AIOC: Caspian oil exporters may not need big export line before 2005

Azerbaijan International Operating Co., a key player in the Caspian oil export puzzle, contends that Caspian oil exporters might not need a high-capacity main export pipeline (MEP) to Ceyhan, Turkey, until 2005.

Transporting crude from Baku, Azerbaijan, to a Mediterranean terminal at Ceyhan is the Caspian oil export option that the U.S., Turkey, and Azerbaijani governments prefer. AIOC has to date resisted U.S., Turkish, and Azerbaijani pressure to support the Baku-Ceyhan pipeline plan. Building an MEP along the proposed route through Turkey would prove more expensive than expansion of the Baku-Novorossiisk or Baku-Supsa pipelines, consortium officials believe (see related story, p. 29).

AIOC view

AIOC Pres. David Woodward said recently that Azerbaijani and Turkish officials have previously claimed that an MEP need to be in place by 2003.

However, Woodward said that oil production levels in the Caspian Sea might not be high enough by then to justify construction of an expensive pipeline to the Turkish Mediterranean coast.

AIOC-the first international consortium to begin work in Azerbaijan and still the only group producing oil from offshore fields on a commercial basis-does not expect to move into the second phase of its development program until 2005, he said. Other investors working in the Caspian will probably not be able to start producing large quantities of oil before that date, he added.

Woodward went on to say that the AIOC would probably be able to produce only half the volume of oil needed to make a Baku-Ceyhan pipeline viable. He also noted that the AIOC planned to double its output this year to 5.25 million metric tons.

This means that the consortium currently has almost twice as much export capacity as it needs; AIOC's "early oil" pipelines from Baku to Novorossiisk and Baku to Supsa are capable of handling 10 million tons/year of oil.

AIOC is a consortium of companies led by BP Amoco plc developing Azeri, Chirag, and Guneshli oil fields in the Caspian Sea. The early oil project is the first stage in the development of Chirag field.