Armenia says to recognise Karabakh in case of war

* Threat of war hangs over oil pipelines running West

* Oil-producing Azerbaijan frequently threatens force

* Rebel enclave broke away from Azerbaijan in 1990s

By Alexei Anishchuk

MOSCOW, Dec 10 (Reuters) - Armenia threatened on Friday to recognise Nagorno-Karabakh as independent if oil-producing Azerbaijan resorts to force to resolve their dispute over the rebel enclave.

The past two years have seen the worst skirmishes along the boundaries around Nagorno-Karabakh, which broke away with the support of Armenia as the Soviet Union collapsed, since a 1994 ceasefire ended all-out war between Muslim Azerbaijan and Christian ethnic Armenians.

No country has recognised the enclave as independent but it runs its own affairs with heavy economic and military support from Armenia.

An Azeri military assault or Armenian recognition of Nagorno-Karabakh would seriously undermine Western and Russian mediation to find a negotiated, compromise settlement.

Renewed fighting would also threaten Azeri oil supplies to the West, carried by pipelines skirting Nagorno-Karabakh.

Azerbaijan, host to oil majors including BP <BP.L>, Exxonmobil <XOM.N> and Chevron <CVX.N> and with its military coffers swollen by petrodollars, says it is losing patience with negotiations and is prepared to use force.

"Armenia is absolutely against a military solution to the (Nagorno-Karabakh) problem," Armenian President Serzh Sarksyan said in Moscow.

"In the event Azerbaijan unleashes a new military venture, Armenia will be left with no choice but to recognise de jure the Republic of Nagorno-Karabakh and provide for the safety of its population by all means."

He spoke after a Kremlin meeting of the Collective Security Treaty Organisation, a Russian-led security bloc of ex-Soviet republics.

An estimated 30,000 people died in the war. Armenian-backed forces also control seven Azeri districts that surround Nagorno-Karabakh and form a land corridor with Armenia.

Armenia&${esc.hash}39;s ruling party on Thursday scuttled an opposition motion in parliament to recognise Nagorno-Karabakh, saying the time was not right.

While Armenia was hit hard by the global economic crisis, Azerbaijan has emerged largely unscathed thanks to oil and gas exports and is spending heavily on its military. Azerbaijan&${esc.hash}39;s 2011 budget includes a 90-percent hike in military spending.

Low-intensity skirmishes since 1994 have killed around 3,000 people, mainly soldiers. But observers say clashes have become more frequent and intense since early 2008, with Azerbaijan enraged by an attempted rapprochement between Armenia and Azeri ally Turkey that eventually collapsed.

Mediators from Russia, the United States and France have led negotiations between Armenia and Azerbaijan since the war ended, under the auspices of the Organisation for Security and Cooperation in Europe (OSCE).

They have made little headway. (Writing by Matt Robinson in Tbilisi, Editing by Sonya Hepinstall)