ECONOMY

Oil pipeline to be named after late Azeri leader Haydar Aliyev

BAKU (Reuters) – Governments behind the BP-led Baku-Ceyhan crude oil pipeline signed $2.6 billion in financing agreements with creditors late on Tuesday and agreed to name the Azeri-Turkish link after the late Azeri President Haydar Aliyev. Azerbaijan, Georgia and Turkey signed four deals with oil firms, government agencies and a banking syndicate to finance the 1,760-kilometer (1,100-mile) US-backed project, whose total costs rose by 20 percent from initial estimates to $3.6 billion due to interest and the expense of filling the line with oil. «Today, we have laid the financing basis for this project,» said Ilham Aliyev, who succeeded his father Haydar as Azeri president in October. «International financial institutions have supported it, which was in effect the final step to realizing this project.» The Baku-Ceyhan pipeline, due to pump a million barrels per day of Caspian crude to the Mediterranean coast from April 2005, has been seen as a way for the United States to weaken Iranian and Russian influence in the oil-rich Caspian region. Azeri and Turkish officials said the governments had decided to name the pipeline in honor of Azerbaijan’s late President Haydar Aliyev, who died late last year. Turkey also proposed naming the terminal at the Ceyhan end after the senior Soviet bureaucrat who stifled dissent and nurtured an ubiquitous personality cult, but is credited with bringing stability to the troubled ex-Soviet state. Tuesday’s ceremony formally completed prearranged financing agreements under which 30 percent of construction costs are covered by the pipeline shareholders, which include oil majors BP, ENI, Itochu, Unocal, Statoil, ConocoPhillips and Total. Remaining loans for the pipeline, which is already half-built, are provided by shareholders and banks. The total project’s cost is around $3.6 billion. The group will start paying back the principal at the end of 2006 and will fully repay in 2015. The huge pipeline, whose return on investment is set at 15 percent, will deliver profits for the first time from 2024.