### Azerbaijani Oil

When the original production sharing agreements (PSAs) for the AIOC fields were signed in 1994, the agreement stipulated that an export system should be in place by mid-1999 to handle around 200,000 b/d with allowances made for the need to expand to a minimum of 500,000 b/d by 2010 . The structure of this agreement divided production between “early oil”, i.e. the oil that would be developed by 1999 and pumped through the initial pipeline, and “late oil”, which would exit via the higher capacity line.

Export routes under consideration for Azerbaijani Oil are Baku-Supsa and Baku-Ceyhan. Baku-Supsa is already under construction for early oil and is likely to be the main route for late oil as well, but tankers must still exit the Black Sea through the Bosporus, perhaps neccessitatiy a bypass route. Baku-Ceyhan does not have to exit via the Bosporus, but is cost-prohitibitive and extremely unlikely.

Also both routes face significant political and ethnic threats, particularly the nagorno-karabakh seperatist conflict, which could disrupt any pipeline through the region and political instablity in Georgia. Almost every major player in the region -- Russia, Iran, Turkey, and the US -- has a strong interest in the region and the eventual export route will have to fall within the limiting criteria of all these major players.

Comparison of Transport Costs for AIOC Oil
Route, Tanker Size | Capacity (kb/d) | Cost to Port | Tanker to Rotterdam | Total Cost
Baku-Novorossiysk, LR-2 | 800 | $1.35 | $1.23 | $2.58
Baku-Supsa, LR-2 | 900 | $0.68 | $1.23 | $1.91
Baku-Supsa, LR-2 | 1500 | $0.50 | $1.23 | $1.73
Baku-Ceyhan, VLCC | 800 | $2.44 | $0.76 | $3.20

Individual Route Pages:
Baku-Supsa
Baku-Ceyhan
Bosporus Bypass

Azerbaijani Oil Links