AZERBAIJAN MAY RETALIATE AGAINST CONTROVERSIAL OIL AGREEMENT.

Despite warnings from Azerbaijan, the National Iranian Oil Company (NIOC) has signed with the American Shell company and Britain’s LASMO an agreement to prospect for oil and gas in a Caspian offshore area which apparently overlaps with the Azerbaijani sector. Iran does not recognize the principle of sectoral division of the Caspian Sea, demanding instead a condominium of all five littoral countries. Alternatively, Tehran demands–as it did at yesterday’s five-country meeting in Moscow–an equal division of the sea and the seabed mineral deposits among the littoral countries.

Baku appears prepared to retaliate against the agreement signed on December 16 in Tehran. Azerbaijan’s senior presidential adviser Vafa Guluzade, as well as Ilhan Aliev, second in command at Azerbaijan’s State Oil Company (SOCAR) and son of President Haidar Aliev, have warned that Shell and LASMO will be excluded from Azerbaijani oil projects unless they withdraw from the agreement with NIOC (Turan, AFP, Reuters, December 15-17).

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