Analysts: BTC will hardly influence traditional Russian energy resources markets

Regnum, Russia
July 19 2006

Opinion of some experts that the Baku-Tbilisi-Ceyhan pipeline
has become Moscow’s geopolitical failure was right for the time
several years ago. Today it can hardly be said about great political
importance and exclusive character of the new pipeline with the
previous unambiguity, Politmonitor reports, noting that countries
that oppose themselves to Russia were mostly happy about BTC opening.

Analysts note that the BTC project was designed for the "big oil"
from Azeri-Chirag-Guneshli bloc at Azeri section of the Caspian Sea,
where the estimated level of extraction was 50 million ton per year
and it was supposed to be achieved as early as in the middle of the
current decade. However, the "big oil" failed to arrive. Moreover,
it can turn out to be unachievable to provide for such filling of the
pipeline to make the BTC becomes profitable, analysts say, pointing
out that maximum oil extracting level in foreseeable future can
reach only 25 million ton. An intermediate solution for the problem
was an agreement with Astana about pumping Kazakh oil, which will be
7.5 million ton at the first stage. The oil will be shipped by the
Caspian Sea in tankers. Some hopes are tied to exploration of Tengiz,
the biggest oil field in Kazakhstan.

Although, today not enough oil is extracted there to allow to speak
about charging the pipeline fully, the analysts say. Besides, Kazakh
oil is exported trough Tengiz-Novorossiysk oil pipeline belonging to
the Caspian Pipeline Consortium, estimated capacity of which is 67
million ton per year. Moreover, Kazakhstan is openly saying about
its intentions to start exporting oil to China. However, these are
not all the problems of the BTC. As the analysts believe, firstly,
the pipeline goes through seismically unstable territories (overall,
there are ten such zones), secondly, through unstable in military
point of view zone of the Nagorno Karabakh conflict and insurgent
Georgian autonomies, there is some threat from Kurdish rebels in
Turkey, and closeness to Iran, Iraq and Syria adds no optimism either.

As for infringing upon Russia’s interests, there will be no shift
in the structure of world consuming of energy resources caused by
the pipeline. Even in case it reaches its estimated capacity, it
will satisfy only 1% of the world demand. Russia is, as it is known,
the second country after Saudi Arabia in extracting oil. Thus, the
BTC pipeline will hardly have any serious influence upon traditional
Russian energy resources markets.