The Azeri national oil company Socar struck the deal with Iranian Oil and Gas Minister Gholamreza Aqazadeh during his weekend visit to the former Soviet republic, said Rafik Abdulayev, an aide to Socar President Natik Aliyev, son of Azeri President Heidar Aliyev.
Abdulayev said that under the deal, Iran would construct a refinery in the Azeri city of Nikhichevan to process Iranian oil. He said the Persian Gulf state also planned to build a gas and oil pipeline from Iran to Nakhichevan to transport the oil to be processed.
Iran, which will gain 25 percent of Socar's 20-percent stake in the multinational Caspian Sea consortium, had previously joined Russia in rejecting Azerbaijan's claim to the oil resources covered by the deal, according a leaked letter from Russian Foreign Minister Andrei Kozyrev to Prime Minister Viktor Chernomyrdin.
The Russian Foreign Ministry has long opposed the project on the pretext that all countries bordering the Caspian Sea must jointly control the sea's resources.
"Apart from Russia, Iran is reluctant to tolerate Azerbaijan's one-sided actions," Kozyrev's letter read, according to a report in the British daily The Independent.
But Abdulayev said that Azerbaijan's relations with Iran, as well as the Caspian Sea oil deposits, were none of Russia's business.
"If he (Kozyrev) does not like the agreement, it is his problem," he said. "The deposit belongs to Azerbajian, and it can do whatever it likes with it."
Grigory Karasin, spokesman for the Russian Foreign Ministry, refused to comment.
The contract to develop the Azeri, Chirag and Gyuneshli deposits in the Caspian Sea, which together hold an estimated 511 million tons of oil, was signed in September by Azerbaijan, Amoco, British Petroleum/Statoil, Pennzoil, Ramco, Unocal, McDermott, LUKoil and Turkish Petroleum.
The Caspian oil project is one of the largest ever in the former Soviet Union, next to the $20 million Tengizchevroil venture in Kazakhstan and the $10 billion Sakhalin-2 oil and gas deal between Russia and a Western consortium.
The Azeri parliament is scheduled to discuss Iran's participation Tuesday together with the initial contract, said Fuad Akhundov, a spokesman for Azeri President Aliyev.
An official with Amoco, one of the partners in the project, said that the consortium had not yet been notified about any changes in the share distribution.
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