Russia Miffed By Oil Deal Signed With Azerbaijan
A CONSORTIUM of Western oil companies signed an $8 billion deal last week with Azerbaijan to develop Caspian Sea oil reserves.
In the biggest oil deal yet with a former Soviet republic, the consortium, including Amoco Corporation, Pennzoil, and British Petroleum, plans to ship its product via a pipeline through Turkey. But that has raised Russian ire, and Moscow has refused to recognize the deal.
At the moment, Russia has a stranglehold over oil production in all former Soviet republics since the Soviet-built pipeline systems all run through Russian territory. Last week's deal would be the first to break that monopoly.
Early this century, Azerbaijan's wells supplied a key portion of world demand for oil. Now Baku's onshore reserves are almost exhausted, but the new offshore fields are estimated to hold 5 billion barrels.
The new project aims to produce 600,000 barrels a day by 1998.