BAKU-NOVOROSSIISK: PIPING THE OIL–OR JUST SWAPPING IT.

Publication: Monitor Volume: 4 Issue: 117

The spokeswoman of the Azerbaijan International Operating Company (AIOC) yesterday elaborated on AIOC’s arrangements to export “early” oil to Russia’s port Novorossiisk on the Black Sea. According to this presentation, Russia’s pipeline company Transneft–operator of the Russian, including Chechen, section of the Baku-Novorossiisk pipeline–is obligated to take stipulated amounts of AIOC oil at the Azerbaijani-Russian border, then to deliver equivalent amounts in Novorossiisk for export by AIOC. (Russian agencies, June 17)

The statement came in reaction to recent Chechen warnings about blocking the pipeline if Moscow continues to default on its obligations to compensate the Chechens for their operating expenses (see the Monitor, June 16). AIOC’s statement clearly opens the possibility that the arrangement with Transneft can take the form of swap operations, skipping the pipeline in North Caucasus. The swap option reflects lack of confidence in pipeline security in that part of Russia. This strengthens the case against laying through Russia the main export pipeline for the “big” Azerbaijani oil.

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