Baku News

ANKARA, October 29 (RIA Novosti) - The Nabucco project to build a trans-Caspian natural gas pipeline to Europe bypassing Russia is impracticable, the general secretary of the EU Energy Charter Secretariat said on Monday. The $6 billion pipeline project is expected to link energy-rich Central Asia to Europe through Turkey, Bulgaria, Romania, Hungary and Austria. Construction is scheduled to begin in 2009, so that the pipeline could go on stream in 2012. "The project's implementation in uncertain circumstances in areas close to the Black Sea region is extremely difficult," Andre Mernier said in an interview with the Turkish newspaper Cumhuriyet. The European Union wants the project to diversify its supply routes away from Russia and to boost European energy security. However, Mernier said it would be difficult to find investors for the project due to the high costs and enhanced risks as it was uncertain whether the problems in Iran and Iraq would be solved. In addition, the Caspian Sea region has insufficient gas reserves to implement the Nabucco project, he said. Nabucco, planned as an arm of the South Caucasus pipeline, is seen as a rival to the gas pipeline deal clinched by Russia, Turkmenistan and Kazakhstan, the region's major gas producers, in May. The three former Soviet allies agreed to build a pipeline along the Caspian Sea coast to pump billions of cubic meters of natural gas from Turkmenistan to Kazakhstan into Russia's network of pipelines running to Europe.

22 October 2007 - Upstream OnLine - UK supermajor BP will begin drilling a second exploration well at the Inam project in Azerbaijan by the beginning of next year after a six-year delay, Gregory Riley, the company's exploration manager for the country said today. Exploration at the Caspian Sea project will start in later this year or early next year, Reuters quoted Riley as saying. "The work will last 220 to 240 days and drilling will begin in the north-eastern part of the structure, in water 186 metres deep," he told the news agency. Drilling of these wells would complete exploration of the Inam project, he added. New technology tested by Shell would be used for drilling at Inam, in an area prone to high pressure, an official for Azeri state energy company Socar told Reuters. Socar, BP, Korea National Oil Corporation and Shell run the $4 billion project, estimated to hold more than 730 million barrels of oil.

October 17, 2007 - International Herald Tribune by Judy Dempsey
BERLIN: Is the Caspian a sea or a lake?
The answer has immense repercussions for the energy industry. If it is a lake, there are no obligations by countries that flank it to grant permits to foreign vessels or drilling companies. But if it is sea, there are international treaties obliging those countries to an array of permits. The Caspian, one of the world's largest enclosed bodies of water, has become the center of a new power game involving the United States and Russia as well as its bordering countries, including Iran, over who should control the vast energy reserves under its depths. The Caspian's status has been in dispute since the collapse of the Soviet Union in 1991. Over the past few years, the United States has been trying to establish alternative energy routes that would weaken the regional dominance of Russia and Iran, while Russia has sought to control the transportation routes across these waters. When Vice President Dick Cheney visited Kazakhstan last year, he used the occasion to launch a fierce attack against President Vladimir Putin of Russia, accusing him of rolling back democracy and suppressing human rights. By delivering the speech in Kazakhstan, the Bush administration was staking out U.S. influence in the region, where it has stepped up plans to build a pipeline that would bypass Iran and Russia. On Tuesday, it was Putin's turn to put down his marker. On the first visit in 64 years by a Kremlin leader to Tehran, he met his Iranian counterpart, Mahmoud Ahmadinejad, whose country faces a fresh round of sanctions by the United Nations if it does not comply with Security Council demands for reining in its nuclear program. But while the standoff between Iran and the United Nations stole the limelight, the reason for Putin's visit was a summit meeting with Ahmadinejad and three Central Asian leaders who are now being wooed in the Caspian power game. In addition to Iran and Russia, Azerbaijan, Kazakhstan and Turkmenistan also have Caspian coastlines. And while all of them want a large stake in the oil reserves, and to use of the sea for transportation, none of them have been able to agree on the status of the coveted waters. Russia and Iran, historically, have agreed that the sea was a lake and that it should be shared equally between the two of them. That all changed after the collapse of the Soviet Union in 1991. Iran and Russia wanted earlier agreements, signed in 1921 and in 1940, to continue. Moscow had obtained consent from the newly independent republics of Azerbaijan, Kazakhstan and Turkmenistan that they would be bound by any agreements signed by the Soviet Union, of which they had been a part. But in 1998, Azerbaijan declared that since the Caspian was an international lake, it should be recognized as such. In practice, this would mean that the surface and seabed would be divided into five sectors determined by the length of each country's shoreline. Under such a scenario, Russia would lose out, and Iran even more so. Iran opposed this plan, since its share of the waters would be reduced to under 14 percent from about 20 percent, according to experts. As soon as Putin was elected president in 1998, he tried to break the deadlock to speed up energy links between Russia and the Central Asian countries and to pre-empt U.S. advances into the region. Energy analysts said that Putin, seeing that the United States and other Western energy companies were eager to forge energy exploration contracts with Kazakhstan and Azerbaijan and to influence the Caspian negotiations, tried to find compromises among all the coastal states. But attempts to determine the status of the Caspian have often proved hazardous. In 2001, Iran deployed a warship and fighter jets as a warning to Azerbaijan, which had sent vessels to explore for oil for British Petroleum along the southern Caspian oilfields. Azerbaijan, which depends on Russia for energy transit routes, had agreed to forge a separate deal with Putin in which those two nations divided a part of the seabed. A similar deal was struck with Kazakhstan. In both cases, Iran was excluded from the negotiations. "The summit in Tehran was about the future status of the Caspian Sea," said Johannes Reissner, Middle East expert at the German Institute for International and Security Affairs in Berlin. "Iran and Russia have enormous interests in resolving this status. But there are major disagreements between them." But while the standoff between Iran and the United Nations stole the limelight, the reason for Putin's visit was a summit meeting with Ahmadinejad and three Central Asian leaders who are now being wooed in the Caspian power game. "The summit in Tehran was about the future status of the Caspian Sea," said Johannes Reissner, Middle East expert at the German Institute for International and Security Affairs in Berlin. "Iran and Russia have enormous interests in resolving this status. But there are major disagreements "Over the past few years, Iran has felt increasingly isolated," said a European diplomat who requested anonymity because he was involved in the region. "It sees what Russia is doing. It is being excluded from the big decisions being made in the region." Russia has not managed to keep the United States out of its traditional sphere of influence. In 2005, the United States supported the Baku-Tbilisi-Ceyhan pipeline, which allows oil to be transported across Georgia and Turkey, bypassing Iran and Russia. The United States, too, is actively supporting the trans-Caspian pipeline, through which Turkmenistan would send natural gas under the Caspian to Azerbaijan and then on to Europe. According to EU diplomats, the U.S. would like to weaken Europe's dependence on Russia, and at the same time isolate Iran. Vladimir Milov, director of the Institute of Energy Policy in Moscow, said he was skeptical about a pipeline under the Caspian. "The perspectives for a trans-Caspian pipeline, putting aside the U.S. optimism, appear bleak due to unresolved Caspian seabed division disputes," he said last month. As if to confirm this, the Caspian summit produced no breakthrough. IRNA, the official Iranian press agency, said the five leaders agreed to form an economic cooperation organization. They are to meet next year in Azerbaijan, leaving open for the moment the viability of a trans-Caspian pipeline and the Nabucco project but confirming Russia's influence in the region.

10 October 2007 - Upstream OnLine - Azerbaijan's state gas company, Azerigas, has started reconstruction of a gas pipeline to Georgia that it plans to use to double gas deliveries to its neighbour from next year. Azerbaijan will send Georgia 3 million cubic metres of gas per day in 2008 through the pipeline from Baku to the Georgian border. Zaman Chelabiev, general director of Aztransgas, the transport arm of Azerigas, told Reuters the reconstruction work would be completed by next year. "The government of Azerbaijan has ordered us to expand the capacity of the pipeline...to 3 MMcmd," Chelabiev told reporters. Azerbaijan currently sells 1.5 Mmcmd to Georgia at $120 per 1000 cubic metres, or almost half the price Georgia pays for its gas from Russia's gas export monopoly Gazprom. Georgia has been seeking an alternative supply after Gazprom doubled the price of gas to the country last year. Gazprom charges Georgia $235 per Mcm. Since March, Georgia has also being buying 1.5 MMcmd from Azerbaijan's offshore oil project Shah Deniz at $63 per Mcm.

08.10.2007 - [Neftegaz.RU] - Azerbaijan plans to buy stakes in German and other European companies, the country's president Ilham Aliyev said. He said that they would do their best to invest their oil revenues safely and generate a high yield. Azerbaijan's state oil fund currently runs to $2bn, though the government expects this to increase markedly in future.

28 September 2007 - Upstream OnLine - UK supermajor BP's Baku-Ceyhan pipeline has halted shipments of crude to Turkey from the Azeri Caspian Sea due to technical problems, a company spokeswoman said today. "Shipments of oil from the Azeri-Chirag-Guneshli fields have stopped for several days. Output will fall to 160,000 barrels per day," Tamam Bayatly, a spokeswoman for BP's Azeri operations, told Reuters. The pipeline, which takes Azeri oil to Turkey via Georgia, opened in June 2006.