AKI, Italy
May 24 2005
OIL: ANALYSIS – CAUCASUS PIPELINE LEAVES RUSSIA IN THE COLD AND
TURKEY TO BENEFIT
Istanbul, 23 May (AKI) – After 12 years of setbacks and disagreements
the taps are ready to turn on a 2.6 billion-dollar giant pipeline
which will pump oil from the Caspian Sea to Turkey and on to the
world’s energy markets – a process which stands to sap Moscow of some
of its influence over the energy resource-rich Caucasus region.
Billed as the “energy project of the century” the Baku-Tbilisi-Ceyhan
(BTC) pipeline will start operations on Wednesday, its inauguration
symbolising an end to the bickering between nations and oil companies
that brought so many delays and changes of plan.
The 1,774 kilometre pipeline starts in Baku, the captial of
Azerbaijan, from where an ongoing territorial dispute with
neighbouring Armenia forced engineers to incorporate a northward
detour up towards Tbilisi, the capital of Georgia. The structure then
winds down south through Armenia and onto the Turkish Mediterranean
port of Ceyhan.
The new pipeline which starts at Baku’s Sangachal terminal and end
ups running the bulk – some 1,070 kilometres – of its length through
Turkey, avoids Russian territory altogether.
This route differs vastly from Russia’s original ambitious “northern
line” project of 1995, which linked the Caspian Sea with the Russian
Black Sea port of Novorossick, with the pipeline running through the
Chechen capital, Grozny.
That route temporarily hooked up with another pipeline, the US-backed
Baku-Tbilisi-Batumi (Georgia) “western line” but in 1999, the Grozny
link had to be abandoned following a wave of sabotage attacks by
Chechen rebels fighting Moscow’s rule. An alternative was also needed
because of the “western line’s” modest carrying capacity.
“Oil and natural gas from Kazakhstan and Azerbaijan, has been
channeled to markets in the West through Russia. Russia controls the
volume of exports and dictates the prices,” Nadir Devlet, an analyst
at Istanbul’s Yeditepe University, told Adnkronos International
(AKI).
“But with the BTC project, Azerbaijani oil production will no longer
depend on Russian policies,” said Devlet, adding that in the long run
the other former Soviet central Asian republics, Kazakhstan and
Turkmenistan, may also link up with the project, further isolating
Moscow.
“This weakens Russia’s position in the energy-rich region. Iran on
the other hand [which some also view as another of the project’s
major losers] will not be affected by the BTC because for Tehran, the
priority is to maintain control of Turkmenistan’s natural gas exports
[for which it acts as a conduit],” Devlet explained.
The BTC pipeline was built by a 11-member consortium led by British
Petroleum (BP) which owns a 30 percent share. The next largest
stakeholder is the Azerbaijan State Oil Company, AZNEFT with 25
percent followed by the Turkish state oil company, TPAO, with 6.5
percent. Italian energy giant ENI, which has extensive drilling and
exploration rights Azerbaijan and Kazakhstan
The BTC’s carrying capacity is a staggering 50 million metric tons of
oil a year, or some 1 million barrels every day. Just to fill its
length will take five months, with the first oil expected to arrive
in Ceyhan by the end of the year.
The BTC’s inaguration comes as the oil price continues to hover above
the 50 dollar a barrel mark. With growing concerns about dwindling
global reserves expected to keep prices high, the pipeline is seen
from a market perspective as a welcome boost in supply.
But the project continues to draw criticism from skeptics who
question the wisdom of constructing a strategically important
pipeline through a region as politcally volatile as the southern
Caucasus.
Azerbaijan and Armenia’s bloody conflict over the enclave of Nagorno
Karabakh in the mid-1990s remains unresolved and cross-border clashes
still occur. Georgia’s government, installed in 2003 after the “Rose
Revolution” which toppled the country’s pro-Moscow leaders, is
grappling with break-away movements in the regions of Abkhazia and
South Ossetia, which are backed by Russia.
Consortium members have dismissed such arguments, insisting that
their investment is a safe one.
(Vahit Bora/Pwm/Aki)