The complications for Azerbaijan's neighbors are also far-reaching. Baku is talking about piping gas to the Turkish city of Erzurum, which is also the junction for an Iranian gas pipeline, due to be ready in 2001. Even without the trans-Caspian project, Azerbaijan believes it can compete by upgrading a system of old lines through Georgia. Russia is also working to build its Blue Stream line across the Black Sea to Turkey. But with the late entry of Azerbaijan into the gas race, it now seems clear that at least one competitor will have to drop out.
Analysts say that Turkey has already agreed to buy more gas than it can use.
The complications come as negotiations over the Baku-Ceyhan oil line appear to be entering a final phase with predictions that a series of key agreements will be signed next month. But the frictions over gas could be a sign of the difficulties that the trans-Caspian project may face. In March, Edward Smith, the president of PSG International, told a U.S. congressional committee that the United States government should provide a sweeping guarantee for pipeline investors against the risks of competing claims in the Caspian. A direct indemnity by the government might be needed in order to expedite financing for the project, Smith said. The appeal for such special treatment is a sign of the seriousness of the problems in the region.