Journal of Turkish Weekly, Turkey
May 25 2005

Baku-Ceyhan Pipeline Opens A New Era in the Region

A BP-led group loaded the first Azeri oil into a pipeline to Turkey’s
Ceyhan sea port at Mediterranean coast which will unlock the Caspian
Sea’s riches and reduce Russia’s stranglehold on export routes from
the region. The Baku-Tbilisi-Ceyhan (BTC) Pipeline will also connect
the Turkic world. Kazakhstan oil will also be connected to the line.

Officials inaugurated the first section of a 1,760-kilometer,
U.S.-backed pipeline on Wednesday that will bring Caspian Sea oil to
Mediterranean coasts. The project seen as an economic and political
opportunity for the troubled Caucasus region. The BTC will contribute
the Azerbaijan, Georgia and Turkey economies. The project further
will put Turkey at the heart of the energy lines.

The presidents of Azerbaijan, Kazakhstan, Georgia and Turkey were on
hand for the ceremony at the Sangachal oil terminal, about 40
kilometers south of Azerbaijan’s capital, Baku, to open the taps for
the first drops of oil to enter the Baku-Tbilisi-Ceyhan pipeline.

The pipeline from Baku to the Turkish Mediterranean port of Ceyhan is
seen as a significant move toward reducing the West’s dependence on
Middle Eastern oil. Most Caspian oil exports previously moved through
Russian pipelines, often adding to the congestion in the Bosporus
strait. The new line will reduce the environmental risks for the
Turkish straits and the Aegean Sea.

The pipeline `will take new supplies of oil to the world market and
will help to demonstrate that security is best achieved by having
multiple sources of supply and trade routes,’ BP PLC Chief Executive
John Brown, whose company leads the consortium that built the
pipeline, said at the opening ceremony.

The $3.2 billion project, with a capacity of 1 million barrels a day,
is the first direct oil link between the landlocked Caspian, which is
thought to contain the world’s third-largest oil and gas reserves,
through Georgia en route to the Mediterranean.

BUSH: `THE PIPELINE OPENS A NEW ERA IN THE CASPIAN BASIN’S
DEVELOPMENT’

The pipeline `opens a new era in the Caspian Basin’s development,’
U.S. President George W. Bush said in a letter read by U.S. Energy
Secretary Samuel Bodman. Bush, whose administration is seeking to
diversify energy sources, called it a `monumental achievement.’

`The United States has consistently supported (the pipeline project)
because we believe in the project’s ability to bolster energy
security, strengthen participating countries’ energy diversity,
enhance regional cooperation and expand international investment
opportunities,’ the letter said.

A NEW SİLK ROAD

Azerbaijan, Georgia and Turkey look to earn substantial revenue from
the pipeline, through transit fees and royalties.

`I do not doubt that BTC will be of use both to Azerbaijan and our
neighbors. This pipeline first of all will help solve economic and
social problems, but the role of the pipeline in strengthening peace
and security in the region also is not small,’ Azerbaijan’s President
Ilham Aliyev said at the ceremony. Turkish President Ahmet Necdet
Sezer said the pipeline `can be called the Silk Road of the 21st
century.’

Azerbaijan is banking on the pipeline to raise its profile in the
world and swing international support behind Baku in its dispute with
Armenia over the Nagorno-Karabakh enclave, which ethnic armed
Armenian separatists with Armenia took control of more than a decade
ago. 20 percent of Azerbaijan has been under Armenian occupation and
Yerevan rejects to withdraw its forces despite of the American and
European calls.

IMPROVE LIVING STANDARDS

Georgia President Mikhail Saakashvili said the pipeline should help
attract investment and improve living standards. Saakashvili has
sought to lessen Russia’s influence on his impoverished country,
which depends heavily on Russia for energy.

Pipeline officials said it would take up to a month and a half to
fill the Azerbaijani section. The Georgian part will be ready after
that, and then the Turkish stretch, which Turkish authorities have
said should be filled by Aug. 15.

It will take approximately 10 million barrels of crude to fill the
entire pipeline. Bodman said Tuesday that deliveries of oil from the
pipeline to tankers at the terminal in Turkey are to begin in the
fall. Once fully operational, the pipeline will represent a’
significant’ addition to Western oil supplies, said analyst Jason
Kenney of ING Financial Markets, although the time needed to fill it
means `you won’t see exports until the later part of the year.’