BTC pipeline to boost throughput by yearend

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Nov. 15 -- The Baku-Tblisi-Ceyhan oil pipeline will resume shipments of 1 million b/d by the yearend, according to Azerbaijan's Energy Minister Natiq Aliyev.

The BTC line has been operating at reduced capacity of 850,000 b/d due to a partial shutdown of the Azeri-Chirag-Gunashli (ACG) fields in the Caspian Sea after a gas leak near one platform.

The Central Azeri platform, one of four producing oil from the ACG fields, will resume output in late December, said Rovnaq Abdullayev, head of the State Oil Co. of the Azerbaijan Republic (SOCAR).

The announcements coincided with plans revealed Nov. 14 that SOCAR and Kazakhstan's state-owned KazMunaiGas agreed on the basic principles of a project to bring Kazakh oil across the Caspian Sea from 2013—some of it intended for transport through the BTC line.

Under the agreement, Kazakhstan will build a pipeline network from the Tenghiz and Kashagan oil fields to export terminals on its Caspian seaboard. The oil will then be shipped by tanker to terminals yet to be constructed on the Azeri coast.

Once in Baku, oil will be shipped through the BTC line or by trans-Caucasus rail to Georgian ports on the Black Sea.

The system's initial shipment capacity will stand at 500,000 b/d, eventually rising to 0.75-1.2 million b/d.

The current accord is based on a June 16, 2006, intergovernmental agreement signed by both countries on the transportation of 25 million tonnes of Kazakh oil through the BTC.

Kazakh Energy Minister Sauat Mynbayev said the trans-Caspian project will give much-needed relief to Kazakhstan's energy business, which is struggling to provide enough capacity for the export of its rising crude output to buyers in Europe and China.

"We're putting a lot of hope into transporting oil across the Caspian," said Mynbayev, adding, "We're interested in different export routes."

By 2015 Kazakhstan expects to be exporting 100 million tonnes of crude, Mynbaev said Nov. 14 at the signing ceremony in Baku.

The Kazakh government pegs the cost of the trans-Caspian transport project, including terminals and tankers, at $3 billion.

The announcement of a firm date for shipments to Azerbaijan came after Kazakhstan last month ended a dispute with foreign investors over the development and operation of its Kashagan oil field.

The government and the international oil companies developing the Kashagan field agreed to double Kazmunaigas' stake in the project.

The other consortium members include Royal Dutch Shell PLC, ExxonMobil Corp., Total SA, ConocoPhillips, and Inpex Holdings Inc.

The Eni SPA-led Kashagan development, in which KazMunaiGas will now have a 16.81% stake, is expected to start production in 2013.

Earlier this month, the first shipment of Kazakh oil—supplied by Tenghiz field—entered the BTC line after being transported across the Caspian Sea by tanker, according to Tamam Bayatli, a spokesman for pipeline operator BP PLC.

The spokesman declined to say how much oil was shipped, but SOCAR officials have said as much as 100,000 b/d of Kazakh oil could ultimately be shipped through the 1,700-km line.

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