From: trh@jack.sns.com (Al Trh)
Newsgroups: soc.culture.turkish
Subject: Azeris Look to the West
Date: 30 Dec 1992 03:43:05 -0600
Organization: UTexas Mail-to-News Gateway
Reply-To: Turkish Cultural Program List <TRKNWS-L%USCVM.BitNet@pucc.PRINCETON.EDU>
NNTP-Posting-Host: cs.utexas.edu

        BAKU, Azerbaijan (UPI) -- In Surakhany, a village
not far from the Azerbaijani capital of Baku, there is a
temple with an eternal flame. It was built by Zoroastrian
fire-worshippers from northern Iran, drawn to Surakhany by
the gas jets that spring in burning flames from its soil.
        Now more foreigners are coming to Azerbaijan, lured
by the vast oil and gas reserves that gave rise to those
unearthly jets and turned Baku into the Soviet Union's pre-
war petrochemical capital.
        In recent months, dozens of Western oil companies
have returned to Baku, eager to develop Azerbaijan's
untapped oil fields.
        Since the 1870s, when the Nobels and Rothschilds
started commercial drilling on the Caspian Sea's oil-rich
eastern shore, Baku has been a center of oil extraction and
refining.
        Azerbaijan's leaders now hope Western companies can
open up their oil industry again and reverse a sad legacy of
underinvestment and long-term neglect by the Soviet
authorities.
        ``We are currently producing 11 million tons of oil
(or about 77 million barrels) a year but expect to see
production rise to 25-30 million tons by the year 2000,''
says Sabit Bagirov of the Azerbaijani state oil and gas
company, Azerineftkhimya.
        That is no oilman's exaggeration. The Azerbaijanis,
or Azeris as they're often called, have been talking to a
number of international companies about developing fields
with a proven capacity of up to 1 billion tons of oil, or
about 7 billion barrels.
        Amoco Corp., based in Chicago, heads a five-company
consortium that won the first international tender in June
1991 and has just completed a feasability study on
developing the 1.75 billion barrel Azeri field on the
Caspian shelf.
        Then Pennzoil of Houston and Ramco, an Aberdeen,
Scotland, company, were given the green light to explore the
Guneshli field, an onshore site which already is producing
130,000 barrels a day and said to have 1.2 billion barrels
still in place.
        Apache, a Denver company, is negotiating rights to
develop the offshore Kepes field, which has reserves
estimated at 200 million to 400 million barrels.
        Finally, British Petroleum and the state-owned
Norwegian company Statoil last September got the go-ahead
from the Azeris to survey the Chirag (flame) field, which
reportedly has reserves of 1.2 billion barrels.
        For decades, fields like Azeri and Chirag remained
untapped, casualties of an industry ill-equipped for deep-
water drilling.
        The drift of resources away from Azerbaijan
accelerated in the 1950s, when the Soviets struck oil in
Siberia. Baku lost its preeminence as the hub of the Soviet
oil industry: production fell from 21.5 million tons in
1965, or 8.9 percent of Soviet total production, to 3.7
million ton 1988, or 0.6 percent of the total.
        But as the Soviet Union fell apart, Azeri leaders
looked elsewhere for the investment they needed. In
Azerbaijan, political freedom was always identified with
economic independence -- the right to dispose of one's own
resources free of Moscow's meddling. Nowhere was this more
obvious than in the oil industry.
        Baku is making sure it is not exploited again.
Foreign companies are paying for the right to negotiate. No
contracts and no extraction rights have been awarded so far.
For these companies, the risk is huge and the potential
rewards enormous.
        But exploitation is not the only demon Azerbaijan
wants to exorcise from its past. The other is waste.
        The Azeris have been looking into ways of harnessing
their natural gas. For years, much of the gas has simply
been ``vented'' -- allowed to escape into the atmosphere
like the gas jets at Surakhany.
        The republic produces 9 billion cubic meters of gas
annually and an estimated 2 billion cubic meters is vented
every year in the Caspian Sea, causing serious but invisible
damage to the environment.
        Azneftkhimya and Pennzoil signed a deal in October
on a gas utilization project that will see gas from the
Guneshli field gathered, compressed and transported to the
mainland to be processed.
        Increased natural-gas production makes sense in
Azerbaijan. The country currently imports most of its gas
from the former Soviet republic of Turkmenistan across the
Caspian Sea. But the Turkmens recently doubled their gas
prices, forcing Azerbaijan to look elsewhere.
        Since gas is a much cheaper energy source than the
fuel oil now burned in Azerbaijan's power plants,
Azneftkhimya hopes that by switching to gas-fired plants
Azerbaijan can free up more oil for export.
        But Azerbaijan's plans for expansion of oil exports
are hampered by an absence of export pipelines. A consortium
made up of Russia, Azerbaijan, Kazakhstan and Oman is being
put together to build a pipeline from Kazakhstan and
Azerbaijan to proposed terminals on the Persian Gulf, the
Mediterranean, or the Black Sea. But this will not be ready
for years.
        Still, the recent progress in talks with foreign
companies has been remarkable. The successes have been
attributed to Popular Front leader Abulfaz Elchibey, whose
landslide victory in the presidential elections in June
helped end a long period of social unrest and political
isolation.
        Buoyed by its new-found popularity in the West,
Azerbaijan wants to sever its last remaining ties with
Russia's ailing economy. It already has introduced its own
currency, the manat, and now wants out of the post-Soviet
ruble zone.
        ``We are still not completely independent in our
choice of economic policy,'' says Sabit Bagirov of
Azneftkhimya. ``We need to get out of the ruble zone so we
can carry out our own monetary and financial policy. This is
the basis of independence.''
        To protect its industries from the ravages of
Russian inflation and the relentless devaluation of the
ruble, Azerbaijan wants to switch completely to the manat
and conduct all trade with the former Soviet republics in
hard currency based on world prices for oil and all other
goods.
        The government in Baku sees that as the only road to
real recovery.
        Azerbaijan's neighbors will balk at paying world
prices for Azeri oil. But there are plenty of people who
won't.
        The government is banking on oil exports buying
economic revival. And for a country paying 30 million rubles
a day for a war with its neighbor Armenia, a strong economy
is not an idle luxury. It is a matter of life and death.