A Western-led consortium developing Azerbaijan's Caspian Sea oilfields announced its Solomonic decision Monday to transport the initial output through both Georgia and Russia, but then indicated Moscow would be cut out of the far larger prize when the deposits are fully exploited.
Months of high-stakes lobbying by Russia, Turkey and the United States concluded in an announcement in Baku to develop twin pipelines to the Black Sea for the 75,000 barrels per day of oil expected to flow from late 1996 when the venture, involving $8 billion in investment, comes on line.
Terry Adams, president of the Azerbaijan International Operating Company, told a press conference in Baku: "We see export to the Mediterranean as a key issue. We therefore anticipate the [main] pipeline will travel to the port of Ceyhan," in Turkey, as output multiplies nearly tenfold to a projected 750,000 barrel-per-day capacity by the end of the century.
Stephen O'Sullivan, an oil analyst with MC Securities in London, said that Turkey -- with Washington's backing -- had emerged the big winner from the consortium's decision.
"It does look like the consortium has thrown its eggs mainly into the Turkish basket here," O'Sullivan said in a tele "The two routes were very carefully analyzed. It was very clear that both were technically viable and also commercially viable," Adams said.
O'Sullivan said Russia -- whose LUKoil giant was a late entrant into the consortium -- "has done quite well to secure some of the early oil." If instability hits Georgia, the Russian route will be there as an alternative, he said.
Both Russia and Georgia stand to gain tens of millions of dollars in pipeline and port fees for transporting the oil.
Russian Fuel and Energy Ministry officials could not be reached for comment Monday.
LUKoil president Vagid Alekperov said he was pleased with the consortium's decision to utilize the existing Russian pipeline which will require upgrading. "Turkey was opposed to the Russian option, but common sense and economic factors convinced the consortium that the Russian route makes the most sense economically" for the pipeline for the early oil, he said, according to The Associated Press.
The Russian pipeline runs from Azerbaijan through the restive North Caucasus, including the breakaway Chechen republic, to Novorossisk. The second pipeline, which will have to be built, will pass from Azerbaijan to the Georgian port of Batumi. Later, this pipeline is to be extended southward, to Turkey's Mediterranean coast.Upgrading the Russian route is expected to cost more than $100 million, while the cost of the Georgian pipeline is estimated as high as $250 million. The oil companies in the consortium are to foot the bill.
The consortium's members include LUKoil; Turkish Petroleum; the American companies Exxon, Amoco, McDermott International, Penzoil and Unocal; the United Kingdom's British Petroleum and Ramco; Norway's Staatoil and Saudia Arabia's DNKL. Azerbaijan's state oil company, SOCAR, has a 10 percent stake.
The Western companies are covering 90 percent of the $8 billion invested in the project, and profits will be split about evenly between the consortium and the former Soviet republic of Azerbaijan.
The issue of who will exploit the rich Caspian Sea oil deposits has taken on a geopolitical dimension, with traditional rivals Turkey and Russia vying for control of the exit routes. An earlier proposal for a pipeline through Iran was rejected because of U.S. objections.
Ankara launched a campaign against the Russian pipeline option and in support of the Georgian-Turkish route. U.S. President Bill Clinton came out for the two-pipeline approach, and even called Azeri President Heidar Aliyev last week to lobby for it, according to Reuters.
Richard Brown, a spokesman at the U.S. Embassy in Baku, confirmed that "the American government backed multiple pipelines," AP reported.
According to some analysts, the decision by the consortium to ship the bulk of output through Georgia and Turkey was driven largely by dollars-and-cents considerations.
"I would think there are operational advantages to having the oil come out in the Mediterranean rather than the Black Sea, because then you don't need to transit the Bosphorus or anything like that," O'Sullivan said.
"Another option was to build a pipeline through Bulgaria and Greece, and you don't need to do that, saving capital costs and extra shipping charges," he added. "Delivering to the Mediterranean is probably the most economic option."
Others said the consortium's decision to use the Russian pipeline at all represents something of a victory for Moscow's diplomacy, given the strong opposition to the idea from Turkey and some in the West.
Irina Kobrinskaya, a senior researcher at the Moscow office of the Carnegie Endowment, said the decision was an "achievement for Russian foreign policy, and economic policy, of course, because it was the aim Russia was trying to achieve the whole time."
She added the decision was a "sign on the part of the West and the United States that Russia is still in the game." and suggested that Beslan Gantemirov, the Moscow-appointed mayor of Grozny, was responsible. Gantemirov was violently opposed to a peace settlement between Russian forces and Dudayev, Salamov said. "This is why he is doing his best to disrupt the work of the Special Supervising Commission in Grozny," he added.
Former parliamentary speaker Ruslan Khasbulatov, who has launched a peace campaign in Chechnya and was about to meet Romanov when the attack occurred, said in an interview with NTV Sunday that the search for the perpetrators should not be narrowed to pro-Dudayev fighters.
"The terrorist act was carried out by those who have no interest in peace, but something to gain from the tensions, lawlessness and chaos in the situation between peace and war," he said. He added that these could include elements of the Moscow-installed provisional administration which "undermine the establishment of legitimate bodies of power in the republic."
Sandor Meszaros, head of the Organization for Security and Cooperation in Europe mission in Grozny which is sponsoring the peace talks, praised Romanov and condemned the bomb attack.
"A terrorist act was directed against a man who came out very decisively for a peaceful resolution of the conflict, for the signing of a peace agreement," he told Interfax.
Tension rose in Grozny after the bombing, with two car bombs and an attack on the OSCE headquarters Saturday, although no injuries were reported. Someone fired on the OSCE building with a rifle-mounted grenade launcher, Interfax said.
Interior Minister Anatoly Kulikov called in an interview on Russian public television Sunday for a state of emergency to be introduced in Chechnya as a result of the bomb attack.
President Boris Yeltsin was weighing up the situation, his press spokesman Sergei Medvedev told Itar-Tass news agency Monday, but he said Oleg Lobov, Yeltsin's envoy in Chechnya, was against imposing a state of emergency.
Yury Baturin, presidential assistant for national security, later seemed to rule out its introduction when he told Interfax that a state of emergency could not be carried out efficiently."The state of emergency may first be followed by a positive reaction, a certain tranquility. But it will not last long," he said during an interview on Russian television.
Months of high-stakes lobbying by Russia, Turkey and the United States concluded in an announcement in Baku to develop twin pipelines to the Black Sea for the 75,000 barrels per day of oil expected to flow from late 1996 when the venture, involving $8 billion in investment, comes on line.
Terry Adams, president of the Azerbaijan International Operating Company, told a press conference in Baku: "We see export to the Mediterranean as a key issue. We therefore anticipate the [main] pipeline will travel to the port of Ceyhan," in Turkey, as output multiplies nearly tenfold to a projected 750,000 barrel-per-day capacity by the end of the century.
Stephen O'Sullivan, an oil analyst with MC Securities in London, said that Turkey -- with Washington's backing -- had emerged the big winner from the consortium's decision.
"It does look like the consortium has thrown its eggs mainly into the Turkish basket here," O'Sullivan said in a tele "The two routes were very carefully analyzed. It was very clear that both were technically viable and also commercially viable," Adams said.
O'Sullivan said Russia -- whose LUKoil giant was a late entrant into the consortium -- "has done quite well to secure some of the early oil." If instability hits Georgia, the Russian route will be there as an alternative, he said.
Both Russia and Georgia stand to gain tens of millions of dollars in pipeline and port fees for transporting the oil.
Russian Fuel and Energy Ministry officials could not be reached for comment Monday.
LUKoil president Vagid Alekperov said he was pleased with the consortium's decision to utilize the existing Russian pipeline which will require upgrading. "Turkey was opposed to the Russian option, but common sense and economic factors convinced the consortium that the Russian route makes the most sense economically" for the pipeline for the early oil, he said, according to The Associated Press.
The Russian pipeline runs from Azerbaijan through the restive North Caucasus, including the breakaway Chechen republic, to Novorossisk. The second pipeline, which will have to be built, will pass from Azerbaijan to the Georgian port of Batumi. Later, this pipeline is to be extended southward, to Turkey's Mediterranean coast.Upgrading the Russian route is expected to cost more than $100 million, while the cost of the Georgian pipeline is estimated as high as $250 million. The oil companies in the consortium are to foot the bill.
The consortium's members include LUKoil; Turkish Petroleum; the American companies Exxon, Amoco, McDermott International, Penzoil and Unocal; the United Kingdom's British Petroleum and Ramco; Norway's Staatoil and Saudia Arabia's DNKL. Azerbaijan's state oil company, SOCAR, has a 10 percent stake.
The Western companies are covering 90 percent of the $8 billion invested in the project, and profits will be split about evenly between the consortium and the former Soviet republic of Azerbaijan.
The issue of who will exploit the rich Caspian Sea oil deposits has taken on a geopolitical dimension, with traditional rivals Turkey and Russia vying for control of the exit routes. An earlier proposal for a pipeline through Iran was rejected because of U.S. objections.
Ankara launched a campaign against the Russian pipeline option and in support of the Georgian-Turkish route. U.S. President Bill Clinton came out for the two-pipeline approach, and even called Azeri President Heidar Aliyev last week to lobby for it, according to Reuters.
Richard Brown, a spokesman at the U.S. Embassy in Baku, confirmed that "the American government backed multiple pipelines," AP reported.
According to some analysts, the decision by the consortium to ship the bulk of output through Georgia and Turkey was driven largely by dollars-and-cents considerations.
"I would think there are operational advantages to having the oil come out in the Mediterranean rather than the Black Sea, because then you don't need to transit the Bosphorus or anything like that," O'Sullivan said.
"Another option was to build a pipeline through Bulgaria and Greece, and you don't need to do that, saving capital costs and extra shipping charges," he added. "Delivering to the Mediterranean is probably the most economic option."
Others said the consortium's decision to use the Russian pipeline at all represents something of a victory for Moscow's diplomacy, given the strong opposition to the idea from Turkey and some in the West.
Irina Kobrinskaya, a senior researcher at the Moscow office of the Carnegie Endowment, said the decision was an "achievement for Russian foreign policy, and economic policy, of course, because it was the aim Russia was trying to achieve the whole time."
She added the decision was a "sign on the part of the West and the United States that Russia is still in the game." and suggested that Beslan Gantemirov, the Moscow-appointed mayor of Grozny, was responsible. Gantemirov was violently opposed to a peace settlement between Russian forces and Dudayev, Salamov said. "This is why he is doing his best to disrupt the work of the Special Supervising Commission in Grozny," he added.
Former parliamentary speaker Ruslan Khasbulatov, who has launched a peace campaign in Chechnya and was about to meet Romanov when the attack occurred, said in an interview with NTV Sunday that the search for the perpetrators should not be narrowed to pro-Dudayev fighters.
"The terrorist act was carried out by those who have no interest in peace, but something to gain from the tensions, lawlessness and chaos in the situation between peace and war," he said. He added that these could include elements of the Moscow-installed provisional administration which "undermine the establishment of legitimate bodies of power in the republic."
Sandor Meszaros, head of the Organization for Security and Cooperation in Europe mission in Grozny which is sponsoring the peace talks, praised Romanov and condemned the bomb attack.
"A terrorist act was directed against a man who came out very decisively for a peaceful resolution of the conflict, for the signing of a peace agreement," he told Interfax.
Tension rose in Grozny after the bombing, with two car bombs and an attack on the OSCE headquarters Saturday, although no injuries were reported. Someone fired on the OSCE building with a rifle-mounted grenade launcher, Interfax said.
Interior Minister Anatoly Kulikov called in an interview on Russian public television Sunday for a state of emergency to be introduced in Chechnya as a result of the bomb attack.
President Boris Yeltsin was weighing up the situation, his press spokesman Sergei Medvedev told Itar-Tass news agency Monday, but he said Oleg Lobov, Yeltsin's envoy in Chechnya, was against imposing a state of emergency.
Yury Baturin, presidential assistant for national security, later seemed to rule out its introduction when he told Interfax that a state of emergency could not be carried out efficiently."The state of emergency may first be followed by a positive reaction, a certain tranquility. But it will not last long," he said during an interview on Russian television.
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