About a month ago, an Iranian warship confronted a BP-operated
research vessel, the Geophysic-3, which belongs to the Azerbaijan Republic,
and demanded that it stop marine exploration at once the Caspian Sea oil
fields belonging to Iran.
Although this was the first time that Iran has taken such a drastic
measure to warn its neighbor, this was not the first time that Azerbaijan had
encroached on Iran's borders in the Caspian Sea.
In order to protect its sovereignty over its portion of the Caspian
Sea, the Iranian government claimed one of the known oil field in the
southwestern part region of the Caspian Sea in 1998. Iranians call this the
Alborz oil field. In Azerbaijan, the name of the same structure in the
southwest Caspian is Alov,which actually consists of three fields: Sharg,
Alov, and Araz. These Persian names mean Sharg (East), Alov (flare), Araz (a
river between Iran and Azerbaijan) and Alborz (a mountain in Iran).
The Alborz/Alov field is located above the Astara-Husseinqoli line.
This virtual line is created by drawing line between Astara, the last point in
Azerbaijan-Iran border in Caspian and Hosseinqoli which is the last point of
ground border between Turkmenistan-Iran. Azerbaijan claims in some oil and gas
maps from Soviet era, this line is the last region of Soviet activities in the
Caspian. The waters below this line is about 11% of total Caspian waters.
Should Iran acquires its 20 percent share of Caspian Sea resource, the
Alborz field will be within the area possessed by Iran. However, if the
Caspian Sea is divided along the median line, the Alborz field would be
located just past Iran's territorial waters. In the legal regime of
condominium, it is clear except for 12- 20 miles of the coastal waters, all of
the waters are in common, and therefore the field would not fall in any one
British Petroleum reached an agreement for Sharg-Alov-Araz Production
Sharing Agreement (PSA) with the Azerbaijan in July 1998 at 10 Downing Street
in the presence of British Prime Minister, Tony Blair and Azerbaijan
President, Heydar Aliyev. . The
Azerbaijan Republic claimed that the Alborz field was inside Azeri territorial
waters. Azerbaijan has already authorized a consortium of oil companies to
operate in this region. The Azeri Oil Company has a 40 percent share in this
consortium, BP Amoco has 15 percent, the Norway's Stat Oil and ExxonMobil each
have 15 percent, the Turkish Oil Company (TPAO) own 10 percent, and Canada’s
Alberta Energy 5%. The Azeri government authorized the consortium to conduct
seismology operations on Sharg-Alov-Araz in 1999, and within a month, the
company started to conduct three-dimensional seismology in the Alov field. It
was after the Ilham Aliyev interview in Baku in December 16, 1998 said “the
government had opened tenders for the D-43, D-44 and D-74 off-shore oil
structures in the southern Caspian. Iran at the same time opposed with the
decision of Azerbaijan Republic and sent a letter to Azerbaijan Government in
December 1998, showed its concerns over the Azerbaijan activities in the
Caspian before the establishment of new legal regime in disputed portion of
After the completion of the study, BP officials said that results
indicated that there is some 2.6 billion barrels of oil and 2.4 billion of gas
in the field.
In the last days of December 1998, National Iranian Oil Co. (NIOC),
Royal Dutch/Shell Group, London independent Lasmo plc and then German Weba
have formed a consortium with the name of KEPCO (Khazar Exploration and
Production Company) to conduct an
exploratory survey of the southern Caspian Sea. The 18-month study comprised
1000 km of two-dimensional seismic survey, and geological and geophysical
studies of the area. Azerbaijan protested the Iranian deal claiming that some
of the areas to be studied are within its littoral boundaries.
In September 1999, NIOC has assigned the Channel Islands-registered
Petro Iran Development Company (PEDCO), to study, explore, and exploit oil
from the Alborz 1, 2, 3, and 4 fields field.
The company invited a Norwegian-registered company called Fugro-Geoteam
to cooperate in conducting two dimensional seismological studies of the field.
This company's Russian ship, the Nalivkin, entered Iranian waters in October
1999 to carry out the study.
In response, Ilham Aliyev, the Deputy Head of the State Oil Company of
the Azerbaijan Republic (SOCAR), called on the regional manager of
Fugro-Geoteam in Baku and threatened to seize all of the company's assets in
At the time, the Iranian foreign Ministry sent letters to the
Azerbaijan Republic, and Iranian Oil Ministry sent letters to the companies
active in the Caspian Sea. In these letters, Iran implicitly emphasized
the necessity to defend its national interests.
Following the evaluation of the results of seismological studies, the
Azeri consortium intended to begin marine exploration and extraction in the
Alborz filed last month. The Iranian foreign Ministry called on the ambassador
of the Azerbaijan on July 21, and requested that the oil companies of
Azerbaijan and the other foreign countries refrain from operating in Iranian
territorial waters. The Iranian oil ministry also warned the companies active
in the region to stay out of Iranian territorial waters.
On July 22, the British ambassador to Iran was informed that
unauthorized foreign companies would not be allowed to operate in Iran's
twenty percent of Caspian. In an interview in Baku on July 22, Norouz
Mohmmadov, who is in charge of the international section of the Azeri
President's office, said that Azerbaijan has been extracting oil from the oil
field of the Caspian Sea for fifty years, and that it would continue the
process in the future. On the same day, the SOCAR spokesman in Baku told
Reuters that SOCAR did not intend to suspend any of its contracts with foreign
The Azeri government apparently thought that the Islamic Republic of
Iran would only resort verbal warnings. Ignoring Iran's warnings, two ships
from Baku were sent to the Iran's oil field to carry out exploration
operations. The Geophysic-3, accompanied by an escort ship, began operation on
Monday July 23.
An Iranian warship demanded that the two ships leave Iranian
territorial waters, and the two ships returned to Baku on the same night. The
Iranian ambassador to Azerbaijan was summoned by the Azeri prime minister
the following day, Tuesday, July 24th.
It appears that Azerbaijan left no options for the Islamic Republic of
Iran but to defend its interests. BP made a rational decision in announcing
that it would refrain from in any activities in the disputed region without
the consent of the two governments, and until the resolution of the dispute
between Iran and Azerbaijan.
The position of other regional countries in this regard should be
mentioned. On Friday, July 27, Kazakhstan asked its Caspian Sea neighbors to
settle their disputes through peaceful means, asking both sides to make the
Caspian area a region of peace, friendship and cooperation. These are the very
same measures referred to by Iran, and mentioned in the 1921 and 1940 treaties
between Iran and the Soviet Union. The government of Turkmenistan also asked
the Azeri government to end its unilateral exploitation of Turkmenistan's
resources in the Caspian Sea, including the Kapaz, Osman and Khazar oil field.
Turkmenistan had already recalled its ambassador to Baku due to the Azeri
activities in these disputed areas. The Russian government also asked all
sides to refrain from any hostile activities in the Caspian. The U.S.
government expressed its concern about Iran's action, but during a meeting
with Heydar Aliyev on July 26, Steven Mann, the U.S. president's special envoy
to the Caspian Sea region and the former U.S. ambassador to Turkmenistan,
limited the discussion to the transfer of oil through Turkey. Therefore, even
the position of other countries shows that there exists a agreement that the
exploitation of the Caspian resources should be delayed until a legal regime
is defined. Otherwise, it is clear that any hasty action is doomed to