BAKU — Azerbaijan said Thursday that it had shot down an Armenian drone near the breakaway Nagorno-Karabakh region, a report dismissed by Armenia as "absurd."

Renewed violence this year along the border between Armenia and Azerbaijan and around Nagorno-Karabakh, which lies inside Azerbaijan but is controlled by its majority ethnic Armenians, has underlined the risk of a wider conflict breaking out in the South Caucasus, which is crossed by oil and gas pipelines.

The Azeri Defence Ministry said the drone had been shot down over Azeri territory but Artsrun Hovhannesyan, the Armenian defense minister's press secretary, denied the report.

"Nagorno-Karabakh officially refutes this information. It is absurd," he said.

Fighting over Nagorno-Karabakh erupted in 1991 as the Soviet Union broke up and a cease-fire was called in 1994. But Azerbaijan and Armenia have regularly traded accusations of further violence around Nagorno-Karabakh and along their border.

Nagorno-Karabakh has run its own affairs with heavy military and financial backing from Armenia since the war that killed about 30,000 people. Armenian-backed forces also hold seven Azeri districts surrounding Nagorno-Karabakh.

Efforts to reach a permanent settlement have failed despite mediation led by France, Russia and the U.S.

Oil-producing Azerbaijan, host to global majors including BP , Chevron and ExxonMobil, frequently threatens to take the mountain region back by force, and is spending heavily on its armed forces.

Armenia, an ally of Russia, says it would not stand by if Nagorno-Karabakh were attacked

Azerbaijan Says It Shot Down Armenian Drone Near Breakaway Region