Btc Pipeline Case

British Petroleum and the BTC pipeline: Turkish delight or Russian roulette

The following case study (adapted from Crane and Matten, 2010) analyses BP’s social responsibility initiatives in the context of one of the largest construction projects in recent times – the Baku-Tblisi-Ceyhan (BTC) pipeline.   The case details the ethical dilemmas faced by a western multinational company (MNC) operating in countries which have poor governance and corruption.   The case also highlights questions regarding Corporate Social Responsibility.

The BTC pipeline was completed in 2006 at a cost of 2.6 billion euros and was considered to be the world’s largest private construction project.     It linked the world’s largest oil reserves in the Caspian Sea near Baku in Azerbaijan to the Turkish post of Ceyhan on the Mediterranean coast.   The pipeline would transport 1 million barrels of oil a day over 1,100 miles.   The pipeline was important for western economies because it reduced dependency on Middle Eastern oil reserves and the former Soviet Union.   The pipeline would also provide access to the oil reserves in Kazakhstan and the other central Asian countries.

The BTC project is privately owned by a consortium of eleven of the world’s MNC with BP as the main partner (owning 30.1%).   The other companies come from the US, Japan, France, Norway and Italy.     BP is a major player in oil fields from this part of the world and views the area as one of its major strategic business units.   The project will also generate money for countries the pipeline runs through.   Azerbaijan, Georgia and Turkey expect to ‘earn’ 150 billion dollars over 20 years.   There will also be economic knock-on effects.   The project was named the ‘silk road of the 21st century’ by the Turkish government.

Pipeline Problems

Such a large project by a consortium of oil companies attracted the attention of a number of different campaigners and civil rights groups.   The first concern was the environmental...