WORLD MARKET GATEWAYS ARE OPEN TO BIG CASPIAN OIL



BUT LARGE-SCALE PROJECTS STILL HAVE CHALLENGES TO BE RESOLVED


THE H.ALIYEV PIPELINE


When making a speech in Istanbul after the solemn ceremony of signing a package of agreements on ΜΕΠ, President Heydar Aliyev announced he experienced a feeling of pride for a five-year way passed from the signing of the contract of the century to today's conclu-sion of an agreement on the strategic Baku -Ceyhan oil pipeline construction. On the way to delivering the project we were faced with seri-ous difficulties. However, we have overcome them in tandem with our partners - Georgia, Turkey and the USA.

Aliyev expressed his personal gratitude to President Clinton. If there were not back-up of the USA and President Clinton personally, the project execution would be impossible, Aliyev emphasized.

The Georgian President Edward Shevardnadze said as far back as 10 years the project would be seen as a fancy. However today, on November 18,1999 it is historic date. An agreement on the Baku-Ceyhan pipeline construction and the European Security Chart were signed today, he said. Shevardnadze expressed his gratitude to President Clinton for his participation in putting the project into prac-tice.

It is great happiness for us to participate in energy projects in the region, Turkmenistan President Saparmurat Niyazov said. This is the eighth successive year when Turkmenistan tries to tap into Turkish and European markets. We have 30 percent of the world's energy reserves, however did not have alternative accesses to world markets. We ask President Clinton to assist in transporting our oil to China and further Japan, Niyazov said.

The Turkish President Suleiman Demirel congratulated the ceremony's participants on the occasion of this historic event. He also noted that the trans-Caspian pipeline would be able to seriously improve the environmental sit-uation in Istanbul.

The USA President Bill Clinton called the Caspian Sea a historic crossroads of transport ways and various cultures. In recent years the USA worked closely together with all the coun-tries of the region to create regional projects that will reinforce their independency. In addi-tion, the projects will bridge the gap between Asia and Europe, Clinton said. In President's opinion, the formation of the transport energy system like this will show how much the region-al cooperation is profitable. At last, the tapping of Caspian energy reserves will make our glob-al security more sustainable and wipes out a monopoly to transport energy resources only in one direction. It is very important and therefore we have been taking a stand for the construc-tion of multi oil pipelines since 1995. We are pursuing the policy and want to involve all of the Caspian countries in similar projects. In the near future we will boost our financing activities and shortly our Eximbank and other lending organizations will get down to work on drawing up a packet of commercial funding, Clinton posted.

700 years ago one of the visitors of Baku said "the town shines in fires all night along". Today the region gets the opportunity to become prosperous. It has not only oil but inde-pendency and security.



Today the leaders of the region's countries showed that now they had teamed up with one another to make the remote crossroads the region of prosperity and well-being and a peace. From now on, the region will light not only itself but all the world.

For Azerbaijan in both Main Export Pipeline (ΜΕΠ) and all of the world-scale projects the main matter was how to provide all conditions for putting it into practice rather than to create the project itself. A hurry in this event could have more disastrous repercussions than a slowdown.

If one takes the see-and-wait position, a famous proverb suggests itself - the furthest way about is the nearest way home, but from the place where you come. If one quickens his pace, it will result in additional snags in the form of underwater icebergs.

So, to successfully carry the Baku-Ceyhan project into effect, it is needed to combine at least three factors: a thorough analysis of polit-ical decisions, the regional approach plus an exact economic account. Azerbaijan had to dis-play all the qualities to show the commercial viability of the project proposed to all the world and for more than 1.5 years' negotiating process on the ΜΕΠ to be finalized successful-ly.

From May 1998 to the present day, Azerbaijan has managed to give the impact to the matter and to unite the world-scale projects: the Baku-Ceyhan ΜΕΠ; the subsea Caspian gas pipeline which will links Turkmenistan and Azerbaijan to the Mediterranean marketplace; transport project (the Great Silk Way). All of the projects taken together are designed to lay a firm investment foundation under each of them singly.

Such are blueprints, and a small country like Azerbaijan aiming to strengthen its inde-pendency and edged between Europe and Asia and being at the center of the interests the West and East may bring them into effect only so.

Energy export projects must be a firm pipeline junction to couple at least three largest oil and gas producing countries surrounding the Caspian Sea - Kazakhstan, Turkmenistan and Azerbaijan. As Azerbaijan has the most developed infrastructure and contractual and legal prac-tice in delivering international projects, it is from the state that an export initiative proceeds. All key decisions on regional and investment pro-jects cannot be made today not involving Azerbaijan - the guarantor of political and eco-nomic stability for investment projects through-out the territory of the Caspian region.


THE NEWEST HISTORY OF ΜΕΠ


As it is known, official negotiations on ΜΕΠ were begun on May 15, 1998 at a time when Azerbaijan President issued a special Decree. By that time, unlike its Turkish and western partners, Azerbaijan has already got a basic economic and political idea of the project. It had only to stand up for its position and to be ready to settle for inevitable compromises.



BASIC CHARACTERISTICS


From the start, Azerbaijan firmly abided by a conception on ΜΕΠ, which includes following points :

- a controlling stake (50 percent plus one share) in a pipeline company will belong to Azerbaijan;

- a procedure of reimbursing expenses on the ΜΕΠ project includes their full compensa-tion;

- after reaching a null-balance, the pipeline will come under the entire control and authority of the Azerbaijan Republic;

- the pipeline must be the not-making-profit entity.

- AIOC will be granted a preferential fee for the use of the ΜΕΠ.

The current advantages and faults of the Baku-Ceyhan project look as follow :


  • Baku-Georgia-Ceyhan (Turkey) route 1710km long costs USD 2.4 billion


    • ASSETS

  • A chance of a quicker settlement of the Armenian-Azeri conflict rises within the frame-work of the Caucasian economic territory being formed.

  • Turkey's guarantee to cover any cost over-runs on the ΜΕΠ construction project in the ter-ritory of the state.

  • The major western oil companies' guaran-tees to cover any costs over the officially fixed estimate of about USD1.2 billion to be spent on laying the pipeline via Azerbaijan and Georgia.


    1. Direct outlet on the Mediterranean coast the pipeline directly will couples the Caspian terminal at Sangachaly with the yet built termi-nal at Ceyhan on the Mediterranean.

    2. The backing by the Turkish Government.

    3. A precedent of delivering Azeri crude and then Kazakh and Turkmen oil to the Mediterranean markets.

    4. A long-term prospect of using the strate-gic oil pipeline for the transport of oil produced from other Caspian fields.

    5. SOCAR's and its equity partners' oppor-tunity to sway the process of shipping oil.

    6. The cost of shipping oil from Ceyhan to Rotterdam twice cheaper than an alternative way from the Black Sea.


    LIABILITIES

    1. Opposition from Russia; unresolved con-flict between Azerbaijan and Armenia and a probability of the conflict becoming acute, includ-ing the Abkhaz wrangle.

    2. Security: proximity of Azeri-Armenian bor-der, a conflict zone in Iraqi Kurdistan ; Kurdish militants in eastern Turkey.


    1997 - THE BUSINESS KICKS OFF WITH THIS YEAR


    During June 1997's session of AlOC's Steering Committee, a research panel of experts from the consortium to assess options for laying the main exportpipeline has been set up.

    It was recognized that it was most commer-cially viable and economically sound to pump large cargoes of Azeri oil to oil refineries on the Mediterranean. On this basis, AlOC's share-holders were offered to consider three potential options for laying the strategic oil pipeline:


  • Baku-Supsa

  • Baku-Novorossiysk,

  • Baku-Ceyhan.


    • In view of the former two routes moving Caspian oil to the Black Sea rather than outlets on the Mediterranean and, consequently, per-manently depend on the passage via the Bosporus, the experts studied a way overcom-ing the difficulty with using the Burgas-Alexandropolic (Bulgaria-Turkey) oil pipeline under construction. The consortium's share-holders considered costs of each of the pro-posed pathways. And the Baku-Ceyhan pipeline was then founded the most costly one. According to the AIOC experts' estimates, its cost was put at not less than $3.3 billion. The northern (Baku-Novorossiysk) route will cost about $2.3 billion. And at last, the Baku-Supsa pipeline is the cheapest conduit ($1.2 billion).

    A key point in the main export pipeline pro-ject was certainly negotiations with the govern-ments of Russia, Georgia and Turkey to deter-mine technical and legal sides of laying the strategic pipeline via the countries, including the settling of transit fees. The talks were to be completed by September 1998. After they are over, the most economically sound route for passing the conduit was slated to be selected.

    It is contemplated that the main export pipeline construction will take not less than 5 years. Consequently, its use will start not earli-er than in 2004 or 2005. The process of reach-ing an accord in the problems of the ΜΕΠ con-struction between SOCAR and AIOC will be uneasy.

    The Azerbaijan State Oil Company is extremely discontent with the actions of the Consortium's oil companies. The sticking point is the laying of the main export pipeline (ΜΕΠ) for shipping big Caspian oil.

    Judging by that of how AIOC acts, it is not belief in what negotiations over selecting route for ΜΕΠ will be completed by October 1998, as

    it was determined in June 1997, Ilkham Aliyev, the first vice president for SOCAR, thinks. In his opinion, it is not clear what aims AIOC pursues while procrastinating the determination of the issue. AIOC realizes well that the Baku-Ceyhan project matters to Baku more political-ly than economically. The AIOC shareholders think that when pipeline routes are selected for construction, the decisions must be based on commercial considerations. They do not want to build the pipeline on the conditions offered by Baku as comprehend that there is little com-mercial momentum behind the project. The option does not suit AIOC because of a decline in oil prices. Therefore the consortium cannot determine what marketplace will be more preferable.

    As to the world-scale export route, there are, in the opinion of Robin Branagan, the vice President of ΜΕΠ for AIOC, two options.

    The first run is two oil lines going across the Black Sea, the Mediterranean Sea and the Persian Gulf toward the Atlantic Ocean.

    The second direction passes through Iran toward the Pacific Ocean.

    Now there is no simple answer to a ques-tion what of the two markets is the most prof-itable for exporting Caspian oil. Everything depends on long-term outlooks and forecasts. Caspian oil will be in competition with the Canadian, US, Columbian, Australian, Iranian and Saudi sorts of crude oil for the Pacific Ocean market. Among the main competitors in the Atlantic Ocean marketplace are the North Sea Brent benchmark crude and the Nigerian, Venezuelan sorts of oil.

    In the markets there is a subtle relationship between demand and supply. Demand is con-tingent upon economic growth of the countries consuming oil and supply depends on the scope of developing offshore fields.

    On the basis of the aspects, for Azerbaijan the Black Sea market looks the most preferable judging by all economic indicators. It is followed by the Mediterranean market and then the Pacific Ocean one.


    1998-YEAR OF BIG HOPES


    It seems that the main event in 1999 on ΜΕΠ was the signing on October 29, 1998 of the Ankara declaration by Presidents of Azerbaijan, Georgia, Kazakhstan, Turkey and

    Uzbekistan. The Caspian region's countries confirmed in it their interest in the ΜΕΠ con-struction. The declaration also gave an assess-ment of the opportunities for producing and harnessing the oil and gas resources and their safe shipping to world markets (the full text of the Ankara Declaration read in number No 2 of CASPIAN ENERGY).

    However, AlOC's position conditioned by economic considerations of the project at the moment, gives Azerbaijan as a participant of the negotiating process the ground for making sharp statements against the operating compa-ny. For example, Abid Sharifov, vice Prime Minister of the Azerbaijani Government, says that if AIOC refuses to deliver the ΜΕΠ project stretching to Ceyhan, Azerbaijan itself will be engaged in putting the project into practice as it has already got a portfolio of many proposals from foreign companies and international finan-cial organizations. Thus, maybe the disagree-ments between SOCAR and AIOC will not become a serious snag for delivering by Azerbaijan the ΜΕΠ project.

    Touching upon financial terms for the pro-ject fulfillment, Sharifov notes that the proce-dure of its financing is rather simple, but there is a problem. For instance, Japanese compa-nies reconcile their proposals to finance Azerbaijani equity participation (50 percent plus one share, which makes up $1 billion and $250 million) in the project, with Azerbaijan having to assign a part of its shares to the Japanese companies. It does not suit Azerbaijan and therefore it is in searches for additional sources of financing the state's stake in the project.

    First results have already been appearing in the process of the negotiations

    For example, in Istanbul the basic provi-sions of the proposed intergovernmental Agreement on ΜΕΠ have already been dove-tailed and SOCAR is ready to sign the docu-ment, the SOCAR president reports. The docu-ment sets down the rights and obligations of Azerbaijan and Turkey to ensure safe and reli-able export of main oil via Turkey and Azerbaijan. Under the deals, favorable tax incentives will be granted to producers trans-porting their oil to world markets.

    A document like this will be sealed between the governments of Azerbaijan and Georgia.

    The USA offer to sign an intergovernmental frame agreement on exporting

    Caspian resources to world markets. Washington provided the initiative in Houston's Sept. 17 session of the joint Turkish-US joint commission.

    Yurdakul Egibgyuden, an adviser to the Natural Resources Ministry, said the USA offered to sign an intergovernmental agree-ment, which will apply to not only the Baku-Ceyhan oil pipeline but all hydrocarbon reserves and oil pipelines in the region.

    The USA and Turkey urge to establish a pipeline company, which will represent the interests of all the Caspian states producing oil. In turn, the states will give appropriate export guarantees. However, given both Turkmenistan and Kazakhstan only start prospecting oil and gas off their Caspian shores, the guarantees are understood not to be so firm as Azerbaijan and, above all, AlOC's shareholders would want to have. But on the other hand, it cannot bring about delays in the ΜΕΠ project, which Azeri officials talk about. And it means that it is the states that lobbying the Baku-Ceyhan project at the moment are due to commit themselves to some business risk. Given that US companies and TPAO of Turkey have a majority of shares in AIOC, one can confirm that the AIOC shareholders are obliged to take some risk of Azerbaijan in the ΜΕΠ project upon themselves.

    The following oil prices were accepted as the terms of reference for a primary assess-ment of the cost effectiveness of a project for exporting early oil: $16.5 for a ton of oil in Rotterdam, $14.65 in Novorossiysk, $15.3 in Supsa,

    Transport costs are $0.43 for delivery of one barrel of oil in the Baku-Supsa direction, $2.12 a barrel for Baku-Novorossiysk, $1.2 for Supsa-Rotterdam, $1.85 for Novorossiysk-Rotterdam.

    Georgia's transit terms are the most prof-itable as the transit fees are retained for 30 years' use of the pipeline system.

    Some corrections are due to be made for the above figures at that time, following low prices for Brent benchmark crude in world mar-ket, which fell by an about third against prices of early 1997. If one allows for a rental rate for the pipeline infrastructure, the terminals and oil loading points on the quays at Ceyhan as well as the pipeline safeguarding costs and insur-ance payments, a transit fee for shipping main Azeri oil via Turkey will total a bit little more than $2 a barrel.

    To make the project cost-effective, the operating and capital expenditures are not to exceed $2.5 billion.

    A chief hassle standing in the way of carry-ing the route into effect appeared to be an extremely high price of $3.3 billion for the pipeline construction. It was set by AIOC.

    In return for it, Turkey suggests some alter-native options for the route.

    By preliminary calculations of experts from Turkey's BOTAS company, the maximum pipeline construction cost is USDS.5 billion. However, there is an opportunity to minimize it to $1.8-$1.9 billion. Everything is contingent upon the volume of oil to be transported through, the pipeline and its direction (the Turkish party worked out four alternative corri-dors, one of which is Baku - Georgia - Erzurum - Ceyhan as well as fixed the start date of pumping Azeri oil. In the opinion of BOTAS' general manager Nadir Beyukogly, the most real date of shipping Azeri oil is 2004-2005 year.

    When a feasibility study was being carried out by the Turkish party, special attention was focused on the environment protection. As it has emerged, the highest point through which the pipeline passes within Azerbaijan is 900 meters over sea level and in Georgia and Turkey the appropriate points are located at levels of 2300 meters. 10 pump stations are to be installed along the pipeline route, three ones being in the territory of Azerbaijan (one of them is on the terminal at Sangachaly), three ones in Georgia and four ones within Turkey.

    The total length of the trunk pipeline is 1730km. A 1618km way from the Sangachaly terminal will be covered with a 42-inch pipe and a 112km pathway from near Tbilisi to the Ceyhan terminal will be made of a 34-inch pipe. A minimum throughput is 300,000 bpd while the line runs at a middle capacity and is 1.2 mil-lion bpd when the pipeline is fully stretched. An annual capacity is suggested to be between 40 to 55 million tons of oil as Kazakh and Turkmen oil are likely to be moved through the conduit. According to different estimates, the project cost ranges from $2.0 to $3.5 billion depending on the kind of route.

    The strategic pipeline is expected to come on stream in the year 2004 to 2005. The con-struction will be operated by the pipeline com-pany. During the 2002-2004 period from 80-90 to 150 million tons of oil are planned to be pro-duced from the Caspian basin. Thus, the pipeline will be working to capacity.


    WILL 1999 DOT ITS "I's"?


    Several events, which furthered moving for-ward the regional Baku-Ceyhan project some-how or other, have already occurred earlier this year.

    A regular round of negotiations on ΜΕΠ was held in Ankara on January 16-18.

    Turkey's Energy Ministry and Kazakhstan's Energy, Industry and Trade Minister made a statement of their intention to sign a Protocol on cooperation in oil and gas sector.

    On January 25-26 a question of boosting Kazakh oil export via Azerbaijan and Georgia was discussed between the Government of Azerbaijan and Kazakhoil, Kazakh company producing oil.

    All the moves of the Caspian states' towards the ΜΕΠ project are favored by the USA administration. The first half of this year has passed pending the quickest dovetailing all the financial issues and the rapidest signing of an intergovernmental agreement on the prospective ΜΕΠ.

    In spite of no effect, in the run of numerous negotiating rounds Azeri negotiating group suc-ceeded in persuading its chief equity partners -Turkey and BP Amoco - in commercial and political viability of building the Baku-Ceyhan pipeline under the current political and eco-nomic conditions of the region. For this time it has been a success not only to reduce the ΜΕΠ construction cost from USD3.3 to USD2.4 billion but to ensure to cover any cost overruns over the re-arranged official estimate of the project. Buoyed by the USA Government and guaranteed by stable equity partners, now Azerbaijan can rely on mitigation of terms and conditions in borrowing a loan from internation-al financial organizations (or better from oil companies). It is essential to finance Azerbaijan's stake (50 percent plus one share) in the prospective pipeline company. To bolster the project, Azerbaijan will need to provide the needed volume of oil produced, which will enable to fill the ΜΕΠ fully by the start of its commissioning, i.e., in 2005 annual oil produc-tion in the Azeri, Chirag and Guneshli fields is due to reach at least 30 million tons. By this time, in Azeri sector of the Caspian Sea new fields - Kurdashi, Lenkoran-deniz and Talysh-deniz, Yalama and then deepwater fields - will be discovered. In doing so, if commercial oil levels are found in at least a third of them, one may say that Azerbaijan will operate all of three pipelines, which move oil to outlets on both the Mediterranean and the Black sea.

    Given the projects for redeveloping old fields - Guneshli (Sunny), Neft Dashlary (Oil Rocks), Palchyg Tepesi (Mud Summit) - and a number of other fields, one may say about additional 10 million tons per year as early as the next seven years if, of course, in 2000 the contracts for these fields are awarded.


    SUBSEA CASPIAN OIL PIPELINE


    After the ceremony of signing a package of agreements on the ΜΕΠ in Istanbul, Kazakhstan President Nursultan Nazarbayev announced Kazakhstan had an intention of tak-ing a concern in not only the Baku-Ceyhan pro-ject but the Baku-Supsa project. According to him, this year alone Kazakhstan shipped 2 mil-lion tons of crude oil via the pipeline. We intend to transport significant part of our oil through the Baku-Ceyhan pipeline and Kazakhstan plans to participate in creating transport infra-structure for shipping oil via a subsea Caspian oil pipeline. The projects' execution will play great role in reinforcing the independency and security of our region's countries, Nazarbayev emphasized. He called upon the USA to assist in bringing the trans-Caspian pipeline project into effect.

    As to the transport of Kazakh oil via the ΜΕΠ, the main common thing in the export strategy of the two countries, as Kasymjomart Tokayev, Prime Minister of the Kazakh Government, claimed, is that Kazakhstan and Azerbaijan stand by a principle of multi solu-tions to the construction of export pipelines. In the October's news briefing Tokayev noted that Kazakhstan took a positive altitude to the Baku-Ceyhan pipeline construction project. "The more pipelines, the better for Kazakhstan if one takes the country's potential into consid-eration", Prime Minister said.

    Judging by what he said, at the negotiations with Azery party in the second half of this October an agreement was reached to conduct some consultations about commercial viability of the project and to work out a feasibility study of the project. Speaking about cooperation of the two states in the transport of oil, the head of the Kazakh government also posted that 1.5 million tons of oil had up to today been shipped by tankers from the Kazakh port of Aktau to Azerbaijan. In future, he added, it is slated to bring the volume to 10 million tons per year.

    Thus, to build the subsea Caspian ΜΕΠ, given attracting western investments and the current line-on of geopolitical forces, Kazakhstan and Azerbaijan have to do the fol-lowing:


    Kazakhstan's tasks in the next five years


    1. To intensify oil and gas production from fields off its Caspian coast, i.e., it is essential to put new efforts into boosting exploration of oil and gas.

    2. To provide the rivalry between the coun-tries wanting to attract foreign investments in the region.

    3. To determine the volume of the oil to be exported via the prospective ΜΕΠ, which defines a break even point of export.

    4. To guarantee a hassle-free oil export from both an economic and political point of view.

    5. To ensure sustained investments within Kazakhstan by way of reducing risks. It can be done by improving its financial framework and providing the fulfillment of long-term obligations under contracts.

    6. To regulate its relations with Russia with regard to the commissioning of the Caspian Pipeline Consortium, thus, providing a reliable principle of multi-solution approach to oil strat-egy.

    7. To study a commercial opportunity to deliver a world-scale project for exporting oil and gas to the Asian and Pacific Ocean region.


    Azerbaijan's tasks for the next five years:


    1. To build the ΜΕΠ to get the cost-effective project.

    2. To strengthen the political and economi-cal cooperation between the countries belonging to the GUUAM.

    3. To create all conditions for immediate settlement of Armenian-Azeri conflicts in favor of Azerbaijan.

    4. To enlist Russia's real (but not apparent) neutrality in the sorest matter for Azerbaijan -by moderate assistance in satisfaction of Russia's economic ambitions in the region.


    The tasks of Azerbaijan and Kazakhstan for the next five years:


    1. To resolve the problem of the legal status of the Caspian Sea. Failure to solve the problem scares main investors away from putting up their money for oil projects.

    2. To enlist the USA administra-tion's maximum back-up.

    3. To maximize the power's investments in the region.

    4. To provide a maximum eco-nomic integration of the two states in the transport sector (the fulfillment of the Great Silk Route project)


    Thus, priorities are clear and it is unlikely that with any luck within five years not only the ΜΕΠ but the subsea Caspian oil pipeline will be built.

    As it has been noted above in the present paper, a comprehensive approach to solving problems of any project will serve as a basis for attracting investments in each of the three pro-jects - ΜΕΠ, subsea Caspian oil and gas pipeline projects, the Great Sulk Way


    AZERBAIJAN'S EXPORT OPPORTUNI-TIES AND WORLD EQUILIBRIM


    On the basis of their export opportunities, the countries can be divided into four groups:


    1. The countries exporting over 100 million tons of oil per year - Saudi Arabia, Iran, Norway, the Arabian Emirates;

    2. The countries exporting between 50 to 100 million tons of oil per year - Russia, Nigeria, Venezuela, Kuwait, Mexico, the Great Britain, Libya;

    3. The countries exporting from 10 to 50 million tons of oil per year - Canada, Indonesia, Oman, Malaysia, Angola, Egypt, Catarrh, Syria, China, Algeria, Gabon, Equator;

    4. The countries exporting up to 10 million tons of oil per year;


    The first group of the countries' oil sales accounts for 46 percent of the world's export or 656 million tons of crude oil per year. The sec-ond group exports 30 percent of export world-wide or 433 million tons of oil per year. The third group's contribution is 18 percent or 260 million tons per year. At last, the fourth group exports 5 percent or 72 million tons of crude per year. As it is seen from the indicated data, the first and second group domi-nate the world market, and their export stake totals 80 percent of world export.

    According to the yet signed contracts and the present developments in the Azerbaijan upstream oil industry, in the next five years the republic can rely on being included in the fourth group. After it brings its annual output to 40 mil-lion tons, the republic can count on its inclusion in the third group. From the position of today's realities, such is the real outlook for the per-spective development in the foreseen future for Azerbaijan.


    The data from the book Big Oil of Azerbaijan by Ch.A.Sultanov were used in the story.