BP SUSPENDS AZERI OIL SHIPMENTS VIA RAIL TO GEORGIA
Eric Watkins
PennEnergy
Aug 18 2008
TX
LOS ANGELES, Aug. 18 — BP PLC has been forced to suspend shipments
of 50,000-70,000 b/d of oil from Azerbaijan to Georgia following the
destruction of a key railroad bridge, severing the main east-west
train link between the two countries.
"Rail exports have stopped from Azerbaijan to Georgia," said BP
spokesman Robert Wine, adding, "There’s been some damage along the
line in Georgia."
Destruction of the rail link, regardless of the cause, reduced
BP’s three possible oil export routes to just one route: via the
Russian-dominated 100,000 b/d line extending from Baku to Russia’s
Black Sea port of Novorossiisk.
Georgian officials accused Russian troops of blowing up the railway
bridge, but Russian officials denied any involvement in the explosion,
which collapsed a 45-m section of the 220-m bridge.
The railway line extends from Tbilisi, through the Georgian town of
Gori, before splitting into three offshoots that extend to the Black
Sea ports of Poti and Batumi and southwest to a point just short of
the Turkish border.
Repairs should be swift Destruction of the line, which BP said can
carry 50,000-70,000 b/d of Azeri oil to the port of Batumi, means
at least a temporary disruption of supplies sent to Georgia’s Black
Sea terminals.
But a shipping agent in the port of Batumi said exports of Azeri oil
from the port are unlikely to be delayed by damage to the railway line,
saying there was just one tanker in port which could be loaded with
oil already on hand.
By the time a new tanker arrives to be loaded, he said, the railway
bridge will be repaired and the railway line will receive railcars
with additional cargo from Azerbaijan.
A spokesperson for Georgian Railways estimated that the key rail
bridge would be rebuilt within a week or sooner. She said engineers,
workers, and materials have arrived from Armenia and Azerbaijan and
works on the bridge are already under way.
The spokesperson said reconstruction of the bridge is the only viable
option for restoring railway traffic, as a nearby alternative bridge,
which has been out of use for about 20 years, cannot be reopened.
The stoppage further limits BP’s options in taking oil from the
Caspian after a fire caused the shutdown of its 1 million b/d capacity
Baku-Tbilisi-Ceyhan (BTC) link to Turkey and hostilities in Georgia
forced closure of the British firm’s 150,000 b/d Western Route Export
Pipeline (WREP) for security reasons.
BP’s only other export alternative currently, the Baku-Novorossiisk
line, leaves the British company with an "unattractive option,"
according to analysts, as it requires the mixing of Azeri oil with
lower-quality Russian Urals crude.
Due to the hostilities in Georgia, however, it remains to be seen
how soon BP will be able to lift its shutdown of the WREP, while no
definite date has been given for the completion of repairs on the
BTC line.
BTC line repairs slow Repairs to the BTC line in Turkey began over
the weekend, but a spokesman for Botas International Ltd., which
operates the Turkish sector of the line, said, "It’s a step-by-step
processâ~@¦. We don’t know just yet how long it will take."
Turkey’s energy minister Hilmi Guler said Aug. 18 that oil transport
along the BTC might resume "in a few days" as repairs on the line
were under way, but that view was not shared by BP spokesman Murat
Lecompte, who said it is too early to say when the pipeline could be
operational again.
Because of the disruption to its export routes, the BP-led
Azeri-Chirag-Gunashli oil fields in the Caspian have cut production
to about 250,000 b/d from about 800,000 b/d.
Of more concern, however, closure of the export routes has raised
worries of Russia attempting to reassert its control over the region,
as took place in the Soviet era. In Georgia, that would mean Russian
control of the existing pipelines, rail routes, and ports.
The Republican presidential candidate, US Senator John McCain
underlined those worries over the weekend, saying that if the BTC line
"were destroyed or controlled by Russia, European energy supplies
would be even more vulnerable to Russian influence."
That view is partially supported by independent analysts. According to
Simon Wardell of analyst Global Insight, Russia is not likely to close
or destroy the existing oil export routes across the Caucasus. To the
contrary, Wardell said, control of the existing export routes would
give Russia more power in the negotiation of prices.
With Russian troops showing no haste to withdraw from Georgia,
despite both sides signing a ceasefire agreement, it is too soon to
tell precisely what sorts of control, if any, Russia will attempt to
impose on the region’s oil and gas export flows and revenues.
–Boundary_(ID_kjNKvH7F8b5xE6htNPg9lA)- –
From: Emil Lazarian | Ararat NewsPress
