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Russia's Chechnya Invites Azerbaijan To Explore Oil Fields

  • RFE/RL

Chechnya's known hydrocarbon reserves are estimated at some 60 million tons of oil and 3 billion cubic meters of natural gas.

Chechnya's known hydrocarbon reserves are estimated at some 60 million tons of oil and 3 billion cubic meters of natural gas.

The government of Russia's North Caucasus Republic of Chechnya has invited the state oil company of Azerbaijan to explore for oil in the violence-riddled region.

Chechen Deputy Finance Minister Ali Isayev told reporters on April 4 that the exploration license issued to Russian state oil giant Rosneft had "expired" and so the invitation was issued to Azerbaijan's State Oil Company (SOCAR).

The announcement pits two of Prime Minister Vladimir Putin's favorites -- Deputy Prime Minister Igor Sechin, who oversees Rosneft although he is no longer chairman of its board of directors, and Chechen Republic head Ramzan Kadyrov -- directly against one another.

In February, Kadyrov accused Rosneft of failing to fulfill a promise to build an oil refinery in Chechnya, a project that had been scheduled to break ground in 2011.

The invitation to Azerbaijan might be a tactic to bolster Kadyrov's bargaining position in talks with Moscow over the development of Chechnya's hydrocarbon reserves.

There has been no reaction to Isayev's announcement from SOCAR or Rosneft. But analysts in Baku downplay its significance.

Ilham Shaban, a researcher with Baku's Oil and Gas Research Institute, says Russia's North Caucasus is too risky to attract the state oil monopoly's interest.

"The Azerbaijani State Oil Company started to invest into oil fields abroad in 2007. But it has invested in very attractive projects. Oil fields in Chechnya and Daghestan are not so attractive for them," Shaban says.

"They consider those oil fields risky as well. There are attacks on oil facilities in North Caucasus. The theft of oil from pipelines is also widespread."

Chechnya's known hydrocarbon reserves are estimated at some 60 million tons of oil and 3 billion cubic meters of natural gas. In 2011, Rosneft's local subsidiary pumped 800,000 tons of oil in the republic.

Written by Robert Coalson, based on reporting by RFE/RL's Azerbaijani Service

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