Russia fights for pipeline deal

Oil rights: The fight to control the flow from Azerbaijan has revived Cold War tensions, but a compromise is set to be agreed today



A consortium of international oil giants helping to develop Azerbaijan's huge Caspian Sea reserves will today announce how the first flow of oil will be conveyed to Western markets, closing the first chapter in a bartering process that has revived some of the frostier emotions of the Cold War.

Meeting in the Azeri capital of Baku, the Azerbaijan International Operating Company (AIOC), which includes British Petroleum, is widely expected to reveal that it will use two pipelines - a compromise solution which will do little to ease the international tensions that have built up around what is widely billed as the "deal of the century".

The future of Azerbaijan's huge oil reserves, which some observers believe could turn the former Soviet republic into another Kuwait, is an issue in which money and politics are both at stake on a grand scale. The Russians have long lobbied for the oil - from three fields capable of eventually yielding 700,000 barrels a day - to be pumped across their territory from Baku to the Black Sea port of Novorossiysk through a pipeline system which is largely in place.

This would supply Moscow with many millions of dollars of much-needed tariffs, although Russia has offered discounts in an effort to get the contract. Far more importantly, it would allow the Kremlin both to reassert influence over its former territory and exert control over what may become one of the most important oil supply lines to the West.

Russian leaders play down concerns over the fact that the pipeline runs through Chechnya, although it helps explain Moscow's speedy move to crush the breakaway republic's bid for independence.

The Americans and the Turks feel equally strongly about the issue. They have pressed hard for the consortium, which is investing $8bn (pounds 5bn) in the project, to include a southern route, thus ensuring that Azerbaijan does not again fall under Russian dominance. Washington, in particular, does not want to see the Russians use their pipeline as a bargaining chip in other strategic wrangles.

At the end of last week, reliable leaks emerged confirming the consortium's compromise. "Early oil" would be split between the Russian route - which would get about 2.5 million barrels a year - and a pipeline to Supsa in Georgia, from where the oil would go on to northern Turkish ports.

The Russians were not pleased. "We are disappointed at the apparent level of US influence over the decision," said a spokesman for the Caspian Pipeline Project, a three-nation conglomerate which is building onto the Russian pipeline system.

The negotiating process has been fraught with behind-the-scenes politicking. Haydar Aliyev, president of Azerbaijan, has a poor human rights record and a doubtful curriculum vitae, which includes membership of the Soviet Politburo under Leonid Brezhnev and a stint as a senior KGB officer.

Yet last week the elderly president - whose state oil company, Socar, has a 10 per cent stake in the consortium - found himself playing Juliet to several of the most powerful Romeos on the planet.

President Bill Clinton spent 35 minutes talking to him by telephone from Washington. A Russian delegation arrived with a long list of helpful proposals, including assistance with a metro system, health care and cross border co-operation - a marked change from their attitude last December when Russia closed its border with Azerbaijan, claiming it was a possible arms route for Chechen rebels.

Nor have the Georgians sat quietly by. They, too, have been pushing their case hard - so much so that some within the country believe the Russians, angered by the rivalry, may have been behind one of the more sinister episodes in the former Soviet republic's recent history - the attempted assassination of their leader, Eduard Shevardnadze, on 29 August. The Georgian Prosecutor-General has issued a warrant for the arrest of Georgia's former head of security, Igor Giorgadze, a former KGB officer who was widely believed to be a puppet of Moscow.

Last week a delegation of senior Georgian officials were in the Russian capital, where they say Mr Giorgadze is in hiding, in an effort to publicise his alleged crime.

Although they have yet to produce hard evidence, they believe it is possible that the assassination attempt was a Russian-inspired warning shot intended to deter Mr Shevardnadze from pushing too enthusiastically for the pipeline.

"It is one theory that we cannot discount," according to a source close to the Georgian government.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Marketing Manager (B2B) - Romford - £40,000 + car

£35000 - £40000 per annum + car and benefits: Ashdown Group: Marketing Manager...

Ashdown Group: Helpdesk Analyst - Devon - £20,000

£18000 - £20000 per annum: Ashdown Group: Helpdesk Analyst - Devon - £20,000 ...

Ashdown Group: Data Scientist - London - £50,000 + bonus

£35000 - £50000 per annum + generous bonus: Ashdown Group: Business Analytics ...

Ashdown Group: IT Project Coordinator (Software Development) - Kingston

£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected