BP tests BTC line; oil flow to resume 'next week'

BP, operator of the Baku-Tbilisi-Ceyhan oil pipeline, said shipments of Azeri crude would resume next week—nearly 3 weeks since the line's closure due to an explosion and fire.

Eric Watkins
Senior Correspondent

LOS ANGELES, Aug. 21 -- BP PLC, operator of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, said shipments of Azeri crude would resume next week—nearly 3 weeks since the line's closure due to an explosion and fire.

"We've taken the decision to start dynamic integrity testing of the line today before a move to full operation," said a BP spokesperson, adding, "This will involve some limited and intermittent flow of oil through the pipeline."

The spokesperson said that for ship scheduling purposes, the lifting program at the Turkish Mediterranean port of Ceyhan would be updated Aug. 21 to start loadings early next week.

A spokesperson for Botas International Ltd., which operates the Turkish section of the BTC line, confirmed that Azeri crude oil would be loaded onto tankers at Ceyhan on Aug. 25 and 26, assuming there are "no problems" before then.

BP and its partners declared force majeure Aug. 5 on exports of Azeri crude oil through the line after the explosion and fire forced its closure. Kurdish separatists in Turkey claimed responsibility for the explosion and fire, but Turkish authorities have yet to confirm those claims.

Operator BP owns 30.1% of the BTC line, while the State Oil Co. of the Azerbaijan Republic (SOCAR) holds 25%. Other shareholders include Chevron 8.9%, StatoilHydro 8.71%, TRAO 6.53%, Eni 5%, Total 5%, Itochu 3.4%, Inpex 2.5%, ConocoPhillips 2.5% and Hess 2.36%.

Resumption of flows through the 1-million b/d capacity line will be widely welcomed. Due to the disruption of the BTC line—as well as the shutdown of other export routes through Georgia—the BP-led Azeri-Chirag-Gunashli oilfields had reduced output to about 250,000 b/d from about 850,000 b/d.

Two other routes for the export of Azeri oil through Georgia remain shut due to continued uncertainty. BP last week closed the 150,000 b/d Western Route Export Pipeline (WREP) for security reasons, and has given no indication of when the line may be reopened.

BP also had to cease shipments of some 50,000-70,000-b/d by rail across Georgia after a key railway bridge was blown up. The explosion, which effectively cut the railway line between Azerbaijan and Georgia, has had an adverse effect on shipping through Georgia's Black Sea ports.

According to wire reports, some 16 rail tankers loaded with oil products have been standing at a railway station in Azerbaijan due to the suspension of the railway traffic in Georgia.

The downed railway line also has seriously restricted operations in Georgia's Black Sea ports of Batumi and Kulevi, which are used to transport crude oil and petroleum products from Azerbaijan and Kazakhstan.

According to a SOCAR official, which owns and operates the Kulevi oil terminal, the last tanker carrying Azerbaijani oil was loaded on Aug. 19, and the terminal has stood idle since then.

Reports vary on the amount of time needed to repair the Georgian railway bridge, with some officials saying just days while others talk of up to 2 weeks. A spokesperson for Georgia Railways, which owns and operates the bridge, said Aug. 21 that repairs were going at an "accelerated rate" and would be finished in "about a week."

Resumption of exports via the BTC line will be especially welcome in Azerbaijan where the shutdown has had adverse effects on the Caspian nation's economy, according to Minister of Economic Development Heydar Babayev.

"The oil is connected directly with GDP growth," he said. "Today we have real problems concerning Azeri oil export caused by the events in Georgia, and we are not aware of how long that process will last."

Contact Eric Watkins at hippalus@yahoo.com.

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