July date is set for start of Turkish-Azeri oil pipeline

MOSCOW (Reuters) – The long-delayed start of the BP-led Baku-Ceyhan pipeline is set for July 13, while a trial cargo with Azeri crude will be loaded from the Mediterranean terminal at the end of May, an Azeri official said yesterday. Azeri Energy and Industries Minister Natik Aliyev told reporters the full official launch of the pipeline, running over a year behind the initial schedule, will take place in Ceyhan on July 13 in the presence of Azeri, Kazakh, Turkish and Georgian leaders. Market players are keen to know when the pipeline will be launched, as its shipments of light and sweet Azeri crude are predicted to massively change the landscape of the Mediterranean market, currently dominated by heavier Russian Urals blend. BP said in April it would cost it $3.9 billion (3.1 billion euros) or 30 percent more than expected to build the 1,768 km pipeline from Azerbaijan to Turkey, which will eventually pump over 1 million barrels per day to world markets. Many of BP’s peers are also revising initial cost estimates for projects around the world, mainly blaming soaring steel prices and higher contractors’ costs, which they say have risen along with oil prices. Baku-Ceyhan is strongly supported by the United States as it will allow crude from the former Soviet Union to bypass Russian transit pipelines and the congested Turkish straits for the first time. Obstacles The pipeline’s launch is running behind schedule due to many obstacles, including slow progress with building in Turkey, difficult weather and protests by environmentalists at earlier stages. The pipeline will this year carry 300,000 bpd and reach capacity in 2008. Azeri oil officials have said the pipeline group would fill storages in Ceyhan not from the pipeline flows but by bringing crude in tankers from the Black Sea port of Supsa, also operated by the pipeline group. Market players have said this meant the trial cargo loading from Ceyhan would be just a ceremony rather than a real start of Azeri crude oil shipments. Apart from BP, which has 30.1 percent and operates the pipeline, the shareholders are Azeri state oil firm SOCAR, Chevron, Statoil, TPAO, Itochu, Amerada Hess, Eni, ConocoPhillips, Inpex and Total.