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. Last Updated: 07/27/2016

Azeri Group Forms Panel to Study Pipelines

Azerbaijan International Operating Co., the consortium developing offshore Caspian oil fields, has formed a technical committee to conduct negotiations on its main export pipeline, AIOC said in a statement.

The decision was made Thursday at a meeting of the steering committee of the 13-member consortium, operator of the $8 billion project to develop the Azeri, Chirag and Guneshli fields, which is led by an alliance between British Petroleum and Norway's Statoil.

The final choice of a main export route should be made by October 1998. Three routes are under discussion.

One runs to the Black Sea via Georgia and its outlet at Supsa, a second from Baku to Russia's Black Sea port of Novorossiisk via secessionist Chechnya and a third through Georgia and Turkey to Ceyhan on the Mediterranean.

The route eventually chosen by AIOC will be just one in a region steeped in natural resources but desperate for access to Western markets.

Oil executives at a conference last Thursday said Kazakhstan, which along with Azerbaijan holds the lion's share of oil in the Caspian area, must develop multiple pipelines across different countries to make sure its crude exports are not too reliant on individual countries.

Most potential export routes pass through states that are competing crude producers like Russia and Iran, and this could cause problems, said Peter Riches, director of new business development, Eurasia and Middle East, for Texaco.

"The scope for conflicts of interest over pipeline access, capacity and tariffs should be very apparent," Riches was reported as saying to delegates at an energy conference in London.

Finding routes from the Caspian to the West has become a political battle as the United States seeks to stop Russia or Iran from dominating oil and gas exports from the area. China also wants pipelines to guarantee its energy needs.

Iranian Oil Minister Bijan Namdar Zanganeh said in remarks published Monday that Iran offers the most financially feasible route linking the resource-rich Caspian Sea to international markets, costing $300 million versus $3 billion for an underwater pipeline linking Turkmenistan to Azerbaijan.

"Unless there are political considerations, all the talk about Caspian underwater pipelines doesn't make economic sense," Zanganeh said.

Earlier, U.S. Energy Secretary Federico Pe?a said Thursday that while a pipeline built through Iran would be shorter and cost less money, the United States would be opposed to such a venture due to Iran's support of terrorism.

But while U.S. President Bill Clinton is pushing for multiple pipelines to be built in the region, they will have to be paid by the private sector, Pena said.

"The United States government is not going to finance these pipelines. These pipelines have to be financed by the private sector," he said.