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. Last Updated: 07/27/2016

U.S. Seeks Caspian Oil Sans Iran

BAKU -- A top U.S. energy official said Wednesday that Washington was waiting to see if Iran would leap into more Caspian energy deals, but industry sources said Tehran would not become a high-rolling Caspian investor soon.

U.S. Deputy Energy Secretary Charles Curtis told a briefing at an international oil and gas exhibition in the Azeri capital that Washington wanted to see the Caspian oil region develop quickly but without the participation of neighboring Iran.

"The United States has a very strong interest in seeing that the development of Caspian reserves proceeds with a sense of rapidness," Curtis said. When asked if Iran should play a role in the region's energy development, Curtis said: "That remains to be seen. We'll have to see if Shakh-Deniz is replicated."

Iran shook the Caspian oil scene Tuesday when a partly Tehran-owned firm acquired a 10 percent stake in the $4.1 billion Shakh-Deniz project, which also includes British Petroleum Co Plc, Norway's Statoil, Turkish Petroleum, Russia's LUKoil and Elf-Aquitaine.

Iran, which with Russia, Azerbaijan, Kazakhstan and Turkmenistan borders the Caspian, claims some of the sea's oil.

The United States -- against European countries whose oil majors are active in the region -- is opposed to Iran's participation in Caspian energy deals because of what Washington terms Tehran's sponsorship of international terrorism.

The United States, which along with Japan consumes about 40 percent of global oil output, is eager to have a major supply of crude independent of the Middle East and not influenced by Iran.

Energy analysts said Azerbaijan intentionally structured Shakh-Deniz to include Iran and exclude U.S. oil majors, but said Teheran was in no position to charge into other big Caspian oil deals.

"Iran has enough investment shortages at home and enough stuff to explore on [its] own shelf," said Jean-Christophe Fueg of Geneva-based Petroconsultants. "I think Iran is here mostly to have a political foothold."

The largest multinational Caspian deal, the $8 billion Azerbaijan International Operating Company, or AIOC, project, includes four U.S. oil majors with a nearly 42 percent stake.

U.S. and European oil companies are forging ahead with deals, saying that the Caspian Sea, whose total output could reach 120 million tons a year by 2010, is a strategic global investment opportunity they cannot miss. "If it comes out of the [U.S.] State Department, we don't even listen to it," said one top Western oil executive in Baku.

A spokesman for Azeri state oil company SOCAR, a key player in contracts in the Azeri sector of the Caspian, said that Mobil Corp., Exxon Corp., Chevron Corp., Occidental Petroleum, Atlantic Richfield Co., Elf-Aquitaine and Conoco were negotiating to tap other fields in the sector.

Any oil produced by groups with Iran would in theory flow through an as yet unbuilt export pipeline that AIOC would use. But U.S. energy officials say Iran's participation in the pipeline could stall U.S. commercial financing of the link. "Exactly how we can mix ownership of the structure ... will involve complicated questions," Curtis said. "There are not yet any clear views as to where those boundaries lie."

Energy analysts say the export pipeline issue may become contentious soon, as AIOC formulates a strategy by next June to build a pipeline to export its own and other Caspian oil.