Georgia near approval for Baku-Ceyhan oil export line

June 7, 2001
Construction of the $2.8 billion Baku-Tiblisi-Ceyhan oil export trunkline could begin in the second quarter of 2002 if Georgia grants a right-of-way, Socar said Wednesday. Twelve months of detailed field engineering work on the 1,743 km pipeline is set to start June 20, he said, if Georgia approves the route.


Darius V. Snieckus
OGJ Online

BAKU, June 7 -- Construction of the $2.8 billion Baku-Tiblisi-Ceyhan oil export trunkline could begin in the second quarter of 2002 if Georgia grants a right-of-way, an executive at Azerbaijan state-owned oil company Socar said Wednesday.

Vitaly Begliarbekov, deputy head of Socar's foreign investment division, said 7 months of basic engineering work on the 1,743 km pipeline was complete and the year-long, $150-million field engineering work was set to start on June 20, if Georgia joined Turkey and Azerbaijan in approving the route mapped out for the line.

"This is a critically important year [for the BTC pipeline project]," said Begliarbekov, speaking at the Caspian Oil & Gas conference. "Most of the major milestones have been passed. We are expecting final clearance to be given in the very near future."

He was recently named to the state's newly formed Ministry of Fuel and Energy but has yet to been given a formal post.

He said the BCT was "one of the most important points in [Azerbaijan's] oil and gas development strategy," which would translate into "real independence" for the Caspian state, as well as providing greater security of energy supply worldwide.

The 42-in., 1-million-b/d oil pipeline would include seven pumping stations and three metering systems.

Begliarbekov emphasized that the BTC consortium had secured "intergovernmental agreements which have the force of prevailing domestic and international law governing the project."

He said, "This is a transit regime which has no analogy and which provides all necessary securities to those [companies and countries] that are participating in this project."

The Azerbaijani government Tuesday approved the 500 m wide corridor needed in the pipeline's construction phase, building on the earlier clearance from Turkish authorities. Begliarbekov said Georgia should do the same "in the next few days."

He stressed that the consortium, which plans to establish a company called BTC Co. to manage the pipeline, already had conditional volume commitments from all project stakeholders, and was in the midst of "intensive discussions" with other companies expected to join the consortium.

Of Socar's 50% stake in BCT, 20% has been set aside for upcoming "third party" investment to encourage the pipeline to be used for export volumes from the whole of the Caspian basin.

On current schedules, the line would be filled mostly with first phase production from the Azerbaijan International Operation Co.'s Azeri-Chirag-Guneshli oil field development, will begin at the end of 2004.

The BTC has a design life of 40 years, although Begliarbekov said the consortium could extend its agreements with the transit countries and prolong the life of the line.

Azerbaijan is expected to export 50 million tonnes/year of oil by 2015, according to AIOC.

Steve Mann, the recently appointed senior advisor for Caspian energy diplomacy at the US Department of State, said Tuesday the administration of President George W. Bush "fully and firmly supports" early development of the pipeline.

BTC stakeholders are Socar 50%, BP PLC 25%, Unocal Corp. 8%, Statoil AS 6%, TPAO 5%, Itochu Oil Exploration Co. Ltd. 3%, Delta Hess 2%, and Devon 1%.

Contact Darius V. Snieckus at [email protected]