ECONOMY

Oil pipeline ready in ’04

LONDON – The Baku-Tbilisi-Ceyhan oil pipeline project is well on track for completion by the end of 2004 despite recent reports of delays along the Turkish leg of the link, BTC CEO Michael Townshend told Reuters. The $3 billion, US-backed pipeline project to pump Azeri oil from the Caspian region to the Mediterranean and world markets is being built by a consortium of international energy firms led by Britain’s BP. «I’m confident that the BTC will be ready to ship the first oil from the Azeri-Chirag-Guneshli (ACG) fields in 2005,» Townshend said in an interview. «Inevitably on a pipeline of this huge length, some bits will go faster than others and of late there have been some delays due to bad weather and winter.» «However, we have sufficient equipment and people to ensure the pipeline is complete within the next 12 months.» The 1,760-kilometer (1,100-mile) BTC project is already half completed, and on Friday received a $1 billion loan from an international banking syndicate, meaning all the funding is now in place. The pipeline, initially in a three-way contest with routes touted by Russia and Iran, has now emerged as the main likely export route from an otherwise remote region, signaling victory for the United States which backed the BTC in a bid to cut Iranian and Russian influence in the oil-rich region. The pipeline will ship crude from Azerbaijan’s ACG fields and potentially also from Kazakhstan’s huge Kashagan site. While Kazakhstan currently uses Russia’s Black Sea Novorossiisk port as its main export outlet, it looks increasingly likely to tap into the BTC’s spare capacity, especially after this winter when shipments from the Black Sea were dogged by weather-related delays and severe shipping jams at the narrow Turkish straits. The BTC will bypass the Bosporus strait to deliver the oil directly to the deepwater Mediterranean port of Ceyhan in Turkey. Townshend said the ACG had enough oil to fill the BTC but there could be spare capacity in the early years and after the ACG passes its peak. The pipeline’s capacity can be increased by a third just by adding drag-reduction agents, he said. «In any case, the development of Kashagan is unlikely before 2006-7 so we have a bit of time to play with,» he added. Townshend said that as the BTC line progressed, BP was starting to lay down small sections of a planned gas pipeline from Azerbaijan’s Shakh Deniz field to Erzurum in Turkey. The $900 million South Caucasus Pipeline (SCP) consortium including BP and Statoil, aims to deliver the first gas from the 625 billion cubic meter Shakh Deniz in 2006. «We have already laid bits of the gas pipeline, installing both at once at river crossings or over mountains,» Townshend said. «They will be side by side, about 8 meters apart.» The first sections of the pipe were delivered to Azerbaijan recently. The pipeline will be 900 kilometers long and will transport 8.4 bcm of gas annually to Turkey, Georgia and Azerbaijan.