The original oil barons — the Nobels and Rothschilds — abandoned them when Baku’s oil industry was nationalised after the 1917 Bolshevik Revolution. But almost a century later, the city stands on the brink of a second oil boom with the official opening today of a controversial pipeline built to take Caspian oil to the energy-hungry West.

President Aliyev of Azerbaijan will open the taps of the Baku-Tblisi-Ceyhan (BTC) pipeline this morning in front of world leaders and oil executives at the Sangachal oil terminal, south of Baku, the Azeri capital.

The pipeline, billed as the world’s biggest energy scheme, winds its way for 1,094 miles from Baku, through Tbilisi, the capital of neighbouring Georgia, to the Turkish Mediterranean port of Ceyhan.

When fully operational by 2009, it will carry a million barrels of oil a day — 1 per cent of global production — from fields off the coasts of Azerbaijan and Kazakhstan.

The $4 billion (£2.1 billion) pipeline — built by a consortium led by BP — will alter the geopolitical map by allowing Caspian oil to bypass Russian pipelines and the congested Bosphorus strait.

It will provide the West with a long-sought alternative energy source to the Middle East, and consolidate the strategic foothold of the United States in Moscow’s traditional backyard.It will allow Baku to reclaim its status as the original oil boom town. “I do not doubt that very soon Azerbaijan will turn into a rich state,” President Aliyev said last week. “Each citizen of Azerbaijan should take advantage of this chance.”

Already the city’s historic Old Town is being smothered by high-rise flat blocks, neon-lit shopping malls and the fumes from countless top-of-the-range SUVs and Mercedes.

The pipeline’s proponents talk breathily about Azerbaijan becoming a new Kuwait — even a Norway. The risk, analysts say, is that it turns into another Nigeria. And some question the wisdom — and huge cost — of building a pipeline through one of the world’s most volatile regions to access oil reserves that have so far failed to meet expectations.

The pipeline passes close to Azerbaijan’s tense ceasefire line with neighbouring Armenia, runs near to separatist regions in Georgia and skirts Kurdish areas in Turkey.

Horseback security guards will patrol it daily in Georgia and Azerbaijan, which have also formed special forces units to combat terrorist attacks.

And in the past week, a government crackdown on the opposition in Azerbaijan has highlighted another potential source of political instability that could disrupt the pipeline.

On Saturday, Azeri police detained 30 leading opposition members and then severely beat and arrested another 45 during a peaceful prodemocracy demonstration in central Baku. The Azeri authorities said that the rally was banned because it was too close to today’s ceremony, which will be attended by foreign dignitaries including Lord Browne, chief executive of BP, the Duke of York and Sam Bodman, the US Energy Secretary. But David Woodward, the president of BP Azerbaijan, told The Times: “It’s very unfortunate. I don’t see that there was a risk to those attending the ceremonies.”

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