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. Last Updated: 07/27/2016

AIOC Proceeds Despite Touchy Issues

BAKU -- Nearly two years after a multibillion-dollar oil consortium sealed a huge deal to tap Caspian Sea reserves, the group is forging ahead despite touchy political issues, a top company official has said.


Terry Adams, president of the Azerbaijan International Operating Company, or AIOC, said key questions over ownership of Caspian resources and pipeline politics would be resolved.


"Clearly, we're proceeding without a clear resolution of the [Caspian] status problem," he told a news conference Wednesday at an international oil and gas exhibition in the Azeri capital.


"But this recognizes that a mutual agreement will have to be reached between all of the participants."


AIOC is the operating arm of a consortium headed by British Petroleum Co Plc and Norway's Den Norske Stats Oljeselskap A/S (Statoil).


The five states bordering the oil-rich Caspian -- Azerbaijan, Russia, Kazakhstan, Turkmenistan and Iran -- are at odds over how to classify the sea and share its resources.


Adams said that the participation of Russia's largest oil company, LUKoil, in the $8 billion project would make it easier to reach agreement with Moscow. He also said he expected the current approach of the five littoral states -- each of which claims a sector of the Caspian's estimated 3.5 billion tons of crude and huge quantities of natural gas and gas condensate -- to stay.


AIOC, which will tap 500 million tons of oil and 55 billion cubic meters of natural gas in the Azeri, Chirag and deepwater Gunashli fields in the Caspian's Azeri sector, was sticking to its first export target date for early oil in August 1997, Adams said.


The consortium also includes Amoco Corp., Pennzoil Co., Unocal Corp., McDermott International Inc., Exxon Corp., Ramco Energy Plc, Saudi Arabia's Delta Nimir, the Turkish Petroleum Corp. and Azeri state oil company SOCAR. Japanese trading house Itochu Corp. also has a stake in the project.


Adams said the group would submit its proposal for a main oil pipeline route to the Azeris by June 1997, but declined to comment on exact routes. But he said it was coordinating with Turkey and Russia.


Moscow recently sealed the Caspian Pipeline Consortium deal with Kazakhstan, Oman and several Western oil firms to build a crude oil link from the Kazakh Tengiz oilfield to Russia's Black Sea port of Novorossiisk.


Adams did not say whether some of AIOC's main, or production, oil might go through the Caspian link.


"We have an obligation to the contract to assess a variety of [long-term] export options, both technically, commercially and in terms of real-politik," he said.