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Tuesday, 5 June, 2001, 18:11 GMT 19:11 UK
Caspian oil row escalates
Azerbaijan's oil infrastructure
Azerbaijan has a long-established oil industry

By the BBC's Eurasia analyst Adrian Foreman

The former Soviet republic of Azerbaijan says it regrets a decision by its near-neighbour, Turkmenistan, to close its embassy in Azerbaijan's capital, Baku.

Turkmenistan gave financial reasons for what it said would be the temporary closure of the embassy.

But the move follows a furious row between the countries over ownership of oil and gas reserves in the Caspian Sea.

Once confirmed, The Caspian Sea's vast oil and gas fields, could keep most of the Western world supplied for many years, and the two countries expect to be big players.

But it's still early days, and there are claims to be settled by five countries bordering on the Caspian -- Iran, Russia, and the three former Soviet republics of Azerbaijan, Kazakhstan and Turkmenistan.

Undersea border

Discussions are still under way over where to draw the undersea borders which will apportion the reserves.

Azerbaijan's capital, Baku, is traditionally an oil port with plenty of existing infrastructure, and it's on the western side of the Caspian - just the right place to start a pipeline taking oil and gas to lucrative European markets.

Plans are now moving ahead to build a pipeline costing nearly 3bn with American help through Georgia to Turkey and the West.

Turkmenistan, on the opposite side of the Caspian, will share some of the undersea reserves with Azerbaijan and will want access to the pipeline.

Embassy snub

The rejection by Azerbaijan of Turkmenistan's suggestion to let impartial experts decide where the undersea border should lie may have been the last straw.

Turkmenistan says the embassy closure is temporary and Azerbaijan will understand the financial difficulties behind it.

But the snub is clear enough. Azerbaijan's foreign minister, Vilayat Quliyev, said whatever the dispute, closing embassies would not resolve it.

The fact is, Azerbaijan doesn't need Turkmenistan as much as Turkmenistan needs the facilities in Baku.

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See also:

10 May 01 | Asia-Pacific
Caspian row hots up
12 Mar 01 | Europe
Caspian gas deal signed
09 Mar 01 | Middle East
Iran prospects for Caspian oil
23 May 01 | Country profiles
Country profile: Turkmenistan
30 Apr 01 | Country profiles
Country profile: Azerbaijan
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