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To: PK who wrote (5013)	11/12/1997 10:08:00 AM
From: GREATMOOD	Respond to of 11888

By Mike Collett-White BAKU, Nov 11 (Reuters) - Terry Adams, president of the $8-billion Azerbaijan International Operating Company (AIOC) is a happy and relieved man. After three years of hard work in the Azeri capital of Baku, Adams will take part in Wednesday's celebrations to mark the first oil from the huge project, which is expected to expected to reach plateau production of 800-850,000 barrels per day of high-quality crude by early next century. First oil was produced from an offshore platform on November 7 -- the exact date the Azeri Oil Rocks offshore project struck black gold in 1949, putting offshore oil production on the global energy map for the first time. "From now on we have a working system," Adams told Reuters in an interview. "We started production at 10.30 p.m. on November 7, the very date in 1949 when the first offshore production from Oil Rocks appeared." Adams said AIOC would be key to the development of the Azeri oil sector, caught in a long-term decline that only billions of foreign dollars will be able to reverse. The AIOC's billionth dollar will be spent on November 12. Azerbaijan oil production is set to soar in the next ten years or so, probably reaching as much as 2.0 million barrels per day, Adams said. "It is realistic for Azerbaijan to be producing 1.5-2.0 million barrels a day between 2005 and 2010," he said. Azerbaijan will be a key part of the expected Central Asian oil production boom in the early 21st century, with Kazakhstan the other main player. Azerbaijan produced just 9.1 million tonnes (182,000 bpd) in 1996 and output this year is forecast to slip to 9.0 million (180,000 bpd). Adams said oil belonging to SOCAR, the Azeri state oil company which is also a part of the consortium, was making its way along the so-called "northern route," a pipeline linking Baku with Russia's Black Sea oil export outlet of Novorossiisk. It had begun to pass along the section of the pipeline crossing the territory of Chechnya, Russia's separatist-minded region, and was expected to be loaded on to a tanker at the port on December 12. Tension between Chechnya and Moscow raised doubts as to whether the northern route could be used at all to carry early oil from AIOC to world markets. "Repairs to the Chechen sector have been done and the system is working well," Adams said. AIOC's own oil is now filling a 180-km stretch of underwater pipeline linking the platform with the Sangachal oil terminal near Baku. It would not reach Novorossiisk until some time in January, Adams said. He said work on the "western route" linking Baku with Georgia's Black Sea oil outlet of Supsa had already started to have the pipeline ready by late 1998. A third pipeline will be needed to carry the main oil from AIOC's three oilfields in the Caspian to the West. The route had yet to be chosen, but a decision was due to be made by October next year. "The expected capacity, according to the original concept, would be one million barrels a day," he said. All three routes would probably be used by AIOC when output from the Chirag, Azeri and Guneshli fields reaches its targeted peak of 800-850,000 bpd by 2005-2007, meaning that the new pipeline could transport other oil as well as AIOC's. "The main export pipeline will not be exclusively for AIOC oil, but will feed the whole offshore industry here," Adams said. The AIOC's three fields contain an estimated four billion barrels of oil. The group involves 12 energy companies, including SOCAR, and is led by a British Petroleum <BP.L>-Statoil 1/8STAT.CN] alliance. Adams, who has been in charge of the AIOC project since its conception about three years ago, said its success would contribute to regional political stability. "The project has delivered tremendous political benefits, and has increased stability in the Caucasus substantially. Regional relations are improving as a result," he said. Adams said that some estimates of reserves lying under the resource rich Caspian may have been overstated. He said the southern Caspian contained an estimated 17.5 billion barrels of oil, putting it on a par with the North Sea. A further, similar amount may well lie under its waters. "Projecting forward, realistically another North Sea is there to be found," Adams said. Some assessments have put total Caspian region oil reserves, of which over half would be offshore, at up to 200 billion barrels. 16:34 11-11-97

To: PK who wrote (5013)	11/12/1997 10:11:00 AM
From: GREATMOOD	Respond to of 11888

ALMATY, Nov 11 (Reuters) - Seeking to escape the clutches of big brother Russia, the presidents of Kazakhstan and Georgia on Tuesday agreed to cooperate in exporting Kazakh oil to international markets via a so-called ''Caucasian corridor.'' ''New possibilities have appeared with the wishes of Kazakhstan, Georgia and Azerbaijan to open a Caucasian corridor for oil transport,'' Kazakh President Nursultan Nazarbayev told reporters after meeting Georgian counterpart Eduard Shevardnadze in the capital Almaty. Nazarbayev said his vast but landlocked Central Asian state would export 5-6 million tonnes of oil annually via Azerbaijan and Georgia after modernisation of its Caspian port of Aktau was completed in 18 months time. The oil would be shipped by tanker from the former Soviet republic's Caspian Sea coast west to the Azeri capital Baku from where the oil would be transported by pipeline and rail to Georgia's Black Sea port of Poti. ''Georgia's Black Sea port will give us access to Europe, the Balkans and the Danube,'' Nazarbayev said. The two countries are also looking at plans to build a pipeline under the Caspian Sea to link Kazakhstan and Azerbaijan. Tengizchevroil, the oil joint venture between U.S. oil companies Chevron Corp and Mobil and Kazakhstan is already shipping some of its 165,000 barrels per day (bpd) output from its giant Kazakh Tengiz field through Georgia. Production at Tengiz could reach 700,000 bpd in the next decade. The two presidents signed a memorandum on oil transport cooperation. But both leaders await the financial muscle of foreign oil companies to realise their ambition of breaking their dependence on former colonial master Russia for energy exports. Moscow inherited control of a Soviet-built network of oil pipelines and grants only limited capacity to Kazakhstan. Kazakhstan aims to increase current oil production of around 460,000 bpd to 3.4 million bpd by 2010 and is mulling alternative export routes through the Caucasus, China and possibly Iran and Afghanistan. Georgia, a mountainous nation picking itself up from several years of civil war, looks to states like Kazakhstan which want to avoid exporting oil and gas through Russia for transit revenues. ''The special memorandum on exporting Caspian oil through Georgia could become the project of the century,'' said a bullish Shevardnadze. e-mail: moscow.newsroom+reuters.com 12:23 11-11-97

To: PK who wrote (5013)	11/12/1997 10:13:00 AM
From: GREATMOOD	Respond to of 11888

By Marat Gurt ASHGABAT, Nov 11 (Reuters) - U.S. Unocal Corp is to form a consortium to pump oil from Turkmenistan to Pakistan via war-stricken Afghanistan, a Turkmen energy official said on Tuesday. ''Yesterday (Monday) (President) Saparmurat Niyazov declared his support for an international consortium to build a pipeline from Turkmenistan to Pakistan through Afghanistan headed by Unocal,'' a spokesman for Turkmenistan's oil and gas ministry told Reuters. The consortium, to be called Central Asia Oil Pipeline Ltd, follows hard on the heels of another Unocal grouping formed last month to construct a $2 billion natural gas pipeline along the same route. Unocal's president, John Imle, met the former Soviet republic's leader for talks on Monday to discuss the project which will cost an estimated $2 billion. In an interview earlier this year, Imle said Unocal would plan to export one million barrels a day (bpd) through the 1,670 km (1,040 miles) pipeline to deliver crude at the Arabian Sea. Oil-rich Kazakhstan, landlocked like Turkmenistan, has expressed interest in export capacity if the pipeline gets built. Kazakhstan aims to boost oil production from 460,000 bpd to 3.4 million bpd by 2010. The pipeline would follow another which is planned to export 20 billion cubic metres of gas annually from Turkmenistan's Dauletabad field in the southeast of the republic to Pakistan. ''Unocal will lead the (oil) consortium,'' Imle said in an interview on Turkmen state televison late on Monday. However, diplomats and investors have cast doubt on Unocal's ambitious projects as a major obstacle stands in the way of oil and gas flowing to Pakistan from the Central Asian republics -- ceaseless violence in Afghanistan. ''Despite the difficult situation in Afghanistan, through which the pipelines would run, we have full support there (Afghanistan) in that it (pipeline) would promote stability, peace and economic development,'' Imle said on state television. When Unocal, Saudi Arabia's Delta, Japan's Itochu Corp and Inpex, Pakistan's Crescent Group, South Korea's Hyundai and Turkmenistan's oil and gas ministry formed a consortium for the gas pipeline last month, Niyazov moved to dispel fears over perennial Afghan chaos. ''Turkmenistan has held talks with the warring Afghan sides, both with the Taleban and the (opposition) northern alliance, and we have found understanding,'' he said. Turkmenistan will open its first gas export pipeline south to Iran next month while Turkmen officials said on Monday Royal Dutch Shell plans to form a consortium to build a gas pipeline to Turkey via Iran. Turkmenistan is trying to break its present total dependence on Russia for exports of gas through pipelines controlled by Moscow. Much of the volumes are diverted to other ex-Soviet states which cannot afford to pay for the gas. e-mail: moscow.newsroom+reuters.com 12:10 11-11-97

To: PK who wrote (5013)	11/12/1997 10:17:00 AM
From: GREATMOOD	Respond to of 11888

By Mike Collett-White BAKU, Nov 12 (Reuters) - Where there is oil and gas, politics are never far behind, and that can work in favour and against major projects, John Imle, president of U.S. energy company Unocal Corp <UCL.N>, said on Wednesday. Few regions offer the same range of examples as the Caspian Sea, which Western energy consumers hope will become the next North Sea by early next century, recalling the 1970's boom. "You cannot separate energy and politics," Imle told Reuters in the Azeri capital of Baku. Imle, along with many senior oil officials and executives from around the world, was in Azerbaijan to celebrate the flow of the first oil in the area from a major consortium. Unocal holds a 10-percent stake in the $8.0-billion Azerbaijan International Operating Company (AIOC), the group said. AIOC pumped its first crude oil from its offshore fields on November 7. The group involves 12 energy companies, led by an alliance of British Petroleum <BP.L> and Norway's state-owned Den norske stats oljeselskap ASA Statoil 1/8STAT.CN]. Imle said the project, which aims to produce 800,000-850,000 barrels per day (bpd) by 2005-2007, was primarily a commercial one. But geopolitical forces were always at play. "With the addition of LUKoil <LKOH.RTS>, SOCAR chose a strategically important partner," he said. LUKoil, Russia's largest oil company, and SOCAR, the Azeri state oil company, each holds 10 percent stakes in AIOC, according to data supplied by the consortium. Moscow is quickly losing its grip on Central Asia's huge oil and gas resources, as former Soviet republics in the region develop deposits independently. Nevertheless, to isolate a nation as powerful as Russia would be a big risk and one that SOCAR apparently did not want to take, which explained the inclusion of a major Russian company. Imle said the development of Caspian energy reserves and transport projects to get the oil and gas to world markets were bound to help strengthen political ties. "Business between nations will always strengthen relations," he said. Pipelines linking AIOC's three Caspian fields -- the Chirag, Azeri and Guneshli deposits -- run across the troubled Caucasus region. Oil can clearly be a divisive factor as well, triggering a bitter row between the five Caspian littoral states over who owns what under the troubled waters. Russia and Iran officially support joint project development, while Turkmenistan, Azerbaijan and Kazakhstan adopt a sectoral approach. Turkmenistan also lays claim to much of the AIOC's oil acreage, thought to contain four billion barrels. "Most experience supports the theory that governments will settle that issue and that a settlement would not impact on the AIOC project," Imle said. Looking east, Unocal proposes building two new pipelines from Central Asia across politically unstable Afghanistan. The gas route would link fields in Turkmenistan to the hungry markets in Pakistan, and possibly India. The oil pipeline would link Russian and Central Asian fields with a terminal in the Arabian Sea and in turn East Asian markets. Imle admits both routes depend on events in Afghanistan. "Both pipelines are equally affected by the turmoil in Afghanistan, although the routes of the pipelines are not in contested areas," he said. But influence from outside could yet see the projects succeed. "I see neighbouring countries taking a more constructive interest in peace and stability in Afghanistan," he added. The recent $9.5-billion oil deal between China and Kazakhstan to tap onshore fields in Central Asia and build a pipeline east into China had clear political motives. "The deal between Kazakhstan and the Chinese I'm sure had a political aspect. There is nothing unusual in that." Countries and companies are focusing hard on the Caspian as the biggest new source of energy in the new century, comparable in size to the North Sea where crude production in September averaged 5.85 million bpd. Unocal forecasts oil supply from the former Soviet Union will surge by 5.3 million bpd, or nearly three quarters, to 12.5 million bpd between now and 2010, with the bulk of the increase coming from Central Asia. 03:15 11-12-97

To: PK who wrote (5013)	11/12/1997 10:20:00 AM
From: GREATMOOD	Respond to of 11888

By Mike Collett-White BAKU, Nov 12 (Reuters) - Azerbaijan is pinning its economic future on the development of huge oil and gas reserves, with foreign energy companies set to continue to play a key role, Azeri President Haydar Aliyev said on Wednesday. "In the 21st century, Azerbaijan's economy will continue to grow based on the achievements we are making in the oil sector," he told an official ceremony marking the first oil from an $8-billion international consortium. Aliyev said deals worth $30 billion had been signed between Azerbaijan and world oil majors to tap nine areas in the republic's sector of the Caspian, including acreage already under development by the consortium. The Azerbaijan International Operating Company (AIOC) pumped its first oil on November 7 but the official opening was moved back to coincide with the second anniversary of the former Soviet republic's constitution. "This contract was named the contract of the century," Aliyev said. "It sent a strong message to the world and the echoes rang around the globe." Aliyev said the start-up represented a key moment in his country's history. Azerbaijan used to account for half the world's oil early this century and is looking to return to the global energy stage. It produced a paltry 9.1 million tonnes (182,000 barrels per day) of crude last year, but peak production from the 11-member AIOC is forecast at 40 million (800,000 bpd). New projects under development should ensure a further increase in production. Western oil executives in Baku estimate total output of 1.5-2.0 million bpd early next century. The AIOC was a pioneer project which Aliyev said would open the way for many more offshore developments, and not only in the Azeri sector of the resource-rich waters of the Caspian. "Today, on the eve of the 21st century, Azerbaijan has opened the Caspian Sea to all foreign oil companies as well as to our neighbouring countries." The only other major international oil project already producing in the Central Asian region is the onshore Tengiz project in Kazakhstan, which will produce up to 800,000 bpd. But plans to tender offshore blocks are advanced in Kazakhstan and Turkmenistan. Leading oil officials and executives descended on the Azeri capital this week, recognising the Caspian as a key source of energy into the next century. Federico Pena, Secretary of Energy of the United States, the world's largest oil consumer, said it was in the interests of the region and the world to see the area developed. "Today, with the turn of a valve, Azerbaijan has opened more than just a pipeline. Azerbaijan has opened an era of new prosperity," Pena told a packed hall. Russian Fuel and Energy Minister Boris Nemtsov read a letter from President Boris Yeltsin to Aliyev. "I think this is a major event in the development of energy resources and will strengthen further relations between the two countries of Russia and Azerbaijan," Yeltsin's letter said. Aliyev said the project, led by a British Petroleum -Statoil alliance, would form the cornerstone of a more prosperous future. For all the talk of hydrocarbon wealth, most Azeris still get by on a meagre wage and have yet to be helped by billions of dollars of promised investments. "We are on the eve of a great and prosperous future. We have laid the foundations for this," Aliyev said. 09:44 11-12-97