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. Last Updated: 07/27/2016

Oil Group Postpones $2.5Bln Caspian Plan

LONDON -- Azerbaijan's flagship foreign oil consortium has delayed a $2.5 billion development plan just as disappointing drilling results and low oil prices have taken the gloss off the Caspian's acclaimed energy potential.

The Azerbaijan International Operating Co., which is developing 4 billion barrels of Azeri oil reserves in the Caspian Sea had planned to present its next 300,000 barrels per day development plan to shareholders next February.

But industry sources close to the project said Friday that this had now been put back by around three months and was unlikely to be presented before the middle of next year.

"There's been a prolonged process of hype over the Caspian, and it has got a shock over the last year from the oil price fall," said Gerald Segal of London's International Institute for Strategic Studies, or IISS.

"The bottom line is that Caspian oil looks far less prospective on $12 to $13 a barrel oil than it did on $18," echoed Mehdi Varzi of Dresdner Kleinwort Benson in a recent report.

Starry-eyed early estimates of recoverable reserves as high as 200 billion barrels, putting the region below only Saudi Arabia as an oil superpower, have also been sharply scaled back.

Two Azeri consortiums, the Amoco-led North Absheron group and Pennzoil-led CIPCO, have each failed to find oil in two test drillings.

IISS puts likely recoverable reserves at no more than 25 to 35 billion barrels.