Russian LUKoil Puts Caspian Deal on Hold

MOSCOW (Reuter)–Russia’s LUKoil–part of a hotly contested Caspian oil deal–said on Thursday it was putting its participation in the project on hold until a quarrel over who owns the oil in question is resolved.

LUKoil spokesman Dmitry Dolgov said the Foreign Ministry had officially informed Turkmen’stan–the Central Asian state claiming the oil–that Russia’s largest oil company had temporarily halted the project.

"In the original document we signed–there was a clause saying no further activity would take place until Azerbaijan and Turkmen’stan resolved their quarrel," he said.

LUKoil–Russian state oil company Rosneft and Azerbaijan signed a $1 billion deal last month to tap a Caspian field claimed by both Azerbaijan and Turkmen’stan.

Rosneft pulled out of the deal and President Boris Yeltsin declared it null and void earlier this month–bowing to pressure from Turkmen’stan.

But LUKoil had vowed to press on within the framework of the original agreement–saying commercial interests were as important as political ones.

The Caspian field–known as Kyapaz by Azerbaijan and Serdar by Turkmen’stan–may contain over 50 million metric tons of recoverable oil.

The project has fanned the flames of a long-standing row between the five states surrounding the Caspian and claiming its large oil reserves over how the resource should be exploited.

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