BTC pipeline reopens; rail line blasted

BP PLC has reopened the Baku-Tbilisi-Ceyhan oil pipeline through conflict-stricken Georgia, and normal operations are under way.

Aug 25th, 2008

Eric Watkins
Senior Correspondent

LOS ANGELES, Aug. 25 -- BP PLC has reopened the Baku-Tbilisi-Ceyhan oil pipeline through conflict-stricken Georgia, and normal operations are under way.

The 1-million b/d pipeline, owned by a BP-led consortium of international oil companies, had been closed since Aug. 5 when a fire occurred at a pumping station on its Turkish section. Kurdish rebels claimed responsibility for the blaze.

BP's ability to export oil from the Caspian region had been seriously curtailed by the fire and by Russian military actions in Georgia which led to the shutdown of other oil and gas export outlets.

The other routes include the 150,000-b/d Western Route Export Pipeline (WREP), the South Caucasus Pipeline for natural gas, and the 50,000-70,000-bd rail link extending from Azerbaijan to Georgia's export terminals on the Black Sea.

BP last week announced the reopening of the SCP, but today said the WREP remains closed with no indication of when it might reopen.

Train blasted
Meanwhile, a railway train loaded with oil products from Azerbaijan, which was bound for the Georgian Black Sea port of Batumi, was hit by an explosion and fire on Sunday—possibly caused by Russian forces.

Officials said the train was located in the village of Skra, 5 km west of Gori, on the main track of the line linking eastern and western Georgia, a vital trade route for oil exports from Azerbaijan to European markets.

Russian troops left Gori on Aug. 22, after a 10-day occupation. The explosion occurred near an abandoned Georgian military base. Russian troops reportedly mined the base before they left it.

Shota Utiashvili, a spokesman for Georgia's Interior Ministry, said there was no evidence of the train hitting a mine, but that the explosives could have been detonated by a timer or by someone watching the train approach.

"I am sure the Russians have left other surprises for us," said Utiashvili, adding that, "They want to disrupt our life and our economy as much as possible."

Deliveries to Iran
Reports varied regarding the extent of the damage, but the main result is a decision by the State Oil Co. of the Azerbaijan Republic (SOCAR) to begin exporting Azeri Light crude to Iran in a swap arrangement.

Under the agreement, SOCAR can sell up to 300,000 tonnes via the Persian Gulf over 2 months, shipping oil from the offshore Azeri-Chirag-Guneshli fields across the Caspian Sea to the Iranian port of Neka.

The start of SOCAR deliveries coincided with a halt in supplies of Azeri crude oil via the BTC line as well as the shutdown of the WREP, and the rail line.

SOCAR also increased exports of oil products to Iran above current contract levels because of the rail outage in Georgia, the company said. Georgian ports are SOCAR's outlet for products sales to Europe.

A SOCAR spokesperson said deliveries of Azeri crude to Iran would vary, depending on the availability of the BTC line.

Relief supplies from US
News of SOCAR's use of Iranian outlets coincided with reports that a US naval destroyer delivered relief supplies Aug. 24 at Georgia's Black Sea port of Batumi, the first of three such American vessels due to arrive in the coming days.

The US ships have avoided Georgia's Black Sea port of Poti—60 km north of Batumi—as the Russian army is still occupying it. Even as the ships approached, a Russian general warned of increased tension due to their presence.

"The situation in the Black Sea is tending to become more tense," said Col. Gen. Anatoly Nogovitsyn, deputy head of the Russian general staff.

"NATO countries are building up their naval presence to deliver humanitarian aid …I do not think that this will contribute to the stabilization of the situation in the region," Nogovitsyn said.

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