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Azerbaijan: Interest High In Oil Export Routes

Bucharest, 30 September 1998 (RFE/RL) -- Oil firm executives from around the world crowded a conference in Bucharest this week to hear a speech by Natik Aliev, president of the State Oil company of the Azerbaijan Republic (SOCAR).

Azerbaijan's vast oil reserves give it the potential to influence world oil prices within 10 years, once an efficient delivery system is created. Oil industry experts at the Bucharest conference were particularly interested in clues from Aliyev about the main export route for Azeri oil. A formal announcement on that route is expected next month by the Azerbaijani International Oil Consortium (AIOC) .

Aliyev said 11 alternatives across the Black Sea and Mediterranean are being considered. He specifically mentioned three - the Baku-Supsa route through Georgia, the Baku-Novorossiysk route through Russia, and the Baku-Ceyhan route through Georgia and Turkey.

The governments of Azerbaijan, the United States and Turkey already have lent political backing to a pipeline linking Baku to Turkey's Mediterranean port at Ceyhan. With Washington expected to help finance that route if it is selected, a Baku-Ceyhan pipeline seems to be the frontrunner. But the ultimate decision rests with the AIOC consortium, not with Baku, Ankara or Washington.

SOCAR has a ten percent stake in the AIOC consortium. The remaining shares are held by 11 international oil firms. British Petroleum (BP) and the US-based Amoco each have a 17 percent stake. The takeover of Amoco in August by British Petroleum makes it, by far, the largest AIOC shareholder.

Other consortium members and their stakes are Russia's Lukoil, 10 percent; US-based Unocal, 10 percent; Statoil of Norway, 8.6 percent; US-based Exxon, 8 percent; Turkey's state-owned TPAO, 6.75 percent; US-based Pennzoil, 4.81 percent; Itochu of Japan, 3.9 percent; Britain's Ramco, 2.08 percent; and Delta Nimir of Saudi Arabia, 1.7 percent.

SOCAR president Aliev's speech in Bucharest also included up-to-date information on Azerbaijan's oil sector. He said Azerbaijan's total offshore oil production now stands at 640,000 tons per month, and onshore production is 120,000 tons per month. He said the AIOC consortium's share of oil production is increasing and will reach 500,000 tons per month by the end of this year.

Aliyev said Azerbaijan's total annual oil production is expected to reach 35 million tons by the year 2005. As early as 2010, he said oil production could reach 45 million tons and natural gas production is expected to reach 15,000 million cubic meters.

SOCAR's production in 1997 amounted to 9 million tons of crude oil and 6,000 million cubic meters of natural gas. About 7.5 million tons of crude production came from offshore fields and 1.5 million tons from onshore fields.

By the beginning of this year, there had been 68 oil and gas fields discovered in Azerbaijan. Forty-two are on land and 26 are in the Azeri sector of the Caspian Sea. So far, Aliyev said, 61 fields are being commercially developed, including 40 onshore and 21 offshore.

Aliyev said Azerbaijan's offshore fields are the most promising areas for exploitation. He said about half of Azerbaijan's initial potential resources are concentrated along the shelf of the Azerbaijan sector of the Caspian Sea. To date, only about one-third of that sector has been explored by geological research methods. Aliyev said expert estimates from different countries on reserves in the Azeri sector of the Caspian Sea range from 4,000 million tons to 10,000 million tons of fuel.

The least studied Azeri sector of the Caspian Sea is in deep-water. Forecasts for oil and gas in those areas have not been determined. This explains the discrepancies between the various estimates on Azerbaijan's total reserves.

Aliyev said 141 offshore sites are ready for exploration or drilling. That includes 41 at depths of up to 60 meters; 27 at depths from 60 meters to 200 meters; and 73 at depths greater than 200 meters.

He said potentially very productive fields are thought to lie at depths of 5,500 to 6,000 meters. But he noted that developers of those fields face harsh temperature and pressure conditions.