oppose to the location of the oil and gas project, the site layout has more potential to be

influenced by the consideration of alternatives. This is particularly important for the

32

onshore oil and gas developments, as the optimised site layout could minimize overall

footprint of the development.

The responses to the questionnaire demonstrate that the scale of the NOGPs are not

generally influenced by the consideration of alternatives. Although, the study has not

studied the reasons for that, it is generally understood that the scale of the development is

more influenced by the economic factors, less by the environmental, as an overall objective

of oil and gas companies is to increase profits.

Some EIAs in Azerbaijan have considered “no development” option, although no doubt that

it was a formality. The questionnaire responses were evenly split (50%) when the

respondents were asked if the consideration of alternatives include “no development”

option. Once oil and gas companies sign PSA with the government of Azerbaijan, it has to

fulfill minimum obligations as per the contract. Therefore “no development” is something

that is more relevant to discuss on strategic level with the government’s lead. The impact of

the lending institutions’ policies and procedures requiring “no-action alternative” to be

routinely included in EIA reports (Wood, 2003) for some of the NOGPs in Azerbaijan,

could have also had influence here.

The questionnaire also asked if the consultation with MENR continued at location and

concept selection for the NOGPs. According to the responses (figure 3.6), some projects

consulted with MENR on this, while there are some that do not.

33

0

1

2

3

4

5

6

7

8

9

Location selection Concept selection

num

ber o

f res

pond

ents

YES

NO

Don't know

Figure 3.6: Influence of the consideration of alternatives on location and concept selection

The design of the NOGPs can sometimes take a number of years. The involvement of

interested parties and organisations is beneficial for large-scale projects (Jones, 1999). As

per the preliminary interviews, the oil and gas companies are keen to maintain a dialogue

with MENR during the design to prevent any “hiccups” down the line. As the submission of

the EIA report for review and approval takes place at a late detailed engineering stage when

many complex studies are complete and decisions based on those studies are already made,

there is a very little chance for the MENR or even other stakeholders to influence the

consideration of alternatives. However, there is no formal process or procedure requiring

the project proponent to consult with the MENR on the alternatives during the EIA process.

The questionnaire also tested the respondents’ knowledge if the project concept selection

has to be approved by any regulatory organisation in Azerbaijan. Only half of the

respondents (eight out of 16) answered positively to this question and some answered that

they do not know (two). This demonstrates that there is no clear understanding amongst

respondents if the development concept for the NOGPs has to be approved by any

regulatory organisation in Azerbaijan. Oil and gas companies under the terms of the PSA

have to liaise with the SOCAR, acting on behalf of the government. Even if the concept of

34

the development is approved by SOCAR, it is not clear if and how the environmental

aspects of the concept are considered within that process.


Although all EIAs examined during the research demonstrated the evidence of the

considerations of alternatives, it was identified that there is a considerable variation in

timing when it begins during the project to be able to influence the decision-making

process. Many aspects of the NOGPs are influenced by the consideration of alternatives,

though there are some such as scale of the developments that do not get much attention.

The research also found inconsistent approach in involving stakeholders, particularly

MENR, into the alternatives. With all these, it is concluded that this stage of the EIA

process only partially meets the best practice evaluation criterion.

3.6. Environmental Baseline Study All EIAs studied within the scope of this research were supported by an EBS. In addition

all respondents indicated that EBS is integral part of the EIA process for the NOGPs in

Azerbaijan and is required element of the EIA process in Azerbaijan.

The respondents also demonstrated a good understanding and use of the various

conventional methods, i.e. literature review, field surveys, questionnaire surveys, as well as

more advanced technological methods such as GIS, remote sensing, aerial photographs,

during EBS (figure 3.7).

0

2

4

6

8

10

12

14

16

Literature review Field surveys Remote sensing/GIS

num

ber o

f res

pond

ents

Figure 3.7: EBS methods

35

This gives an indication that the environmental baseline conditions are studied and well

integrated into the EIA process.

The respondents were also asked about their opinion on how effective of EBS was for

overall EIA study (figure 3.8)

Very effective(3)

Not effective(1)

Effective(12)

Figure 3.8: Opinion of the respondents on effectiveness of EBS for the overall EIA process

Through the question asked to establish if the results of EBS are communicated externally

or not, the study established that in most cases (11 respondents) EBS report is submitted to

the MENR. However, the review of the EIA reports showed that the results of EBS are

communicated to MENR in integrated form within the EIA reports. Only in a few cases (i.e.

ACG EOP project), EBS results were communicated to MENR in a separate report, well

before EIA submission. Although this is not required by EIA handbook, the latter is good

practice, as it enables authorities and other interested parties to get familiarised with the

actual state of the environment at the project location early enough and to stay focused on a

particular sensitivities later on while reviewing the EIA reports.

With the above-described good trend in EBS’s role within EIA process for the NOGPs, the

research has also identified some concerns. While the most respondents agreed that EBS

was effective for the rest of the EIA process, it was also indicated that there are still some

data gaps exist in EBS and reliability of some third party data sources could not be assured.

Glassson et al. (2001) also points out that quality and reliability of environmental data vary

a great deal. One of the questionnaire respondents indicated that the effectiveness of the

EBS varied from project to project, and the stage at which the EBS was conducted in the

design life of the project, and therefore the ability of the EBS to influence changes in the

36

design to avoid key sensitivities. Due to the considerable logistical resources required to

commission field trips, EBSs sometimes get delayed, because the allocation of financial

resources is not possible at this early stage of the project. As EBS is important for the rest

of the EIA process, delayed EBS sometimes put overall EIA process on a critical path as far

as the project delivery is concerned.


It is clear from the research that the EBS is integral component of the EIA process with the

use of various conventional and advanced methods. The results of the EBS are

communicated either within the EIA report or separately. However, start of the EBS is

sometimes delayed, because the project management cannot commit to the required

financial resources at an early stage of a project. With the foregoing discussion, the research

suggests that the EBS stage of the EIA process for the NOGPs partially meets the best

practice evaluation criterion for this research.

3.7. Impact identification and evaluation Review of the number of EIA reports for the NOGPs in Azerbaijan identified that they

generally cover most of the environmental impacts. However, this particular area requires

in-depth analysis in order to come up with more tangible results that are not possible within

the scope of this research.

One of the key questions asked during the follow-up interviews was to find out if the

interviewed specialists think that the EIAs for the NOGPs in Azerbaijan identified relevant

environmental impacts of all significant actions associated with the development. The

interviewees were satisfied that EIAs generally address all significant aspects of the

development. One interviewee, who was involved in early EIAs in Azerbaijan during 1996-

1997 and in the recent ones during 2002-2004, mentioned that there is a clear improvement

in this area. The recent EIAs tend to address issues that either were not assessed adequately

or not discussed at all in the early EIAs. For example, there is much bigger emphasis on

cumulative and transboundary impacts. There is a considerable improvement in addressing

social impacts within the scope of EIAs. In fact many recent EIAs for some NOGPs in

37

Azerbaijan are called ESIA where “S” stands for “Social”. According to the follow-up

interviews, there is a significant gap in capturing and appropriate assessment of waste

management related impacts for the NOGPs. For example, having not found a solution for

disposal of a particular waste stream, this sometimes get excluded from the scope of the

EIA, deferring the discussion of the issues and making it a subject for separate approval

through EIA addendums. This is the case for produced water management in the EIAs for

the number of offshore oil and gas projects, hydrotest water management for the pipeline

projects. This is clearly not a good practice.

A couple of more issues have been discovered while looking at this particular stage of the

EIA process.

The scope of the EIAs for offshore NOGPs tends to concentrate on design and operation of

the facilities. As per the follow-up interviews, the construction stage is normally assessed

on a very high level without providing a location of a construction yard. This could be

explained by the nature of the project management for offshore projects. Offshore facilities

are normally fabricated and assembled at onshore yards and then sailed offshore for

installation. The construction projects for large offshore structures may take about two

years or more and there are many environmental and social impacts associated with this

stage. The selection of a construction yard is a tendered process where the selection of yard

depends which construction contractor is successful during tender. The construction

contracts are normally awarded at the end of preliminary design when the EIA for the

project is more or less complete. Therefore, the EIAs for offshore projects tend to overlook

construction aspect or discuss it on a general level. Although the research has not studied

this, but inadequate identification of preliminary impacts during scoping stage could also

have been a reason why the construction related impacts get overlooked in the EIA process.

Another aspect that was brought up during one of the follow-up interviews is related to the

impact assessment methodology used by the EIAs for the NOGPs in Azerbaijan. The

problem is that the project proponents and environmental consultancies tend to use more

qualitative methodologies during impact assessment as oppose to the quantitative. Although

this issue is not directly related to the identification of significant aspects as set by the

evaluation criteria, the concern was raised during the interview that use of qualitative data

38

does not help EIA follow-up process when the impact predictions made in the original EIA

could not be effectively compared with the actual data from the post-EIA monitoring

activities.


Although the EIAs reviewed during the research demonstrate a good coverage of the

impacts for design and operation stages, they do not adequately cover the construction stage

of the NOGPs. There is an improvement in addressing social impacts within the scope of

the recent EIAs. The comparison with the evaluation criterion suggests that impact

identification and assessment stage only partially meets the best practice evaluation

criterion.

3.8. Public involvement The research identified that most EIAs for the NOGPs have been through public

participation process. For instance, many questionnaire respondents (13) indicated that the

EIAs they were involved with were publicly disclosed.

According to the results of the survey, the project proponents use many means of

communications to engage stakeholders into consultation process (figure 3.9). This

primarily includes consultation through public hearings, notices through newspapers,

internet, and sometimes involves setting advisory committees with structured workshops.

39

02468

10121416

Publicnotices

Newspapers Internet Mass mediaaccounts

Consultationthroughpublic

hearing

Advisorycommittee

withstructuredworkshops

Citizens’reviewboards

num

ber o

f res

pond

ents

Figure 3.9: Means of communication used during public consultation

The respondents were also asked to rate the level of participation by the various stakeholder

groups in the EIA process using the scale of one to five, where one is the least active and

five is the most active stakeholder. The average results demonstrate that the most active

stakeholders are regulatory bodies with the average rate of four (figure 3.10).

0

1

2

3

4

5

NGOs Scientificcommunity

General public Regulatory bodies Other privatecompanies andorganisations

aver

age

rate

(out

of m

ax 5

)

Figure 3.10: Rating of stakeholder participation level

One of the respondents indicated that although the projects sought maximum participation

of key stakeholder groups in the ESIA process and worked hard to solicit meaningful input,

40

some respondents pointed out that public hearing of the EIAs is very challenging.

According to some preliminary interviews, despite a number of attempts by the project

proponents, only limited number of stakeholder representatives attended those hearings.

The attendance is better when public hearing is conducted amongst communities close to

the developments. However, participants generally show very low interest in environmental

issues associated with those projects, but ask many questions with regards to the potential

employment opportunities created by the NOGPs.

According to Bektashi & Cherp (2002), the practice of public hearings and consultation is

constantly improving in Azerbaijan. The traditionally high level of scientific knowledge

inherited from the Soviet period and the traditional interest in the nature of the homeland

are given as main factor influencing this process. Despite that, the feedback received

through the questionnaire show that the public involvement had either some or negligible

impact on overall EIA process. Although the response to the questionnaire indicates above

average rate of involvement by regulatory bodies, scientific communities and NGOs (figure

3.10), during preliminary interviews some EIA specialists indicated that they see public

involvement as very challenging process due to the passive character of involvement from

various stakeholder groups.

The opinions of the questionnaire respondents were divided while indicating a level of

impact the public involvement had on the overall EIA process. Most respondents thought

that the public involvement made some (six respondents) or significant (four) impact on the

EIA process, whilst some respondents (six) indicated that the impact was negligible.

Although Azerbaijan signed the Arhus Convention in 2000, the environmental legislation,

specifically the EIA handbook, have not been updated to align with the requirements of the

convention. However, the adoption of the law on Obtaining Environmental Information in

2002 created a new legislative platform for the improvements in the process of public

involvement in the EIA process in Azerbaijan. This research did not study implications that

the new legislation had had over the EIA process in the NOGPs, but by influencing overall

public environmental awareness in the country, the law could positively contribute to the

increased public interest in the EIAs in the future.

41

The issue of the accessibility of EIA reports for the public has been highlighted as being

poor during the preliminary interviews. Woods (2003) says that EIA documentation needs

to be readily available at a number of locations convenient to those most likely to be

affected by the proposal. The EIA reports in Azerbaijan are not easily accessible through

MENR, district or local government offices and local libraries (Bektashi & Cherp, 2002).

However, there are examples of a good practice here by some oil and gas companies that

perhaps should be encouraged not only in Azerbaijan, but also elsewhere during EIA

process. BP, as an operator of several major oil and gas projects in the region, established a

dedicated web-site (www.caspiandevelopmentandexport.com) where all EIAs and other

environmental documentations for the projects are published and easily accessible. While

this is a good practice, it should be noted that Internet in Azerbaijan is not developed to

cover regions and the country is ranked as 10th amongst CIS countries in Internet

development (UNDP Azerbaijan, 2003). Therefore, the environmental authorities and the

project proponents should not minimise use of conventional hard documents during public

consultation process as part of the EIA.

The involvement of major lending institutions such as IFC, EBRD, etc., with their high

attention to the public involvement, has certainly played a significant role in public

consultation process for some NOGPs in Azerbaijan. For example, BTC and ACG Phase 1

projects that are co-financed by IFC and EBRD developed specific Public Consultation and

Disclosure Plans (PCDP) that are the detailed documents outlining the public consultation

process not only for pre-construction, but also during construction and operational stages of

these projects (BTC, 2003).


EIAs reviewed during the research have all undergone public disclosure. The lending

institutions have a big impact on the public participation process during the EIAs for the

NOGPs. Despite several good practices evidenced during the research, the involvement of

public into the EIA process is still seen challenging. Accessibility of EIA reports is

sometimes also an issue. Based on the discussion above, the research suggests that the

public participation partially meets the evaluation criterion.

42

http://www.caspiandevelopmentandexport.com/

3.9. EIA reporting

It is understood from the follow-up interviews conducted during the research that there are

two primary guidance sources that the NOGPs refer to with regards to the EIA report

requirements. These are the EIA handbook and the Annex B of IFC’s Operational Policy

4.01 (OP 4.01) “Environmental Assessment”. The projects tend to refer to the latter than to

the former. But by addressing the requirements of the OP 4.01, the projects are believed to

comply with the requirements of the EIA Handbook for the EIA report content, as the latter

is slightly less prescriptive. All four interviewees were satisfied that the EIA they were

involved into met prescribed requirements. Some also mentioned improving trend with

regards to the quality of EIA reports in comparison with the early EIAs in 1997-1999.

The review of the EIAs and also the follow-up interviews identified that the EIA reports

generally meet the prescribed requirements as per the EIA handbook. Although the EIAs

conducted for the recent projects, such as BTC, ACG Phase 2, etc., meet the requirements

of the OP 4.01, the interviewees however indicated that the EIA reports prepared at early

stages of NOGPs (e.g. 1997-1999) developed by the FOCs did not quite meet these

requirements. There are two possible explanations to that. First of all, the OP 4.01 was

issued in October 1998, when EOP project EIA had already been completed. Secondly, not

all projects in Azerbaijan go through the external financing through the lending institutions

therefore they do not have to comply with their requirements, for instance with OP 4.01.

One of the interviewees indicated that there is a concern with the regards to varying volume

of the EIA reports produced by the different NOGPs. While the comprehensive nature of

some EIA reports were appreciated, the voluminous and complex structure of some EIA

reports make it difficult to review and understand the document and use it as a source for

referencing. ACG Phase 1 ESIA was brought as an example of such document.


The research revealed generally good level of compliance with the requirements of EIA

Handbook and IFC’s OP 4.01 with regards to the EIA report. Therefore, the research

43

considers that the EIA report requirements for the NOGPs meet the respective evaluation

criterion.

3.10. Mitigation measures and monitoring Mitigation measures and monitoring activities form a follow-up stage of the EIA process.

Even in many developed EIA systems, the follow-up mechanisms remain poorly developed

(Sadler, 1996). The questionnaire as part of this research tried to identify how well

mitigation measures and proposed monitoring activities were implemented during an

execution phase of the NOGPs in Azerbaijan.

Majority of respondents (nine out of 16) indicated that the mitigation measures were

partially integrated into further stages of the project. However, some respondents (six) think

that the extent of this integration is full.

The research evidenced a good practice in integration of the mitigation measures into the

project execution stage in the recent major NOGPs in Azerbaijan. ACG Phase 1, BTC,

Shah Deniz and SCP projects prepared a set of so-called Contractor Control Plans (CCP)

for the construction stage (AIOC, 2003). Although it was done to satisfy the requirements

of the lending institutions, by preparing CCPs the project operators created a mechanism

that clearly communicated the company’s requirements on implementation of the

environmental mitigation measures during the construction to the project contractors. The

CCPs are contractually binding and contractor companies get audited by the project

operators on implementation of the mitigation measures.

Another good practice observed in these projects is the establishment of the Commitments

Register summarising all mitigation measures that the project proponent is committed to as

part of the EIA process. It is quite often difficult to understand the commitments made in

the EIA through reading the lengthy EIA reports. The mitigation measures are sometimes

worded so that they could be misinterpreted. The Commitments Registers (AIOC, 2003)

selects the mitigation measures, as well as other commitments the project proponent made

in the course of EIA and summarises them in clear and user-friendly format.

44

There was also a question asked to identify the extent by which the monitoring actions

proposed as part of EIA process have been implemented during the project execution stage.

10 respondents answered that the monitoring actions have been fully implemented; five

thought they were implemented, but only partially and one respondent did not know the

answer to this question.

In comparison with the previous questions, the respondents were not so optimistic while

rating the effectiveness of the post-EIA monitoring activities in refining the significance of

the environmental impacts (figure 3.11). Although the responses showed a good level of the

implementation of the monitoring actions, many respondents (nine) thought that the post-

EIA monitoring is just “effective”.

0

2

4

6

8

10

12

14

16

Not effective Effective Very effective Don’t know

num

ber

of re

spon

dent

s

Figure 3.11: Rating of the effectiveness of the post-EIA monitoring

The questionnaire also tried to establish the extent to which the results of the post-EIA

monitoring activities have been communicated to the MENR. The results here were split:

one group of respondents (seven) indicated that all post-EIA monitoring results have been

reported to the MENR, when another group (eight) thought that only some results were

communicated. One respondent did not answer this question. Open communication of the

monitoring results to the regulatory authorities is certainly positive trend that contributes to

the transparency in environmental performance of the oil and gas companies operating in

Azerbaijan. The research was not able to determine what kind of monitoring information is

reported to the MENR and therefore cannot make a conclusive statement on this matter.

45

However, the responses indicate that the NOGPs have a selective approach in

communicating the monitoring data externally.


The mitigation measures proposed in EIAs for the NOGPs are generally integrated well into

the project construction and operation phases. The model of CCPs and the Commitments

Register are good initiatives improving the implementation of the mitigation measures

during project execution. However, people involved in the research still have some doubts

about the effectiveness of the post-EIA monitoring. The monitoring results are not well

communicated externally. This stage of the EIA process could be considered partially

meeting the best practice evaluation criterion.

46

4. CONCLUSION

4.1. Comparison with the best practice - summary EIA has been used widely by the NOGPs in Azerbaijan to identify and to assess the

environmental impacts over the last seven years. The main objective of this research was to

compare the EIA practice in the NOGPs in Azerbaijan with best practice EIA. The

evaluation criteria developed as part of the research was used as a basis for the comparison

through stage-by-stage analysis of the EIA process for the NOGPs in Azerbaijan. Through

the course of comparison, the research has also studied current practice for each main stage

of the EIA process for the NOGPs and identified many issues that the EIA process is

currently faced with. The results of comparison are presented below in the table 4.1. Table 4.1: Results of the comparison

Evaluation criteria Criterion met? Comments Clear and specific legal provision for EIA for the NOGPs in Azerbaijan

No The legal status of the EIA handbook is ambiguous. There are no industry-specific EIA guidelines. EIA approval is sometimes not secured prior internal project approval.


Yes There is a process in place to apply screening for the major modifications in the projects that were already subject to EIA

Scoping the NOGPs take place

Yes Scoping takes place with involvement of stakeholders. Scoping report is communicated externally.


Partially Variation in starting time could undermine ability of the consideration of alternatives to influence the decision-making during EIA.


Partially

Delayed start of the EBS could put overall EIA process on a critical path

Relevant environmental impacts of all significant actions are assessed

Partially Impacts related to the construction stage of the oil and gas developments are not adequately covered


Partially Public disclosure takes places. Lending institutions have a big influence over the public consultation process. Public participation is still not active. There are issues with accessibility of EIA reports.


Yes EIA reports generally complies with the requirements of the EIA handbook and World Bank’s OP 4.01

Clear provision for mitigation measures and monitoring requirements and follow-up during project execution

Partially There is still a room for improvement with regards to the communication of monitoring results externally, namely to the MENR.

The questionnaire respondents think that the EIA process for the NOGPs in Azerbaijan is

satisfactory (11) or good (four). However, the results of the research demonstrate that the

47

EIA process does not fully follow best practice. Despite that the research evidenced many

good practices at some EIA stages, such as scoping, follow-up and public involvement. But

the research also identified several areas in the EIA process, particularly in the legislation

side, which require further improvement. The recommendations made in the discussion

below could potentially improve the situation.

The absence of the clear and specific legal framework for EIA in the country is a major

drawback for its future development. Sadler (1998) states that EIA should have “a well

founded legislative base”. With the EIA handbook establishing a foundation of the “classic”

EIA in the country in 1996, there is now a need in substantial restructuring of the legislative

framework. This should include revision and formalization of the EIA handbook as a main

legislative source for the EIA process in the country. Further strengthening of the capacity

of the regulatory bodies, particularly MENR, in Azerbaijan has been pointed out by the

questionnaire respondents as another major factor for the improvement of the EIA system

in Azerbaijan. With the oil and gas industry being important for the country’s economy, but

at the same time presenting potential to create significant environmental impacts, it would

be good to develop the industry-specific EIA guidelines in Azerbaijan.

Currently, some EIAs are submitted to MENR after key decisions in the projects are made.

The project management models in NOGPs should be aligned with the MENR’s EIA

approval requirements to avoid potential situation when a project reach “no return” point,

but the EIA approval is not yet obtained.

Delayed start of the EBS could put whole EIA delivery on a critical path that in its turn

could delay overall project. The NOGPs should allocate necessary financial resources early

enough in the project for the EBS to start on time.

Further improvements are also necessary in starting time for the consideration of

alternatives. The research cannot suggest any particular time when the alternatives should

start due to the varying nature of the NOGPs. However, the recommendation is to conduct

the consideration of alternatives before the key decisions in the project are made.

48

Although some oil and gas companies have put a lot of efforts in engaging public during the

EIA process, the participation is still generally weak. Perhaps, along with oil and gas

companies, the regulatory authorities and NGOs should also be more proactive in raising

general environmental awareness. Oil and gas companies should also continue their efforts

in promoting and communicating environmental issues beyond EIA process.

It was identified that the results of the post-EIA monitoring are not always communicated

externally, namely to the MENR. The research was not able to explore this issue within its

scope and it is recommended as an area for further investigation.

The research revealed inadequate approach in identifying the construction related impacts

in the EIAs for the offshore NOGPs. Even if the construction stage of the project cannot be

adequately assessed within the scope of the EIA due to the absence of the certain

information, this should clearly be spelt out in the EIA report and further provision for

assessment of outstanding impacts should be made available.

4.2. Final conclusion Although the research evidenced a number of good practices, the EIA process for the

NOGPs in Azerbaijan does not fully meet best practice. The necessary improvements in

legislative framework for the EIA in the country and also improvements to be made in the

current practice of carrying out EBS, consideration of alternatives, identification of impacts,

public involvement and EIA follow-up should bring the EIA process closer to the best

practice model. The EIA process for the NOGPs in Azerbaijan is evolving and the

comparison of the early EIAs with the recent ones demonstrate a significant improvement

in a number of areas. And the recommendations made in this research can contribute to

further improvement of the EIA process in the future NOGPs.

49

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J., (1999) Handbook of Environmental Impact Assessment - Volume 1. Blackwell

Science. Oxford.

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Azerbaijan. www.azstat.org/statinfo/industry/en/ind02.shtml (Accessed 18/05/05 )

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Azerbaijan. Baku.

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APPENDIX 1 – NEW OIL AND GAS PROJECTS IN AZERBAIJAN Table 1 - Development projects

Name of PSA Estimated Reserves 1 Project Status

Azeri-Chirag-Gunashli (ACG) 5.4 billion barrels (bbl) of recoverable oil Producing around 130,000 bpd from Early Oil Project (EOP) phase and 30,000 bpd from ACG Phase 1. Further development and production enhancement will bring production up to 1 million bpd by 2010.

Shah Deniz (SD) 400 billion cubic metres (m3) of gas reserves Discovered in 1999,

Western Route Export Pipeline (WREP) pipeline 2

830 kilometers (km) length, 140,000 bbl per day (bpd) throughput

Was commissioned in 1998 to carry oil from ACG’s EOP phase to Black sea terminal in Supsa, Georgia

Baku-Tbilisi-Ceyhan (BTC)pipeline

1760km (445km in Azerbaijan) length 3

1 million bbl per day

Construction is nearing completion. The line fill is expected to start in May 2005.

South Caucasus Pipeline (SCP) pipeline 3

690 km length

7 billion m3 of gas per year throughput

Construction is underway. Due to be commissioned in 2006.

1For pipelines projects - throughput

2 Developed as part of ACG PSA

3 Developed under the terms and conditions of Host Governmental Agreements (HGAs)

Source: Caspian Development and Export web-site (www.caspiandevelopmentandexport.com), 2005

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http://www.caspiandevelopmentandexport.com/

Table 2 - Offshore Production Sharing Agreements Name of PSA Estimated

Reserves Project Status

Lankaran-Talysh 700 million bbl of oil First test well (2001) came up dry. Yalama/D-222 750 million bbl of oil Conducted 2-D and 3-D seismic work. Absheron

1.3 billion bbl of oil and up to 100 trillion cubic feet of natural gas

First well drilled in 2001 with poor results. Deeper drilling occurring. Second well undergoing testing in 2004. Expected to produce about 70 barrels/day.

Oguz

290 million bbl of oil and 685 billion cubic feet of gas

Dry well drilled in April 2001. ExxonMobil announced plans to quit the project in April 2002.

Nakhchivan

750 million bbl of oil ExxonMobil drilled one successful well, will drill a second well.

Kurdashi-Araz- Kirgan Daniz

730 million bbl of oil First test wells drilled, with poor results.

Inam 2.2 billion bbls of oil BP suspended drilling of its first appraisal well in Aug. 2001 due to high pressure. New well planned to be completed by 2005

Araz, Alov, and Sharg

4 billion bbl of oil In exploring phase in 2004. Confrontation with Iranian gunboat in July 2001; exploration suspended, pending resolution of Caspian Sea borders between Azerbaijan and Iran.

Atashgah 600 million bbl of oil in Atashgah, Mugandeniz, and Yanan Tava fields

Seismic work being undertaken.

Lerik,Jenab, Savalan, Dalga

1 billion bbl of oil Exploration D-43, D-44, and D-73 blocks

Zafar-Mashal 1-2 billion bbl of oil, 1.8 trillion cubic feet gas

Exploration D-9 and D-38 blocks. Reached final drilling point in September 2004, well likely to be shut down due to abnormally high pressure.

Source: Energy Information Administration, USA, 2004

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Table 3 - Onshore Production Sharing Agreements

Name of PSA Estimated Reserves

Project Status

Kalamaddin-Mishovdagh 200 million bbl of oil Production averaged 2,700 bpd of oil in 2004. Plans exist to raise level to 3,200 bpd

Anshad Petrol 219 million bbl at Neftchala, Khilly, Babazanan

Drilled 4 wells 1998-1999. Oil Production averaged 77,000 bpd in 2004. Gas production averaged 1.1 million cubic feet per day for 2004

AzGeroil 140 million bbl at Ramany, Balkhany, and Sabunchi fields

Production averaged 1,000 bpd in 1999.

Southwest Gobustan 180-200 million bbl of oil; up to 900 billion cubic feet of natural gas

Still conducting 2-D seismic research.

Zykh-Govsany 66-150 million bbl of oil Rehabilitating fields; produced 1,830 bpd in 2000. Contract start date pushed back due to environmental issues.

Kursangi-Garabagli 730 million bbl of oil 10 additional wells drilled in 2003 to increase production; fields producing 6,600 bpd in June 2004

Muradkhanli-Jafarli-Zardab 730 million bbl of oil 1st test well at Muradkhanli shut down in April 2001.

Padar-Kharami 580-750 million bbl of oil Seismic work being undertaken.

Shirvanoil 650 million bbl of oil at Kyurovdag field Rehabilitating existing wells since 1997. Oil production averaged 57,000 bpd in 2004. Gas production was 1.5 million cubic feet per day

West Absheron (Karadag-Kergez- Umbaki fields)

200 million bbl of oil SOCAR moved to take over the concession in December 1999 following BMB's request to suspend operations.

Source: Energy Information Administration, USA, 2004

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CONFIDENTIAL

APPENDIX 2 - QUESTIONNAIRE

1. Introduction 1a. Please indicate the period(s) of your involvement into EIA projects for oil and gas developments in Azerbaijan. (Please indicate all the periods that apply).

1) Pre 1997 2) 1997-1999 3) 2000- 2001 4) 2001-2002 5) 2002-2003 6) 2003-2004

1b. Please indicate the approximate number of oil and gas related EIAs in Azerbaijan that you have been involved with:

1) 1 – 3 2) 3-10 3) more than 10

1c. Please indicate the type of the oil and gas projects where you have been involved with EIAs in Azerbaijan by selecting one or more of the following areas:

1) onshore processing 2) offshore processing 3) oil and gas pipelines 4) refineries 5) other, please specify

1d. Please indicate your main role in the EIAs by the selecting one or more of the following areas:

1) Stakeholder reviews and consultations 2) EIA project management 3) EIA preparation 4) EIA review (both official and unofficial) 5) Other, please specify

2. Screening While oil and gas projects normally require an EIA without a formal screening process, it is less clear in the case of the modifications to existing developments in the oil and gas industry.

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CONFIDENTIAL 2a. Have you ever been involved with screening for any modifications/changes in your projects for EIA? Yes No If the answer is NO, please go to section 3 of the questionnaire. If YES, please continue this section. 2b. Which of the following have you referred to during the screening process? (Please indicate all that apply)

1) Experience of other operators in the country 2) International EIA guidelines 3) Internal company requirements 4) Consultation with the EIA regulators in Azerbaijan 5) Other, please specify

2c. What approach have you taken during the screening? (Please indicate all that apply)

1) Thresholds (e.g. increase of the throughput of the facility by more than 10,000 bbl/day of production)

2) Case-by-Case, “e.g. compare project characteristics against checklist of guidelines and criteria”

3) Other – please describe briefly.

3. Scoping 3a. Have you been involved in scoping during the EIA process? Yes No If the answer is NO please go to section 4 of the questionnaire. If YES, continue in this section. 3b. Has scoping been a formal regulatory requirement in the EIAs you have been involved with? Yes No 3c. Have you conducted scoping meetings involving the interested parties? Yes No

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CONFIDENTIAL 3d. If yes, please assess effectiveness of the scoping meetings to the EIA process on the following scale 1 – Not effective 2 – Effective 3 – Very effective 3e. Was a formal report prepared as a result of the scoping process? Yes No Don’t know

4. The consideration of alternatives 4a. During the project planning, at what stage was the consideration of alternatives examined?

1. Project appraisal 2. Concept selection 3. Design engineering 4. Other – please specify 5. Don’t know

4b. Was the consideration of alternatives part of EIA process? Yes No 4c. Has the consideration of alternatives influenced any of the following areas of your project? Please, answer for each of the following options

1) Location of the project Yes No 2) Design concept Yes No 3) Scale of the development Yes No 4) Process and equipment Yes No 5) Site layout Yes No 6) Operating conditions Yes No

4d. Did the consideration of alternatives include “no development” option? Yes No 4e. Was consultation with the MENR continued at the following stages of the oil and gas project(s) in Azerbaijan you were involved with:

• Location selection Yes No

• Concept selection for the development? Yes No

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CONFIDENTIAL 4f. Is there a requirement to have the project concept approved by any regulatory organisation in Azerbaijan? Yes No

5. Environmental Baseline Study (EBS) 5a. Has the EIA process been supported by an EBS? Yes No 5b. Is an EBS a required element for the oil and gas projects under Azerbaijani environmental regulations? Yes No 5c. Which of the following methodologies have been used in an EBS you were involved with?

1) Literature review 2) Field surveys 3) Remote sensing/GIS 4) Other- please specify

5d. Please could you indicate the effectiveness of EBS during the EIAs you have been involved with 1 – Not effective 2 – Effective 3 – Very effective 5e. Have you submitted EBS to the MENR? Yes No

6. Public involvement 6a. Have Environmental Statements been publicly disclosed? Yes No 6b. Please, indicate a level of impact the public involvement had on the overall EIA process?

1) Negligible impact 2) Some impact 3) Significant impact 4) Don’t know

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CONFIDENTIAL

6c. Please, rate the level of the participation of the stakeholder groups in the EIA process. Use the scale from 1 to 5 (1 is the least active and 5 is the most active).

1) NGOs 2) Scientific community 3) General public 4) Regulatory bodies 5) Other private companies and organisations

6d. What methods of general public engagement were used? Please select one or more of the following:

1) Public notices 2) Newspapers 3) Internet 4) Mass media accounts 5) Consultation through public hearing 6) Advisory committee with structured workshops 7) Citizens’ review boards 8) Other - please describe briefly

7. Mitigation measures and monitoring 7a. To what extent, have the mitigation actions proposed in the EIA been integrated into the implementation and operation stages of the project?

1) Full 2) Partially 3) None 4) Don’t know

7b. To what extent, have the monitoring actions proposed in the EIA been implemented in the project execution stage?

1) Full 2) Partially 3) None 4) Don’t know

7c. Please rate the effectiveness of the post-EIA monitoring activities in refining the significance of the environmental impacts? 1 – Not effective 2 – Effective 3 – Very effective 4 – Don’t know

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CONFIDENTIAL 7d. To what extent have the results of the post-EIA monitoring activities been communicated to the MENR?

1) All 2) Some 3) None

8. General 8a. Overall, how would you rate the EIA process in the oil and gas industry of Azerbaijan during the last 8 years?

1) Poor 2) Satisfactory 3) Good 4) Excellent

8b. Please, rate the following organisations in terms of their influence on the EIA process in the oil and gas industry of Azerbaijan. Use the scale of 1 to 5 (1 is the least influential, 5 is the most influential)

1) The Ministry of Environment and Natural Resources 2) Oil and gas companies 3) The lending institutions, i.e. IFC, EBRD, ADB, etc. 4) NGOs 5) Scientific organisations and research institutes 6) Environmental consultancy companies 7) Government authorities

8c. What is your opinion about prospective changes/improvements in EIA process in Azerbaijan? (Please summarise in the box)

Thank you very much for spending the time to complete this survey. If you would like a copy of my summarised results, indicate in the following box ( ) Please send the completed questionnaire by e-mail to the following address: [email protected]

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mailto:[email protected]

eia in the new oil and gas projects in azerbaijan – … · 2020. 7. 28. · barrels of proven oil...

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