Socar declares force majeure on Azeri oil exports

Socar, following an explosion and fire on a section of the Baku-Tbilisi-Ceyhan oil pipeline in Turkey, has declared force majeure on its exports of Azeri crude.

Aug 6th, 2008

Eric Watkins
Senior Correspondent

LOS ANGELES, Aug. 6 -- The State Oil Co. of the Azerbaijan Republic (Socar), following an explosion and fire on a section of the Baku-Tbilisi-Ceyhan oil pipeline in Turkey, has declared force majeure on its exports of Azeri crude.

The report, based on initial remarks by traders and confirmed by BP PLC, follows earlier denials of force majeure issued by the British firm, which operates and owns 30.1% of the 1 million b/d oil pipeline.

"Exports are continuing from Ceyhan. Nothing has changed," said a BP spokesperson in Istanbul, denying the market rumors that force majeure had been declared after a blast caused a fire on the line about 60 km along the Erzinjan-Refahiye highway near Yurtbashi.

Earlier, BP officials said the firm might use alternative routes for Azerbaijani supplies after the BTC line was shut down. A BP spokesperson said the line had not been damaged because the fire affected only an overground valve.

The cause of the fire remains unclear, with some analysts suggesting it was the result of an attack by the rebel Kurdistan Workers' Party.

Wolfango Piccoli, an analyst at Eurasia Group, said an attack by the PKK is a serious possibility since the group has intensified its campaign against the Turkish government, as demonstrated by a July 9 bombing in Istanbul that left 17 dead.

Although some reports said the PKK had "assumed" responsibility for the explosion, the Turkish Interior ministry would neither confirm nor deny the claim. A spokesman said a thorough investigation of the cause would be undertaken after the fire had been extinguished.

Meanwhile, local officials suggested a technical problem lay behind the explosion and fire.

Head of the local administration, Mehmet Makas, told Turkish television that the technical faults had been revealed in one of the line's compressors and that several valves had been shut off. After the explosion, he said, the fire erupted along the line.

Still, the BTC line is considered a prime target by groups in the region aiming to undermine one or more of the three countries involved with it.

Earlier this week, it was reported that an attack on the BTC line is one of several options under the consideration of separatist groups in Georgia, with specially trained saboteurs ready to undertake such a mission.

According to Russian media, the Security Council of the nonrecognized Abkhazian Republic—eyeing the pipeline—decided to render military assistance to non-recognized Republic of Southern Osetia, if necessary.

The political symbolism of the line was last week underscored by Georgian President Mikhail who said it, along with the Baku-Tbilisi-Erzurum gas pipeline, represented the regional cooperation of the three countries involved: Georgia, Azerbaijan, and Turkey.

Contact Eric Watkins at hippalus@yahoo.com.

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