Baker & Botts to Establish Office in Azerbaijan.

HOUSTON--(BUSINESS WIRE)--May 28, 1998--Baker & Botts announced today that the Firm will establish an office in Baku, Azerbaijan. The office will accommodate six or seven lawyers and is expected to open later this summer.

Baker & Botts has been active in transactions in Azerbaijan since 1992 through its representation of Pennzoil Company, Azerbaijan International Operating Company (AIOC) and Howard Energy International. In addition to serving current clients, the Firm expects the Baku office to be a vehicle to develop significant new business. Most major oil companies are now directing substantial attention, along with billions of dollars of exploration and development funds, to the Caspian Sea region, which has recently re-emerged as one of the world's most promising oil and gas producing areas. Oil field service companies also have been drawn to the Caspian Sea region. As a result, the amount of legal work focused in Baku is dramatically increasing.

"We see the opening of the Baku office as a natural progression of our involvement in the area," explains Baker & Botts attorney George Goolsby, lead attorney for the Firm's AIOC work. "In addition to supporting lawyers from the United States and Europe who will continue to commute to Baku, we currently are evaluating the permanent staffing requirements for this new office."

"This decision further manifests the global reach of our Firm," said former Secretary of State James A. Baker, III, a senior partner.

Baker & Botts' extensive experience in Azerbaijan and elsewhere in the region involves a broad spectrum of issues arising in connection with projects to develop the region's natural resources and related infrastructure, especially export pipelines. Initially, the firm's legal work involved the negotiation of various production sharing, joint operating and similar agreements, and evaluation of rights and issues involved in ongoing operations. This type of representation continues to be very active.

More recently, attention has turned to developing the necessary pipeline systems to take the oil to hard currency markets. The first projects involved governmental and commercial agreements for the construction of pipelines and securing of transportation rights to export crude oil from offshore Azerbaijan through Russia and Georgia in connection with the so-called "Early Oil" project. Currently, the consortium of twelve oil companies (through their operator, AIOC) is developing the Main Export Pipeline system to handle the much larger volumes of export oil (up to 1,000,000 barrels per day) which are expected to be produced in the near future.

Three main routes are currently being evaluated for the Main Export Pipeline, two of which would deliver the oil to tankers on the Black Sea and one which crosses Georgia and Turkey to the Mediterranean. The geo-political aspects of developing this major pipeline involve not only the challenging physical environment, but also consideration of U.S. restrictions relating to Iran, Turkish concerns about the traffic load through the Bosphorus Straits, relations between Chechnya and Russia, and the effects of certain international treaties on energy projects in the area.

"Although the Firm has been assisting with these types of intricate projects for decades, it is interesting to note how our attitude toward foreign offices seems to have changed over the years," said Managing Partner, Richard C. Johnson, in explaining the Firm's decision regarding Baku. "Since mid-1993, when our first foreign office opened in Moscow, we have become increasingly prepared to provide unique, industry-specific legal services on a regional basis from new offices abroad. In particular, our primary focus is on the energy, technology, and commercial real estate (and related capital markets) sectors. To date, this emphasis on our proven industry expertise and resultant product differentiation has been central to our approach in establishing foreign offices."

Frank Hubert, partner-in-charge of the Baker & Botts Moscow office, will have oversight of the operation of the Baku office and of new work undertaken by lawyers employed in the office. In addition, lawyers from Baker & Botts' offices in Houston, Dallas, Washington, D.C., New York and London routinely travel to Baku and other regional capitals and will use the office as a base for regional activities.

Baker & Botts is one of the oldest U.S. law firms with approximately 500 attorneys practicing in virtually all areas of civil law. Founded in Houston, Texas in 1840, the Firm has extensive experience in all aspects of oil and gas and energy project development, as well as corporate structuring and financing issues arising in commercial transactions.

    CONTACT: Baker & Botts, Houston
              Media Relations Coordinator
              Elizabeth Plagens, 713/229-1197
              or
              AIOC Deal
              George Goolsby, 713/229-1416
              or
              Managing Partner
              Richard C. Johnson, 713/229-1797
              or
              Chairman - International Practice Group
              Joel Swanson, 713/229-1330
              or
              Moscow
              Frank W.R. Hubert, (7095) 921-5300
              or
              Washington, D.C.
              James A. Baker IV, 202/639-7778
              B. Donovan (Don) Picard, 202/639-7742
              or
              Administrative Partner
              Roy L. Nolen, 713/229-1216