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Caucasus: All Nations Are Scrambling For Oil

Washington, 21 November 1997(RFE/RL) --Regional cooperation was a central concept mentioned repeatedly this week at a two-day conference in Washington on the prospects for pipelines to carry Caspian Sea oil to world markets.

The region, considered to have oil and gas reserves at least equal to the North Sea, has become the focus of international attention -- both by governments and private oil companies -- all wanting to have a hand in a resource that could be worth more than $4 trillion at today's prices.

The United States, Russia and China all have interests in seeing that a good portion of the petroleum resources from the Caspian are made available to their consumers.

Oil officials from the region called it symbolic that this conference was held in the U.S., thousands of miles from the Caspian but home to many of the major international oil firms which will make the investment to build the pipelines in hopes of even greater rewards.

It was also perhaps symbolic that the conference was co-sponsored by the U.S.-Russian Business Council, Cambridge Energy Research Associations -- a major advisory and consulting firm to energy industries -- and the U.S.-Azerbaijan Chamber of Commerce.

It drew oil and gas company executives, oil exploration and pipeline construction firms, officials from state oil companies in the region and government officials from most of the countries with an interest.

The Caspian Sea is bordered by five countries -- Azerbaijan, Russia, Kazakhstan, Turkmenistan and Iran -- and global attention is focused on this area because everyone is trying to decide how many pipelines will be needed to get the petroleum to markets and where those pipelines should run. Major decisions are scheduled to be made in October, 1998.

These five countries, and many of their immediate neighbors, however, have had many local and regional disputes over the years and officials and executives from the countries agreed that regional cooperation in handling the oil resource will require settling some of these old grievances.

One is the dispute over how ownership of the oil producing areas in the Caspian should be divided. Russia says it favors the view that the Caspian is a lake rather than a sea, and that the resources in that lake should be divided in what is called a "condominium ownership" scheme -- in effect each neighboring country owning a certain percentage of everything in the sea.

Azerbaijan and some others, however, say the Caspian is a sea and its riches should be divided according to international law, with each country controlling a specific piece of the sea and its bottom resources.

The seriousness of that dispute seems to be fading, with officials from several countries expressing optimism that it will be worked out soon, and international oil executives saying the disagreement won't stop a large part of the work needing to be done in the next few years.

But the dispute has ruffled some feathers. The First Vice President of Azerbaijan's International Oil company SOCAR, Illham Aliyev, warned that some of its neighbors can't talk about promoting regional cooperation and at the same time "escalate tensions over so-called disputed oil fields."

Aliyev, who is the son of Azerbaijani President Heydar Aliyev, told the conference that countries which "oppose Azerbaijan's rights to develop its own oil fields" shouldn't then come seeking permission to participate in overall oil development.

He also focused on another, more contentious dispute -- that between Azerbaijan and Armenia over the break-away region of Nagorno-Karabakh. "One cannot be regarded as a reliable partner in regional cooperation and at the same time continue its policy of occupation of a significant part of Azerbaijan's territory," he said.

Aliyev's comments came after Armenia's Ambassador to the U.S., Rouben Shugarian, told the conference he was optimistic over the newest negotiations going on with the so-called Minsk group co-chaired by Russia, the U.S. and France.

Shugarian said the dispute over Nagorno-Karabakh and pipeline cooperation should not be tied together because the pipeline proposals are a "purely commercial deal." He said Armenia's approach to Azerbaijan is step-by-step and that this should mean starting now on cooperative projects and working up to an eventual solution.

He also said one of the steps should be a lifting of Azerbaijani blockades of Armenia and a withdrawal of Nagorno-Karabakh troops from "some" of the territories of Azerbaijan.

Asked if peace was close, Shugarian answered it would be when "Azerbaijan will negotiate directly with elected authorities of Nagorno-Karabakh." He called the current talks "a new quality, a new situation."

Aliyev criticized the Armenian approach as "not realistic" but did say his country does want to develop strong regional cooperation. He said Azerbaijan respects all the various proposals for pipeline routes, but said everyone should remember one thing: "This is Azerbaijani oil, which belongs to the people of Azerbaijan, and the best transportation way out is that which is the best for Azerbaijan."