Publication: Monitor Volume: 3 Issue: 124

The first shipment of "early" oil along the Baku-Djohar-gala-Novorossiisk pipeline will take place on schedule, according to Terry Adams, head of the AIOC (Azerbaijan International Operating Company). The AIOC is coordinating the development of Azerbaijan’s Azeri, Chirag, and Guneshli offshore oil fields. Adams added that, in light of a June 13 agreement between Djohar-gala and Moscow, the prospects for the northern route are "very optimistic." (Russian news agencies, June 23)

Transit of "early" Azerbaijani oil through Chechen territory was one of the topics discussed by Russian prime minister Viktor Chernomyrdin and Chechen president Aslan Maskhadov when they met in Sochi on June 13. Moscow wants transit payments to conform to internal Russian rates. Djohar-gala is insisting on being paid international rates, which are several times higher, and has been trying to win the support of other project participants. On the eve of the Sochi meeting, a Chechen delegation was in Baku, where it tried to persuade Adams and the Azerbaijani authorities to recognize Chechnya as an equal participant in the consortium. Adams refused, saying Chechnya is a subject of Russia and should work this question out with Moscow. (Segodnya, June 14) Baku’s reaction seems to have been even harsher. Natik Aliev, president of Azerbaijan’s State Oil Company, said that Azerbaijan will not be drawn into negotiations between Russia and Chechnya over an issue which, in Aliev’s opinion, concerns Russia alone. (Russian news agencies, June 24)

Moscow and Djohar-gala both have a vital interest in transporting Azerbaijani oil along the Baku-Djohar-gala-Novorossiisk pipeline, but their inability to reach a compromise remains the main obstacle to use of the "northern route." No agreement was reached in Sochi on the issue. The memorandum signed by Chernomyrdin and Maskhadov was of a general, non-binding nature. (Segodnya, June 14) Terry Adams’ conclusions seem therefore to be overly optimistic.

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