World Bank
May 26 2005
Inauguration Of Baku-Ceyhan Pipeline To Also Start New Economic
Prospects In Caspian Region
/noticias.info/ The 1,760-kilometer (1,100-mile) Baku-Ceyhan pipeline
to be inaugurated Wednesday will not only bring Caspian oil to the
West but could help bring stability to a troubled region, analysts
say, The Associated Press reports.
The $3.2 billion US-backed project is the first direct pipeline link
between the landlocked Caspian, which is thought to contain the
world’s third-largest oil and gas reserves, and the Mediterranean —
providing a much-needed alternative to Mideast energy sources and
Russian transit routes. “This global project will completely change
the economic situation in Azerbaijan, and in the political sense it
will influence the rest of the Caucasus and Central Asia,” said Vafa
Guluzade, a former foreign affairs adviser to the Azerbaijani
government. Built by a consortium led by BP PLC, the route travels
from Azerbaijan through Georgia to the Turkish port of Ceyhan. Until
now, Caspian states sent almost all their oil through Russian
pipelines to reach world markets. The new route will neutralize any
Russian attempts to use economic levers to bring former Soviet
republics back under its wing, Guluzade said. Azerbaijan will earn
taxes and royalties on the oil that transits its territory, while
Georgia and Turkey are to profit from transit fees.
US Energy Secretary Samuel Bodman said that it would take three or
four months to fill the pipeline and that deliveries would begin in
the fall. But experts have said the new oil will provide only
short-term relief to a world that is consuming more crude every year.
Oil prices, while down off their recent highs, are still hovering
around $49 a barrel. Four years ago, oil officials spoke of finds
that could rival the Middle East’s production. But experts now say
the Caspian should in coming years pump some 4 million to 5 million
barrels per day, on par with Iran.
Agence France Presse reports the British oil giant BP holds a leading
30 percent stake in the consortium running the pipeline. Other
consortium members include Azerbaijan’s state oil company SOCAR,
Amerada Hess, ConocoPhillips, Eni, Inpex, Itochu, Statoil, Total,
TPAO and Unocal. SOCAR president Natik Aliyev called the pipeline,
which is expected to become a major competitor to traditional export
routes for Caspian oil that pass through Russia, the “realization” of
a national dream on Wednesday. He said it “bridged the nations of the
region.” The Caspian region produces a light crude of high quality
but has suffered from its distance from the world’s major consumers
— North America, Europe, China and Japan.
The Evening Standard (UK) also reports that it is thought the wider
Caspian region has oil reserves bigger than those in both American
continents, with the potential to provide the west’s oil needs for 50
years. There are also proven reserves of gas at least as large as
those controlled by Saudi Arabia. The project, which took 10 years to
design and build, runs through some of the most inhospitable terrain
and politically volatile territory in the region. In Azerbaijan, it
goes close to a cease-fire line with Armenia where there are still
frequent clashes over a territorial dispute. Georgia is fighting
separatist conflicts while in Turkey the pipeline skirts the Kurdish
heartlands. In an attempt to prevent sabotage the line has been
buried several meters underground for most of its length and will be
guarded by local police forces. There have also been tensions with
Russia, which feels it has been cut out of the deal.
The Wall Street Journal reports that the region and the pipeline,
referred to as BTC, offer Western markets one more alternative to the
often-volatile Middle East and other oil-rich but politically shaky
hot spots including West Africa. Washington also has used the
pipeline project as a way of fostering stability and cementing
political and economic ties with regional governments in the wake of
the breakup of the former Soviet Union.