Azerbaijan Accuses Iran of Caspian Encroachment

BAKU (Reuters)–Azerbaijan’s Foreign Ministry Thursday accused Iran of encroaching on what Baku considers its sector of the Caspian Sea by preparing to sign an oil exploration deal with two foreign firms.

A ministry statement said Tehran’s plans to sign an exploration agreement with Royal Dutch/Shell and Britain’s LASMO Ltd. on December 14 were "inadmissible" as the area it covered reached into the Azeri sector of the sea.

"Azerbaijan considers inadmissible an agreement between Iran and the oil companies Shell and LASMO on conducting a geological and geographical exploration in a section of the Caspian Sea encompassing a part of the Azeri sector of the Caspian," said the statement.

"Unilateral and illegal actions by the Iranian side undermine the positive tendencies which have been observed in the process of work on the legal status of the Caspian Sea and could assert a negative influence on the strengthening of the spirit of cooperation and trust in the Caspian region," it said.

A LASMO spokeswoman at the company’s Baku representative office said the company would not have entered into an agreement which might have encroached upon Azerbaijan’s Caspian waters.

"We wouldn’t have agreed to conclude an agreement which includes Azerbaijan’s sector of the Caspian," she said–preferring not to be named.

A Shell spokesman in Baku said he was unaware of the ministry statement and declined comment.

Caspian littoral states have yet to agree fully on how to divide up the sea territorially in the wake of the collapse of the Soviet Union in 1991–which added three new coastal states.

Azerbaijan says the Caspian should be divided up under international maritime law which establishes fixed sea borders.

Iran has suggested giving each of the five Caspian states–which also include Kazakhstan–Turkmen’stan–and Russia–one-fifth of the Caspian aquatorium and its resources.

Strictly secular Azerbaijan has uneasy ties with the Islamic Republic–which it has accused in the past of trying to destabilize it and its pro-Western orientation.

Tehran has chided Baku for its warm ties with Israel and the United States.

The British Petroleum-led Azerbaijan International Operating Company on Thursday began filling a crude oil pipeline linking the Azeri capital Baku to Georgia’s Black Sea coast–AIOC said in a statement.

The Baku-Supsa route has been under refurbishment for about two years and will provide AIOC–Azerbaijan’s largest oil consortium–with a second option for exporting its so-called "early oil" output from three Caspian fields under development.

Rehabilitating the Soviet-era structure has cost $560 million–substantially more than the $315 million originally budgeted. Work has been finished on the Azeri portion of the line and is nearing completion on the Georgian section.

The cost overruns have been the subject of a row between AIOC members and Azeri state oil company SOCAR over who should pay.

"First oil into the pipeline is a very significant and rewarding milestone–which puts us on track to deliver oil across the Georgian border by the end of this year and allow the first tanker loading from Supsa in April–1999," the statement quoted AIOC vice president John Hollis as saying.

AIOC currently exports its 70,000 barrel per day output through a pipeline from Baku to Russia’s port of Novorossiisk The Baku-Supsa line will allow the export of five million metric tons of crude per year.


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