Canadian oil firm sparks Azeri anger
By ALAN FREEMAN

The Globe and Mail

TODAY’S PAPER

Wednesday, March 9, 2005 – Page A11

The decision by a small Alberta oil-exploration firm represented
by former prime minister Jean Chrétien to pursue exploration of
a disputed Caspian Sea oil field has prompted retaliation against
Canada by Azerbaijan’s parliament.

The Azeri National Assembly refused last week to pass a law that
would enforce a treaty signed last year between Canada and Azerbaijan,
aimed at avoiding double taxation and preventing tax evasion.

Reports from Azerbaijan say the legislators were protesting against
the actions of Buried Hill Energy of Calgary. The company was recently
granted rights to explore the Serdar oil field in the Caspian Sea by
the government of Turkmenistan.

Like Azerbaijan, Turkmenistan became independent in 1991 after the
breakup of the former Soviet Union. It is one of the world’s most
repressive countries.

Buried Hill, founded by Calgary oilman Roger Haines, was granted the
concession after a visit to Turkmenistan by Mr. Chrétien. He was
representing the firm in his role as counsel to the Calgary law firm
of Bennett Jones.

An official of the Azeri embassy in Ottawa said legislators from both
the ruling party and the opposition were upset by the involvement of
Buried Hill in a part of the inland sea that is disputed territory.

The official said they were also angry about the activities of a
Yukon-registered gold-mining firm, Sterlite Gold Ltd. in another
contested region, this one claimed by both Azerbaijan and Armenia.

“The MPs decided to delay consideration of the legislation. . . . The
perception in Azerbaijan is that the Canadian government should do
more to stop Buried Hill,” the Azeri official said. He added that
Canadian officials have told him they cannot control the activities
of a private Canadian firm.

Efforts to reach officials of Buried Hill were unsuccessful. An
official of a Toronto law firm representing Sterlite said the company
has no employees in Canada and that its top executives are based
in Armenia.

A spokeswoman for the Foreign Affairs Department in Ottawa said the
Canadian embassy in Ankara, which handles diplomatic relations with
Azerbaijan, had been asked to look into the matter.

The spokeswoman sought to distance the Canadian government from
activities of Buried Hill, insisting that Canada had not been asked to
support its activities and had advised the Calgary firm of the dispute
involving the oil concession. She said Canada takes no position on
the border disagreement involving Azerbaijan and Turkmenistan.

Canada has tax treaties with 92 countries. The pact with Azerbaijan
would limit the rate of withholding tax on dividends, interest and
royalties and is designed to encourage business between the two
countries by avoiding double taxation and evasion.

Oil exploration and production, involving substantial foreign
investment, has driven economic growth to levels near 10 per cent
a year.

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