Maureen Lorenzetti
OGJ Online
WASHINGTON, DC, Jan. 16 -- US officials Wednesday said an oil pipeline from the Caspian Sea to the Turkish port of Ceyhan would be completed in 2005 on time and on budget.
The remarks came after meetings between Turkish and US officials this week. The US has supported a Baku-Ceyhan route since the beginning of the Clinton administration. US foreign policy officials see the pipeline as a way to limit Russia and Iran's influence over Caspian oil exports.
The line across Azerbaijan, Georgia, and Turkey also would prevent additional tanker traffic through the crowded Bosporus Straits (OGJ, Jan. 14, 2002, p. 60).
Some US companies privately say that timetable is ambitious, given that financing for the $3 billion project is still in the air.
Companies with extensive holdings in the region, such as ExxonMobil Corp. and BP PLC, tried unsuccessfully for years to persuade the US government to consider supporting a shorter and less expensive pipeline from Iran. Companies had hoped that President George W. Bush, a former oil man, would reconsider the US position. But for now the US remains steadfastly against any project that could give Iran, still considered by some -- although not all -- US officials to be a state sponsor of terrorism, more leverage in Western oil markets.
Instead, industry and US officials said Vice-Pres. Dick Cheney "reaffirmed" the Bush administration's commitment to the Baku-Ceyhan pipeline. Sources familiar with the meeting between Cheney and Turkish officials said the vice-president believes the pipeline makes sense "both politically and financially."
The US Energy Information Administration reports Caspian Sea exports were about 800,000 b/d (of the 1.3 million b/d produced) in 2000. With several oil projects in the region due on stream in the coming years, the region's exports could increase to more than 3 million b/d in 2010 and possibly 2 million b/d on top of that by 2020, EIA said.
Turkish officials said the pipeline is slated to begin construction this summer although financing has not been finalized. US financial aid is expected but not certain.
Meanwhile, pipeline sponsors are taking a wait-and-see attitude before committing serious money to the project, now in the engineering stage. They are likely to wait for the results of a World Bank environmental and social impact study of the 1,700 km pipeline route. The bank cannot commit to loans until it receives comment on that report next summer.
Security issues also are a concern, but US officials noted that Caspian nations have shown they can protect critical infrastructures with limited US assistance: the "early oil" pipeline from Baku to the Georgian port of Supsa on the Black Sea has operated for 2 years without incident.
Contact Maureen Lorenzetti at [email protected]