Exxon spurns BP’s pipeline in favour of trains
By Carl Mortished, International Business Editor

The Times, UK
Nov 25 2004

AFTER billions of dollars and billions of headaches, BP’s mammoth
project to pipe oil from the Caspian to the Mediterranean is almost
complete but ExxonMobil will not use it. It is too expensive, the
Americans say.

ExxonMobil is ignoring BP’s new pipe and, instead, has chosen to
export its Caspian oil via rail tankers to a Black Sea port.

BP was quick to insist that Exxon’s decision would not hurt the
economics of the Baku-Tbilisi-Ceyhan (BTC) link. Exxon speaks for 8
per cent of BP’s Azeri-Chirag-Gunashli offshore Caspian oilfield but
the American penny-pinching is as much a political embarrassment as
a financial blow to BP.

A decade ago Washington threw its diplomatic weight behind a project
that was once dismissed as foolish and dangerous: a 1,760km steel
pipe linking oilfields offshore of Baku to a Turkish Mediterranean
port. Passing through the troubled Georgian republic and skirting
Armenia, BTC is a political statement as well as infrastructure: a
route for Central Asian oil to reach Western markets without touching
Russian soil.

The American oil giant confirmed that it had signed a five-year
contract with Azpetrol to ship 10 million tonnes of oil by rail from
Baku to Batumi. “There was a cost issue and we signed with Azpetrol
for competitive reasons,” said an Exxon spokesman.

The complexity of Caucasian politics has dogged the BTC project,
which has also had to fend off campaigning by environmental groups
determined to make an example of BP’s project. The pipeline rises
from sea level to 2,800 metres and passes through national parks.