CASPIAN GEOMETRY

Аnalytical group of the "Caspian Energy"

The beginning of 2004 was marked by high activity of negotiations in upper strata between three Caspian countries Russia and Kazakhstan, Azerbaijan and Russia, Kazakhstan and Azerbaijan. Early January this year the president of Russian Federation Vladimir Putin announced in Astana beginning of the "Year of Russia in Kazakhstan", it was confirmed by signature of considerable pack of interstate economic contracts. Early February the president of Azerbaijan Ilham Aliyev paid an official visit to Moscow (first official visit as the chief of the state), logic continuation of bilateral meetings of the three Caspian leaders was the visit of the head of Azerbaijan state to Kazakhstan, where a number of basic agreements on expansion of cooperation was achieved. The aspiration of Baku, Moscow and Astana to set a positive fashion to new economic interaction in the Caspian will allow speeding up realization of a number of projects. Under high iceberg top of interstate arrangements and a number of key statements do not look very distinct, but lines of next joint projects that seemed inconceivable some five years ago became possible with participation of the three Caspian countries.

Kazakhstan-Russia

The presidents Vladimir Putin and Nursultan Nazarbayev ratified the signing of agreements on cooperation on the extensive list of general tasks during visit of the Russian leader to Astana on January 9-10. The most important seems to be interaction in oil branch.

Russia and Kazakhstan signed the following documents:

The agreement on effective utilization of Baikonur cosmodrome,

- The memorandum on further development of cooperation on maintenance of operating of the Baikonur complex,

- The agreement on creation of the Kazakhstan geostationary satellite,

- The memorandum on mutual understanding on creation of Kazakhstan communication and broadcasting satellite

- The contract on creation of telecommunication satellite and its delivery to the geostationary orbit accompanying a land control complex of a space vehicle and communication monitoring system,

- The contract on cooperation and interaction on frontier issues,

- The agreement on activity of the frontier representatives,

- The agreement on the order of interaction at realization of export of production of military assignment to the third countries,

- The agreement on maintenance of specialization of the enterprises and organizations participating in production of military assignment products,

- The contract between LUKOIL and "KazMunayGaz".

Symbol of the Russian-Kazakhstan friendship was signature of the contract between "KazMunayGaz" (KMG) National company and Russian LUKOIL on January 9 on "Dostik" ("Friendship") project on establishment of a consortium on development of Tyub-Karagan bloc and prospecting of Atash bloc in the Caspian sea shelf on parity conditions.

At the end of December KMG and Competent body in the person of the Ministry of Power and Mineral Resources of Kazakhstan have signed two agreements on these fields. Thus, "KazMunayGaz" became their basic depth user. Russian partner of KMG plans to invest about $2 bn in Tyub-Karagan and undertake financing the Atash bloc prospecting. Tyub-Karagan stocks are estimated in Kazakhstan at 150 mln tons of standard oil, Atash - 130 mln tons.

Relations between Moscow and Astana are traditionally based on fuel and energy branch. If in the production sphere Astana encourages cooperation with Russia, in the field of transportation and sale it requires significant concessions, the Russian web-site Rusenergy.com writes. During visit of Vladimir Putin the president Nazarbayev awarded the order of "Dostik" to Victor Khristenko, former Russian vice-premier supervising then transportation and oil export for his merits in realization of the Year of Kazakhstan in Russia in 2003. Basic merit of the Russian vice-premier consists in authorization of increase of quota of Kazakhstan petroleum at export transit via Russian pipelines. Last December the annual Protocol on pumping to the intergovernmental agreement on cooperation in petroleum sphere was signed. In conformity with it quota of Kazakhstan exporters in 2004 will raise to 22 mln tons.

The tendency of hydrocarbon production speaks about necessity of activating the new - alternative directions of Russian export in near future (see information).

In 2003 Kazakhstan increased oil production with gas condensate up to 51.4 mln tons from 47.2 mln tons the previous year. Total amount of Kazakhstan export in 2003 grew by 33% in comparison with 2002 and made $12 bn 900 mln. Trade balance developed positively at the sum of $4 bn 570 mln. The share of mineral products in the structure of Kazakhstan export in 2003 made 65%.

Basic buyers of Kazakhstan export for the given period were the Bermuda island - 17.0%, Russia - 15.2%, Switzerland - 13.0%, China - 12.8%.

At the meeting with Vladimir Putin the president Nursultan Nazarbayev stated that Kazakhstan petroleum will be transported by tankers via the Caspian Sea and enter the constructed pipeline of Baku-Tbilisi-Ceyhan. Astana plans to direct 20 mln tons of petroleum per year via this route at the first stage. Such a prospect is not pleasant to the president Putin who said to his Kazakhstan colleague that Kazakhstan can not load the CPC pipeline constructed in 2001 because Russia will suffer losses. In response Kazakhstan proposed to create the Russian-Kazakhstan structure to deal with joint export and sale of petroleum, including the pipeline system of Atirau-Samara and "Dostik" from Kazakhstan to Europe via Russia. "KazRosGaz" JV (KRG) created in June, 2002 by "Gazprom" and "KazMunayGaz" on a parity basis and registered in the Republic of Kazakhstan by "KazRosGaz" CJSC JV for purchase and marketing of natural gas, gas processing at the Russian GR and other kinds of activity serves an example for the oil enterprise.

Prospected stocks of natural gas of the Republic of Kazakhstan total about 2 trn c.m. The forecasted resources of natural gas in view of the Caspian sea shelf are estimated at 8.3 trn c.m. Recently gas production in Kazakhstan has been about 11-12 bn c.m., internal consumption - about 5 bn c.m. per year. Gas production is planned to increase to 14 bn c.m. in 2005 and to 60 bn c.m. in 2010. Basic directions of bilateral cooperation between "Gazprom" OJSC and managing subjects of Kazakhstan are processing of raw material of the Karachaganak gas condensate deposit at Orenburg GR (in 2003 about 5.5 bn c.m. of crude gas and 4.5 mln tons of astable gas condensate GR was processed at the Orenburg GR, plan of 2004 is 7 bn c.m. and 3.1 mln tons accordingly); Rendering of services to the enterprises of "Gazprom" JSC in transit of Kazakhstan gas from Tengiz deposit via the territory of the Russian Federation to consumers of Transcaucasian states; delivery of Russian natural gas to the consumers of Kustanay, Kazakhstan; organization of transit of Central Asian gas via the territory of the Republic of Kazakhstan in growing volumes under the concluded long-term agreements.

The idea of gas cooperation consists in "Gazprom" assignment of a part of market for the benefit of KRG in exchange for an opportunity to buy gas for joint sale. Last KRG contract became the opportunity of selling gas to Azerbaijan at the price of $52 per 1000 c.m. provided to it by "Gazprom" (instead of independent "Itera") on December 2003. KRG also plans to sell gas to Ukraine and European countries in total volume of 7 bn c.m. in 2004. The head of "KazRosGaz" Anuarbek Argingazin noted that his company can deliver 6 bn c.m. of gas to Azerbaijan in 2004. Since January 1 the company carries out export of Kazakhstan gas to Azerbaijan within the framework of the contract signed on December 2003 with "Gazexport", a Gazprom "branch". On January-February "KazRosGaz" already delivered almost 1 bn c.m. of gas to Azerbaijan. Thus "Gazexport" must work on a parity basis with "Itera". However, as "Itera" could not receive quota on transit of Turkmenistan gas via the Uzbek site of Central Asia-Centre ("Gazprom" is the operator of the Uzbek line) gas pipeline, it has not begun performing the contract. These circumstances may be considered as "fors-major", but "Itera" is probably disturbed not by the sanctions, but by the threat of complete loss of business on gas sale not in Caucasia. Thus, cooperating with Russian oil exporters "KazMunayGaz" is going to build its export policy further. The plans on purchase of 63% of Unipetrol, a Czech petrochemical company capable to process 9 mln tons of petroleum per year speak about the gravity of intentions of the Kazakhstan monopolist in European markets, KMG press release distributed on December 2003 announced. The Czech company includes some processing enterprises and more than 300 refueling stations. The given document also says that the plans of KMG concerning Central Europe are of a long-term and strategic character. It is proved in practice, in 2003 KMG created "TransYug" JV ("Transsouth") with the Ukrainian state oil transportation company "Ukrtransnafta" for development of the Odessa-Brody-Gdansk pipeline in the Baltic Sea. Ukraine and European Union (EU) create it in account of the throughput exceeding 40 mln tons of petroleum per year for deliveries of Kazakhstan raw material. This is how KMG imagines the practical basis of Kazakhstan-Russian economic interaction today.

Russia - Azerbaijan

"Russia is a strategic partner for Azerbaijan, and we shall be faithful to this partnership, we shall advance this course constantly", - I.Aliyev said at negotiations with I.Putin in Moscow. He regarded the relations with Russia as "successful, dynamical and comprehensive".

Vladimir Putin stated the level of interaction between Russia and Azerbaijan has reached now the best development for last years. "We consider that despite of all complexities we face in the postsoviet space, in the region, we will manage to overcome these difficulties by joint efforts", - the president of Russia said.

The president of the Russian Federation noted that for last two years goods turnover between the two countries "exceeded on the average 50 percents per year". V.Putin also informed that Moscow and Baku "together think about realization of the joint projects, including in the fuel and energy sphere".

The following agreements were signed during the visit:

- The agreement between ITAR-TASS and AzerTaj agencies on cooperation in the field of information;

- On mutual protection of the confidential information between government of the Russian Federation and government of the Azerbaijan Republic

- The protocol on withdrawals from the free trade mode to the Agreement on free trade between government of Russian Federation and government of the Azerbaijan Republic from September 30, 1992;

- The program of cooperation in humanitarian sphere between the Russian Federation and Azerbaijan Republic for 2004-2006;

After signing these documents the presidents Vladimir Putin and Ilham Aliyev signed the Moscow declaration of the Russian Federation and Azerbaijan Republic that expresses intentions of the two countries to also further develop interaction in all directions, in particular concerning the Baku-Novorossisk pipeline.

In this connection the Declaration marks readiness of Russia and Azerbaijan to continue "cooperation in development and prompt conclusion of the Convention on legal status of the Caspian sea... at prime settlement of the issues of depth use, ecology, fishery and navigation". The meeting of the ministers of foreign affairs of Caspian states on preparation of the second Caspian summit is planned for early April 2004 in Moscow.

In conformity with the Moscow Declaration, Russian Federation will support Azerbaijan in the question of joining Azerbaijan to the Agreement on international transport corridor /ITC/ "North-South". The agreement on "North-South" ITC was signed on September 12, 2000 in St.Petersburg by Russia, India, Iran and Oman and came into force on May 21, 2002. Short ways, low tariffs, saving of time, simplification of registration of documents and administrative procedures, and also delivery of cargoes by means of "combinations of vehicles" are marked among the special advantages of ITC.

It is estimated that "North-South" route via which the transit cargoes follow from the countries of the Indian ocean and Persian gulf through Iran, Caspian sea, Russia to the countries of North and East Europe is three times shorter than the way through the Suez channel. For consignors this route will do cheaper by 15-20% and for 20 days faster than through the Suez channel. Five countries besides Azerbaijan - Kazakhstan, Belorussia, Armenia, Bulgaria and Bahrain have officially declared about their intention to join the Agreement on "North-South" ITC. Turkmenistan, Saudi Arabia, Kuwait, UAE, Indonesia, Malaysia, Sri-Lanka and some other countries, including the European - Finland and Lithuania display serious interest to the transit project. On preliminary calculations of experts, volume of transit via "North-South" ITC can make up to 10 millions tons per year without account of oil and oil products.

During visit to the Russian capital the president of Azerbaijan has made a number of important statements particularly determining future economic mutual relations of the two countries. The head of Azerbaijan noted that cooperation in power sector meets the interests of Russia and Azerbaijan and will be continued. "It meets the interests of Russia and Azerbaijan, brings economic benefit, and is an important bridge between our peoples", - head of the Azerbaijan state emphasized.

In turn, Vladimir Putin declared readiness to even more activate the relations with Azerbaijan in the sphere of power carriers.

Answering mass media questions, the president of Azerbaijan once again confirmed that construction of Baku-Tbilisi-Ceyhan pipeline can not "cause any harm".

For the first time at such a high level, the Azerbaijan leader has not excluded that subsequently also Russian petroleum may be pumped through the re-constructed pipeline. "I consider that this pipeline is a deeply economic project not having any underlying political reason", - emphasized Aliyev. "Input of "Baku-Tbilisi-Ceyhan" pipeline will not be of any negative consequences for our neighbors, on the contrary: in future also petroleum produced in Russia will be transported via this system",- he stated.

Azerbaijan is going to draw Russian companies actively to its market. "We welcome participation of Russian companies in the mutually advantageous cooperation", - Ilham Aliyev stated. He noted that "more than 300 Russian companies work in our country and they invested hundreds of millions of dollars, including in power sector". "Russian banks work actively, - the Azerbaijan leader said. He also emphasized that "Russia and Azerbaijan are going to increase goods turnover twice in near future". Today it is 500 mln dollars. The minister of Economic Development of Azerbaijan Farhad Aliyev informed, "Russia is ready to participate in privatization of enterprises". According to him, "the speech first of all goes about upgrade of oil mechanical engineering".

Together with the visible side of success of the visit there is also another side that was permanently present in such kinds of meetings. Before the top level Russian-Azerbaijan meeting former minister of power of the Russian Federation (the former vice-president of 'Rosneft", now head of the Federal agency of the Russian Federation on power Sergey Oganesyan executes now his duties), vice minister of power, industry and atom industry Igor Yusufov stated that Russia is interested in signature of long-term agreement with Azerbaijan on transit of Azerbaijan oil "We could sign such an agreement on analogy with other CIS countries not fixing volumes, tariffs so that it would be comfortable and completed by annual protocols on concrete technical parameters", - Yusufov stressed. He reminded that a similar agreement for the period of 15 years has been made between Russia and Kazakhstan.

"Thus we would be sure that Russian pipeline system will be loaded by certain volumes and for a certain term also Azerbaijan petroleum would be guaranteed with access to the Mediterranean ports and Europe using our transit", - the former minister noted.

The reaction of Baku appeared predicted, "Now Azerbaijan is not going, and has no free volumes of petroleum to increase transit via the Baku-Novorossisk route", SOCAR president Natig Aliyev stated then.

9 out of 16 mln tons produced in Azerbaijan is produced directly by SOCAR today, 2.5-2.7 mln of them is sent on export via Baku-Novorossisk on the tariff some times more than on the similar direction of Baku-Supsa (today only petroleum of the international consortium is pumped via this pipeline). Thus up to 20% in oil price is lost only at mixing with Russian grades of petroleum and approximately as much after payment of penny and penalties from idle time of tankers in Bosphorus strait and (or) storm weather in the Novorossisk port. The remaining hardly more than 6 mln tons is directed to internal needs, in particular for processing to two Baku OR (capacity 22 mln tons), that is there is no surplus of petroleum in Baku. Therefore signing of the long-term economic document is also of obviously declarative character.

In reply to persistent resistance of Moscow officials, Baku offers more rational and mutually advantageous version - to unload the Novorossisk port with the help of Baku-Tbilisi-Ceyhan (BTC) in future. Top throughput of two Baku pipeline branches - Baku-Tbilisi-Ceyhan and Baku-Supsa - is 60 mln tons per year. In 2004 the Consortium on development of "Azeri-Chirag-Guneshli" (ACG) contract area will produce 6.8 mln tons, and after BTC is put into operation, efficiency of ACG deposits will grow together with BTC throughput, the peak of production at 52 mln tons will fall on 2008 and be prolonged for 3 years. After the basic pipeline is launched, the urgency of other export direction Baku-Supsa for Azerbaijan petroleum from ACG automatically reduces, its transit role for other Caspian petroleum accordingly grows. If to take into account that Baku OR today are loaded just by 30% of their capacity, the version of Baku-Novorossisk reverse can appear already in near future not less urgent and more expedient for Russia than the arrogant maintenance of maximal transit of the volume of Azerbaijan petroleum via the Russian territory that is obsolete today.

Today also Kazakhstan - the old export strategic partner of the Russian Federation going to pump up to 20 mln tons through Baku by tankers claims for transit capacities of Baku. Besides today KazRosGaz already pumps gas to Azerbaijan. Having proposed to create a JV on petroleum like KazRosGaz, Nursultan Nazarbayev in a thin eastern manner allowed to assume that negotiations on export direction of Kazakhstan petroleum via Novorossisk-Baku-Tbilisi-Ceyhan is not a case of far distant future and, as a matter of fact, is a non-risk variant for all, would there be a free throughput. On the background of the issues of general economic character this theme nevertheless seemed the basic one during visit of the Azerbaijan leader to Astana.

Kazakhstan - Azerbaijan

The idea of joining Actau and Baku conditionally by a gas pipeline sounded in Astana not for the first time, but for the first time on such a high level and received support, all the more the precedent of subsea gas pipeline already exists in world practice - it is the Russian-Italian Blue Stream laid on the bottom of the Black Sea to Turkey. The president of Azerbaijan Ilham Aliyev noted that during the meeting with the president Nursultan Nazarbayev a complete agreement was achieved in the field of transport, increase of goods turnover and transportation of power carriers. I.Aliyev said that further, after the Baku-Tbilisi-Erzurum gas pipeline is put into operation Kazakhstan gas is also planned to transport to Europe via this pipeline. He expressed confidence that in near future Kazakhstan and Azerbaijan will become basic countries on gas transportation to Europe.

Therefore visit of the Azerbaijan president Ilham Aliyev to Kazakhstan has served as a new starting point for subsequent negotiations on connection of Kazakhstan to the global network of Baku oil and gas pipelines - Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum. The session of Supervisory Committee on the "Kashagan" project was held literally a week before the visit, petroleum from this field is also planned to pump via an alternative oil pipeline. The positive result of meeting of the shareholders of the given project having agreed on new terms of production of first oil became a forerunner of the positive of forthcoming Kazakhstan-Azerbaijan top meetings.

A number of important statements sounded also in the Kazakhstan capital which, in particular, shed a light on the reasons of delay of signature of the Azerbaijan-Kazakhstan intergovernmental contract on oil pumping via the BTC pipeline planned to sign late 2003. Despite of subtle polemic of the presidents of the two countries on this question, it is not a proof of any global disagreements, but it looks like it is reflection of the course of negotiations at the given stage.

Before the flight the president Aliyev stated in interview to journalists at the Bina international airport that the question on connection of Kazakhstan to the Baku-Tbilisi-Ceyhan project has been frequently discussed last years. "Though we repeatedly declared that we are building the Baku-Tbilisi-Ceyhan pipeline for transportation of only Azerbaijan petroleum, but, the geographical location of the region, certainly, brings to such discussions", - Aliyev stressed.

He emphasized "we would like that petroleum of other countries was transported through the territory of Azerbaijan, that Azerbaijan became a transit country from this point of view. But at the same time we are sure that oil produced in Azerbaijan will be sufficient for effective activity of the Baku-Tbilisi-Ceyhan pipeline".

At the joint press conference on March 1 the president Nursultan Nazarbayev said that Kazakhstan is interested in successful realization of Baku-Tbilisi-Ceyhan project. "We understand exclusive importance of this project both for external and internal policy of Azerbaijan, but it is also very important for us as an alternative export of our power carriers to the foreign market", - Nazarbayev said.

At the same time, he noted that Kazakhstan has questions on the issue concerning connection to Baku-Tbilisi-Ceyhan project". "The whole dispute is the tariffs offered to us by the Georgian party", - he said. Nevertheless, Nazarbayev "is convinced that the Kazakhstan petroleum will surely go via this pipe".

At that, in his opinion, "first of all, when there is much petroleum in our country, it will be possible to submit the first part by tankers through the Caspian sea, and after 20 millions tons of petroleum per year and more, it will be possible to think of the pipeline". "This is a case of future", - the head of Kazakhstan emphasized. "The transport sphere between Actau and Baku may be developed in such a manner that Kazakhstan will receive an alternative access to international markets through Caucasus", - N.Nazarbayev emphasized.

Nazarbayev considers also that "in future it is possible to think of connection to the gas project in the same direction".

Information: As informed earlier, BTC oil pipeline is 1762 km length, 443 km - in Azerbaijan, 249 km - in Georgia, and 1070 km - in Turkey. Throughput of the pipeline is 50 mln tons of petroleum per year. Export of Azerbaijan petroleum from port Ceyhan (Turkey) is planned for the 2nd quarter of 2005. The Azerbaijan site of the oil pipeline is to be constructed by September 2004, Georgian - by October 2004, Turkish - late 2004. Participating interests of BTC project are: BP (30.1%); SOCAR (25.00%); Unocal (8.90%); Statoil (8.71%); TPAO (6.53%); ENI (5.00%); Itochu (3.40%), ConocoPhillips (2.50%); INPEX (2.50%), Total (5.00%) and Amerada Hess (2.36%).

The following documents were signed in Astana:

- The declaration "On friendly relations and strategic partnership between the Azerbaijan Republic and Republic of Kazakhstan";

- The agreement "On cooperation between the government of Azerbaijan and government of Kazakhstan in the military sphere";

- The agreement "On cooperation between the government of Azerbaijan and government of Kazakhstan in the field of governmental communication";

- The agreement "On scientific and technical cooperation between the government of Azerbaijan and government of Kazakhstan";

- The agreement "On scientific and technical, trade and economic cooperation between the executive authority of city of Baku and authority of the city of Astana";

- The program "On long-term cooperation in the field of culture, science and tourism between the government of Azerbaijan and government of Kazakhstan";

- The contract "On cooperation between the airline companies of Azerbaijan and Kazakhstan".

The negotiations on signing the intergovernmental agreement between Azerbaijan and Kazakhstan on transportation of Kazakhstan petroleum via the Baku-Tbilisi-Ceyhan export pipeline launched the finishing stage, SOCAR president Natig Aliyev informed. Terms of signing this agreement will depend on intensity of negotiation, however it will take place in 2004, he noted.

The agreement will become a legal base for the senders of petroleum and investors, a commercial base for BTC Co and future senders, head of the state company said. The document will give guarantees on tax, customs and commercial questions of oil transit and define the settlement of ecological problems in accordance with standards acceptable for Azerbaijan and Kazakhstan.

The important moment to define the agreement is the condition at which Kazakhstan sending petroleum would not break the condition of the agreements earlier signed among Azerbaijan, Georgia and Turkey.

Not all the questions on the agreement are solved yet. For example, the status of the document. Azerbaijan has a long practice of ratification of this kind of agreements in the parliament and increasing them to the level of laws. Kazakhstan has no such practice and is not going to do this for the agreement on BTC. It is of great importance for the investors, as they do not want the agreement to undergo any changes further.

According to N.Aliyev, the solution may be signature of an additional agreement, the so-called "acknowledgement" that will confirm the agreement is valid compared to Kazakhstan laws. In opinion of Aliyev, transit of any petroleum via BTC must be determined by market mechanisms, non-discriminating conditions must be applied to all the participants of transit. Therefore the agreement should not define any privileges or preferences.

According to the vice-minister of power and mineral resources of Kazakhstan Lazzat Kiinov, the agreement is practically ready, approval must be received on the part of appropriate state bodies of the two countries.

On Caspian problems

In Astana the president of Azerbaijan offered to take the existing bilateral contracts between Kazakhstan and Azerbaijan, Kazakhstan and Russia, Russia and Azerbaijan for the basis of the universal agreement on the Caspian.

"I am sure that if our existing contracts are taken for the basis of the universal agreement, we can very easily and painlessly achieve the appropriate agreement (on Caspian demarcation)", - Aliyev said.

According to him, the bilateral agreements completely cover all the necessary questions and "are based on norms of international law and international practice".

"Today nobody questions the sectoral principle of dividing Caspian, which was adhered by two countries from the very beginning - Azerbaijan and Kazakhstan, and further others joined also", - the head of the state reminded.

In this connection Nazarbayev noted importance of continuing the constructive dialogue on legal status of the Caspian.

During meeting the presidents of Kazakhstan and Azerbaijan Nursultan Nazarbayev and Ilham Aliyev discussed initiatives of Kazakhstan on creation of a regional antiterrorist center of Caspian states and conclusion of the Pact on stability in the Caspian, and also the problem of demilitarization of the region.

In this context the opportunity of cooperation in the field of creating an effective transport corridor on transportation of cargoes in direction of Europe-Asia is marked.

According to the declaration on friendly relations and strategic partnership of the two countries signed by the presidents on March 1, Kazakhstan and Azerbaijan "emphasize necessity of continuing the constructive dialogue within the framework of work on definition of legal status of the Caspian Sea". The parties positively estimate activity of Special working group at the level of vice ministers of foreign affairs of the Caspian states and "welcome signing of the Frame convention on protection of sea environment of the Caspian sea on November 2003 in Teheran", the declaration says.

As was informed earlier, the agreement on demarcation of the Caspian Sea bottom between Kazakhstan and Azerbaijan was signed on November 29, 2001. The agreement establishes a principle of demarcation of the Caspian bottom into national sectors on middle line, the geographical description and coordinates of which are included in the above-stated protocol. Besides on May 14, 2003 a tripartite agreement was signed in Almaty between Russia, Kazakhstan and Azerbaijan on the point of joint, line of demrcation of adjoining sites of the Caspian sea bottom, on which, in particular, Russia got 19%, Kazakhstan - 29%, and Azerbaijan - within the limits of 18-19%.

According to the document, the joint point of the demarcation line of adjoining sites of the Caspian sea bottom is determined by geographical coordinates of latitude 42 degrees 33.6 minutes North and longitude 49 degrees 53.3 minutes east.

Summary:

Thus, the agreements on Caspian status between the three Caspian countries - Azerbaijan, Kazakhstan and Russia opening opportunity for two other states - Turkmenistan and Iran to join them became a basis for further economic interaction all over the Caspian region. New projects are another confirmation of that joint production of hydrocarbons in national sectors or their transportation carried out on a commercial basis will allow creating a unique high technology and ecological system of management in the Caspian in future focused basically on European markets. A geographically favorable position of the states in relation to perspective markets, stable growth of demand in these markets are the most weighty arguments in the complex geoeconomic game. The alternative principle of export of power carriers is basic, equal to the factor of competition in market relations with the condition of not rendering a braking effect. In any case the upholding of interests of this or that party should not receive a long character and accept any non-constructive and featureless forms, otherwise in this case it is the principle of alternative of alternatives that is working, to put it simply, "a holy place is never empty". Current year will show by how fast rates the conceived projects will be realized, which must legally connect the existing agreements on Actau (Kurik)-Baku project, designate the opportunity of reverse fill of Novorossisk-Baku pipeline (max throughput - 17 mln tons), investigate the opportunity of transiting Kazakhstan gas through Baku-Erzurum (30 bn c.m. per year), probably, also a new Kazakhstan-Russian JV on oil export will be created.

Information: export of oil and gas condensate from Kazakhstan grew by 13% in 2003 in comparison with 2002 up to 44 mln 339 thousand tons, including to CIS countries - up to 7 mln 23 thousand tons, Agency of Statistics of the Republic of Kazakhstan informed. In cost expression volume of oil and gas condensate export in 2003 grew by 39% and made $7 bn 20 mln.

Information: According to the declaration Moscow and Baku regard it necessary to start arranging the second Caspian summit with the purposes of prompt conclusion of the Convention on legal status of the Caspian Sea, says the Declaration signed by the heads of the two states on Friday in Moscow. "Following Ashghabad arrangement of the presidents of Caspian states on attaching a regular character to their meetings, the parties /Russia and Azerbaijan/ regard it necessary to begin preparing the second Caspian summit and with this purpose to carry out a meeting of the ministers of foreign affairs of the Caspian states", - the declaration says.