Sunday, April 06, 2008

REMEMBER: Trans-Balkan Oil Pipelines






Two rival oil pipelines which will cross the Balkans are:

The Russian Project: Burgas - Alexandroupolis (which crosses Bulgaria and Greece, starting from the Russian port Novorossiysk)

And the US Project: The Trans-Balkan pipeline AMBO (which crosses Albania, Macedonia and Bulgaria)


Pan-European Pipeline: Constanta-Trieste) - a proposed oil pipeline from Constanţa in Romania via Serbia and Croatia to a point near Rijeka and from there through Slovenia to Trieste in Italy.

And, finally, the famous BTC (Baku-Tbilisi-Cehyan) pipeline transporting for now Azeri oil from Baku to the Turkish Cehyan port at the Mediterranean Sea and which the US seeks extended through the Caspian Sea, in order to transport oil from Kazakhstan.


Trans-Balkan (AMBO) pipeline "the cause of the crisis in Yugoslavia"

February 16, 2001

London, February 15 (Tanjug) - According to numerous western analysts, the US project of the Trans-Balkan pipeline running from the Caspian sea to the Albanian port of Vlore, is the main cause of the tragic crisis in the former Yugoslavia and the US intervention in Kosovo and Metohija, the London Guardian writes today.

All past doubts have been rejected, and the western press did not pay attention to that, the paper reminds, stressing that it becomes more clear that this US economic interest is the leading motive of creating the crisis in the former Yugoslavia.

The London paper points to freelance researches of Keith Fisher and the US Trade and Development Agency's paper published last May, which assesses that the pipeline is a US strategic interest.

According to the paper, the pipeline will provide oil and gas to the US market worth $600m a month, adding that the pipeline is necessary because the oil coming from the Caspian sea will quickly surpass the safe capacity of the Bosphorus.

In 1998, Bill Richardson, then US energy secretary, said that the pipeline would make all countries from the Caspian to the Balkans politically and economically reliant on the West, which is also a strategic goal.

It is obvious, The Guardian writes, that the former Yugoslavia, especially Serbia, was a serious problem for the realization of the plan. The intervention in Kosovo and Metohija was carried out in order to please Albania, whose port of Vlore is the ultimate destination of the pipeline.

The project of the Trans-Balkan pipeline was made in early 90-s, and it is due for approval next month, the paper writes.

Pan-European Pipeline:

Pan-European is a proposed oil pipeline from Constanţa in Romania via Serbia and Croatia to a point near Rijeka and from there through Slovenia to Trieste in Italy. The aim of 1,856-kilometre long pipeline is to bypass Turkish straits in the transportation of Russian and Caspian oil. The pipeline, which would cost about 2 billion euros, will feed refineries in South-Eastern Europe, Italy, Austria and Bavaria at least with 40,000,000 ton of oil per year.
The project was proposed in 2002. The project is sponsored by so far unidentified group of industrial interests that possibly include[1] General Electric Oil and Gas, China National Offshore Oil Corporation, Chevron, Texaco and British Petroleum. Lobbyists for the project include Henry Owen, a close friend to the Bush family. Owen has written a lobbying letter to the minister of finance of Slovenia, Andrej Bajuk[1] in the first half of 2006.
National governments of Romania, Serbia and Croatia are favourable about the project. Most engaged is the President of Romania, Traian Băsescu, who has cited a study estimating the benefits of the project for Romania over 20 years of operation in the range between 2.27 to 4.39 billion US dollars.[1] Government of Slovenia is not favourable about the project, citing the following reasons: the 29 km stretch is on the environmentally sensitive Karst terrain, no national interest exists regarding oil supply, and, the memorandum proposed is too binding for the Government which can not secure a construction permit without respect to the legal siting procedure.[2]
Signing of the memorandum of understanding on the construction of the pipeline was several times delayed. An agreement to begin work on the pipeline was signed on 3 April 2007 by officials of Croatia, Italy, Romania, Serbia, and Slovenia during an energy forum in Zagreb.[3]

See also
Burgas-Alexandroupoli pipeline
AMBO pipeline
Baku-Tbilisi-Ceyhan pipeline

Analytics: Europe’s response to Russia - Constanza-Trieste project:

[ 05 Feb 2008 16:56 ]Before Russia completed the attack on South-Eastern Europe through South Stream gas pipeline, there is something new emerging in the region.

This time European Union intends to strike on weak spot of Russia.

The ink had hardly dried on the agreements signed with participation of President Vladimir Putin, when Bulgarian President Georgi Pyrvanov stated that his country still gives political support to Nabucco gas pipeline.

Prime Minister Sergey Stanyshev even claimed that South Stream and Nabucco pipelines supplement each other.

“Some say Bulgaria betrayed European Union and supported Russia’s interests and this project is the alternative of Nabucco. It’s nonsense.”

It is interesting that this statement coincided with the statements of Sofia-accredited U.S. diplomats that Russia’s strengthening positions in the Balkans worry them.

Prime Minister of Bulgaria refused these accusations and assured that relations with Russia will not change official Sofia’s geopolitical direction towards the West.

But it seems this assuredness does not suffice everybody. Happenings in Bulgaria’s Burgas city prove it.

The residents of the city, which is the outfall of Burgas-Alexandroupolis oil pipeline, the second giant energy project between Moscow and Sofia, held mass rally and protested against the project.

"Our rulers sold Bulgaria", "Don’t turn Burgas into a second Chernobyl," read the posters of the protestors, who even staged an auction and sold parts of the pipeline.

The agreement signed by Bulgaria, Russia and Greece with participation of Russian president envisages transportation of Russian oil to Aegean Sea bypassing Turkey’s Bosphorus and Dardanelles.

Question arises how “Borjomi scenario” is realized around the project, which is considered as the alternative to Baku-Tbilisi-Ceyhan pipeline.

But the referendum in Burgas on February 17, which will decide the fate of the pipeline, shows seriousness of the situation.

51% of the city residents are to participate in the voting, so that the referendum can be considered valid.

President Georgi Pyrvanov stated that local referendums will not influence the fate of the project.

On the other hand, Romanian President Traian Basescu’s speech about Constanza-Trieste before foreign diplomats accredited in Bucharest shows that the happenings in Burgas are no of local character.

“Nabucco pipeline is of strategic character for Romania and European Union. Direct, effective and safe delivery of the Caspian oil is possible through Constanza-Trieste pipeline,” he said.

President Basescu expressed his hope that European Union in its new policy on Central Asia will apply more suitable approach to this strategic region.

“Romania will try to achieve the goals of this policy through the relations with its strategic partners Azerbaijan and Kazakhstan,” he said.

1.400 kilometer- Constanza-Trieste pipeline or Pan-European Oil Pipeline which is a competitor of Burgas-Alexandroupolis and Bulgas-Vlore pipelines will link the Black and Adriatic Seas.

Pan-European is a proposed oil pipeline from Constant,a in Romania via Serbia and Croatia to a point near Rijeka and from there through Slovenia to Trieste in Italy.

It would carry around 60 million tonnes of oil per year. The feasibility study for the project has estimated that the pipeline will commence operations in 2012.Viorel Palashka, Romanian deputy Minister of Economy stated in the middle of January that, the government supports the joining of “Gaz de France “Company and Kazakhstan to Constanza-Triesta pipeline project.

This project was the focus of attention of Bucharest along January.

This issue was debated during the visit of Romanian President Traian Basescu to Belgrade on January 29.

Serbia is a key country for this project and Constanza-Triesta pipeline became insolvent because of Kosovo crisis in 1999.

Official Bucharest assured Belgrade that its position will be close to Serbian positions.

“We debated this project with Boris Tadic I am sure that, our political and economical partnership will successfully develop,” he said.

Serbian President Boris Tadic noted that they are interested in the necessity of Constanza port and in the development of cooperation on implementation of above-said project.

Against the back drop of South stream gas pipeline Romanian-Serbian dialogue was drawn more attention last month.

Most parts of the pipeline are already built except for a connection between the city of Pitesti, Romania and the city of Pancevo, Serbia, and a section between Croatia’s northern Adriatic region through Slovenia to Trieste.

Compared to the Burgas-Alexandroupolis and AMBO pipelines, a pipeline which runs entirely across land and directly joins the central European pipeline network carries smaller risks associated with oil spills.

There is a threat that the number of tankers passing through the Turkish straits will not fall significantly and that oil pipelines would increase the total amount of oil being transported rather than replacing tanker traffic.

Bucharest and Sofia, candidates to EU competes for Pan-European pipeline and South stream gas pipeline and these countries depend on Serbia. Serbian President Boris Tadic stated that the country intends to make investment in oil infrastructure of Constanza port. (?)

It is interesting, is Gazprom which bought Serbian Oil Company last month behind the investments? /APA Analytics /

AMBO pipeline

AMBO pipeline is a planned oil pipeline from Bulgarian Black Sea port Burgas via Macedonia to Albanian Adriatic port Vlore. The aim of the 894 kilometer long trans-Balkan pipeline is to bypass Turkish straits in transportation of Russian and Caspian oil. The pipeline is expected to cost about 1.5 billion USD and it will transport 750,000 barrels of oil per day.[1] There will be four pump stations, two in Bulgaria and one each in Macedonia and Albania, constructed along the route.
The pipeline is planned to be built and operated by the US-registered Albanian Macedonian Bulgarian Oil Corporation (AMBO). The project is backed by the US government, who financed a feasibility study of pipeline.[2]
The pipeline was proposed already in 1993. On 27 December 2004, prime-ministers of Albania, Macedonia and Bulgaria signed the latest political declaration, followed by the memorandum of understanding between representatives of Albania, Macedonia and Bulgaria and Ted Ferguson, the president & CEO of AMBO.[3] On 30 October 2006, Albania and Macedonia signed a protocol to determinate the entrance points of the pipeline. The entrance point will be Stebleve village in Albania and Lakaica village in Macedonia. A similar protocol between Bulgaria and Macedonia was signed later in 2006.
On 31 January 2007, Macedonia, Bulgaria and Albania signed a trilateral convention on the construction of the Balkan pipeline AMBO. This document has been ratified by the Parliaments of all three countries and will govern the construction, operation, and maintenance of the project. It goes into effect in September 2007. Environmental studies are being conducted and construction licenses need to be obtained, allowing work to commence in late 2008.[4]
Other pipeline projects (which do not compete with AMBO since they serve entirely different markets) are the Burgas-Alexandroupoli pipeline from Burgas to Greece Aegean port Alexandroupoli, and the Pan-European Pipeline from Constanţa in Romania to Trieste in Italy. There is also the Baku-Tbilisi-Ceyhan pipeline. Compared with Burgas-Alexandroupoli pipeline, the AMBO pipeline is longer and more expensive, but at the same time Vlore (which is a sheltered, deep-water, all-weather port) could accommodate larger tankers and is more accessible than Alexandroupoli.[5] Also, an oil spill in the Aegean would have a negative influence on Greece’s tourism industry.[6]

[edit] See also
Burgas-Alexandroupoli pipeline
Pan-European Pipeline
Baku-Tbilisi-Ceyhan pipeline

Burgas-Alexandroupoli pipeline

The Burgas-Alexandroupoli pipeline is an oil pipeline that will be used to transport Russian and Caspian oil from the Bulgarian Black Sea port of Burgas to the Greek Aegean port of Alexandroupoli. The pipeline will be an alternative route for Russian oil bypassing the Bosporus and the Dardanelles. Its construction will begin in 2008, and is estimated to be completed by the beginning of 2011.[1][2]

The pipeline project was proposed in 1993–1994 by several Russian and Greek companies.[3] In 1994, for construction of the pipeline Greece and Bulgaria signed a bilateral agreement, followed by a memorandum of cooperation, signed by Greece and Russia.[4]
In February 1998, a Greek consortium for pipeline construction named Bapline was established, and in May 1998, a memorandum of creation of the Transbalkan Oil Pipeline Company was signed.[4] In 2000, a technical specifications and an economic evaluation of the project were prepared by the German company ILF.[3]
A joint protocol for preparing the pipeline's construction was signed by the three countries in January 2005.[5] The political memorandum between governments was signed on 12 April 2005.
In May 2006, there was a controversy in the media regarding the Bulgarian government's alleged withdrawal from the project, but this has been denied later by Bulgarian officials.[6] An inter-governmental agreement on the project was agreed on 7 February 2007, and it was signed on 15 March 2007 in Athens, by the involved ministers of the three countries, under the presence of their leaders, Vladimir Putin (Russian president), Sergey Stanishev (Bulgarian prime-minister), and Kostas Karamanlis (prime-minister of Greece).[2][7][8]

[edit] Technical features and financing
The main pipeline with a diameter of 36 inches (900 mm) will be 279 kilometres (173 mi) long, and it would transport 15-23 million tons of oil per year during the first phase, as well as 35 million during the second.[3] The pipeline would have three oil refilling stations, two of which in Bulgaria (the first one at Neftochim close to Burgas) and one at Alexandroupoli. The project includes reconstruction of Burgas and Alexandroupolis terminals, including oil tanks with a capacity of 600,000 tons in Burgas, and w1,200,000 tons in Alexandroupolis.[9]
The pipeline is expected to cost up to €1 billion.[2][10] The investment scheme is not agreed yet, and it’s not decided from which sources the pipeline will be filled.[8]

[edit] International project company
The pipeline will be constructed and owned by the international project company, which will be registered in the Netherlands. The agreement establishing the international project company was signed in Moscow on 18 December 2007.[11] 51 % of shares would be given to the Burgas-Alexandroupolis Pipeline Consortium, a joint venture of Russian Transneft, Rosneft and Gazprom Neft.[12] Bulgarian Burgas-Alexandroupolis Project Company-BG, a joint venture of Bulgargaz and Transexportstroy, will own 24.5 % of shares. Greece consortium HELPE S.A. - THRAKI S.A., a joint venture between Hellenic Petroleum and Thraki, which is owned by Prometheus Gas and the Latsis Group, will own 23.5 %, while the Government of Greece will have 1 %.[13]
There are speculations that the part of Bulgarian and Hellenic stakes could be sold to other oil companies as Chevron, TNK-BP and KazMunayGas.[8] Also Andrei Dementyev, a deputy industry and energy minister of Russia, has proposed that Kazakhstani KazMunayGas and other shareholders of the Caspian Pipeline Consortium could be get a stake in the pipeline project.[14] Kazakhstan's Energy Minister Baktykozha Izmukhambetov has said that Kazakhstan wants to buy a stake in the pipeline consortium.[15]
The ownership of the Burgas oil terminal remains unclear. Bulgarian opposition has demanded to scrap the deal if Russian companies are granted control over the terminal.[7]

[edit] Controversy
There are several competitive pipeline projects, such as the AMBO pipeline from Burgas to Vlore, Pan-European Pipeline from Constanţa to Trieste, Odessa-Brody-Plotsk pipeline, Kiykoy-Ibrice pipeline, and Samsun-Ceyhan pipeline — all aimed to transport oil from the Black Sea bypassing Turkish straits. The project of the Burgas-Alexandroupoli pipeline is described as one of the shortest pipeline through a plain terrain and therefore to be one of the cheapest and cost effective.[9] The critics of the the Burgas-Alexandroupoli pipeline project have raised environmental concerns because of oil tankers traffic in the Aegean Sea, which contains numerous submerged rocks and island populations dependent on tourism and fishing.[16] It has been mentioned that a possible oil spill in the Aegean would be devastating for Greece's tourism industry.[17]

See also:

AMBO pipeline
Pan-European Pipeline
Odessa-Brody pipeline
Samsun-Ceyhan pipeline
Baku-Tbilisi-Ceyhan pipeline
Caspian Pipeline Consortium

Russia, Greece and Bulgaria sign major oil pipeline deal:

ATHENS, Greece: Russian President Valdimir Putin presided over a three-nation pipeline deal Thursday to bring Russia's fast expanding energy network to the Mediterranean Sea by 2011.
Development and energy ministers from Russia, Greece and Bulgaria signed an agreement authorizing construction of a 175-mile (280-kilometer) Russian oil pipeline from Bulgaria's Black Sea port of Burgas to Alexandroupolis, in northern Greece.
While it may mollify European worries over oil supply, the project could increase Europe's dependency on Russia at a time when emerging central Asian producers are still heavily reliant on the Russian network for delivery to energy-hungry Western consumers.
The deal was fast-tracked early last month after Russian President Vladimir Putin threatened to seek alternative routes unless economic disputes were quickly resolved.
Russia already provides Europe with a third of its oil and 40 percent of its natural gas, and the pipeline deal is likely to deepen that dependence. Russia's reliance as a supplier has been questioned after several supply disruptions resulting from price disputes between Moscow and former Soviet republics that serve as transit routes.

Joining Putin at Thursday's signing ceremony were Prime Ministers Costas Karamanlis of Greece and Sergei Stanishev of Bulgaria.
"This pipeline demonstrates how all countries can benefit, not just in the Balkans but in Europe," Putin said. "Our work was in a spirit of cooperation, friendship and partnership."
Karamanlis said: "it will also help international markets with improved access to oil at a time when energy is a fundamental global concern."
First conceived in 1993, the US$1.2 billion (€900 million) Burgas-Alexandroupolis pipeline will avoid Turkey's Bosphorus strait, which is burdened by long delays, transit restrictions and rising tariffs.
Crude supplies, possibly also from Kazakhstan, will still be shipped from the Russian port of Novorossiysk to Burgas, and again out from Alexandroupolis to world markets.
Three state-owned Russian firms control 51 percent in the venture, including infrastructure like pumping stations, storage facilities and loading docks, leaving EU-members Bulgaria and Greece with 24.5 percent each. The project will compete with other pipelines including Baku-Ceyhan, which skirts Russian soil and was strongly backed by the US.
Putin said the project "will have a negative impact" on existing conduits, but would aim to protect the environment and ensure safety by adopting the latest technologies.
US oil giant Chevron has indicated it may invest in the pipeline — which will be funded mainly through equity and borrowed capital — and in liquid natural gas facilities in Burgas. Bulgaria may sell its stake to private firms.
The 90-centimeter (36-inch) conduit will channel 700,000 barrels of oil a day to Greece, with potential daily capacity of 1 million barrels, or 50 million metric tons a year. Construction should begin in 2008 and take 18 months.
"The faster we set to work, the better things will turn out to be," Putin said.
Stanishev stressed the project "will attract more investments ... that could amount to hundreds of millions of euros," he said.
Some analysts, however, caution that pipeline deals increase dependence on a single source of energy.
Claudia Kemfert, an analyst at the German Institute for Economic Research, said by telephone from Berlin: "You get a strengthening of supply, but it can create higher dependency and other problems. To avoid this we need more diversification on the supply side, and to be less dependent on Russian energy."
On Monday, Matthew Bryza, U.S. Deputy Assistant Secretary of State for European and Eurasian affairs, visited Athens and expressed support for the oil pipeline.
But he added: "Where we are focusing most urgently now is diversification of gas supply ... away from its one primary supplier, Gazprom."
U.S. officials want Greece to prioritize gas from Azerbaijan in a natural gas network being built from Central Asia to Greece through Turkey, the TGI Interconnector, due to continue onto Italy after 2011.
Putin left for Moscow on Thursday afternoon.

Baku-Tbilisi-Ceyhan pipeline

The Baku-Tbilisi-Ceyhan pipeline (sometimes abbreviated as BTC pipeline) is a crude oil pipeline that covers 1,768 kilometres (1,099 mi) from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean Sea. It connects Baku, the capital of Azerbaijan; Tbilisi, the capital of Georgia; and Ceyhan, a port on the south-eastern Mediterranean coast of Turkey, hence its name. It is the second longest oil pipeline in the world after the Druzhba pipeline. The first oil that was pumped from the Baku end of the pipeline on May 10, 2005 reached Ceyhan on May 28, 2006.[1]

The Caspian Sea lies above one of the world's largest groups of oil and gas fields. As the Caspian Sea is landlocked, the transportation of oil to Western markets is complicated. During Soviet times, all transportation routes from the Caspian region were built through Russia.
The collapse of the Soviet Union started a search for new routes. Russia first insisted that the new pipeline should pass through Russian territory, then declined to participate.[2][3] A pipeline across Iran from the Caspian Sea to the Persian Gulf would have provided the shortest route, but Iran was considered an undesirable partner for a number of reasons: its theocratic government, concerns about its nuclear program, and United States sanctions that greatly restrict Western investment (especially by American companies) in the country. The United States government opposed any route that would pass through Iran[4].
At the time, Turkey called for energy transit through Turkey, insisting that this would be the safest and most economic route for export. In the spring of 1992, the Turkish Prime Minister Süleyman Demirel made this proposal to Central Asian countries and Azerbaijan. The first document on the construction of the Baku-Tbilisi-Ceyhan pipeline was signed between Azerbaijan and Turkey on 9 March 1993 in Ankara.[5]
The choice of a Turkish route meant oil export from Azerbaijan via either Georgia or Armenia. For several reasons a route through Armenia was politically inconvenient, mainly because of the unresolved military conflict between Armenia and Azerbaijan over Nagorno-Karabakh.[6] This left the Azerbaijan-Georgia-Turkey route as politically most expedient for the major parties, although it was longer and more expensive to build than the other options.
The BTC pipeline project gained momentum following the Ankara Declaration, adopted on 29 October 1998 by President of Azerbaijan Heydar Aliyev, President of Georgia Eduard Shevardnadze, President of Kazakhstan Nursultan Nazarbayev, President of Turkey Süleyman Demirel, and President of Uzbekistan Islom Karimov. The declaration was witnessed by the United States Secretary of Energy Bill Richardson, who expressed strong support for the BTC pipeline. The intergovernmental agreement in support of the BTC pipeline was signed by Azerbaijan, Georgia, and Turkey on 18 November 1999, during a meeting of the Organization for Security and Cooperation in Europe (OSCE) in Istanbul, Turkey.[6]

[edit] Construction
The Baku-Tbilisi-Ceyhan Pipeline Company (BTC Co.) was founded during a document signing ceremony in London on 1 August 2002.[7] The official ceremony launching construction of the pipeline was held on 18 September 2002.[8] Construction began in April of 2003 and was completed in 2005. The Azerbaijan section was constructed by Consolidated Contractors International of Greece, and Georgia's section was constructed by a joint venture of France’s Spie Capag and US Petrofac Petrofac International. The Turkish section was constructed by BOTAŞ. Bechtel was the main contractor for engineering, procurement and construction.[7]

[edit] Inauguration
All together, three official inauguration ceremonies were held. On 25 May 2005, the pipeline was officially inaugurated at the Sangachal terminal by President Ilham Aliyev of the Azerbaijan Republic, President Mikhail Saakashvili of Georgia and President Ahmet Sezer of Turkey, joined by President Nursaltan Nazarbayev of Kazakhstan, as well as United States Secretary of Energy Samuel Bodman.[9] The inauguration of the Georgian section of the pipeline was hosted by President Mikheil Saakashvili at the BTC pumping station near Gardabani on 12 October 2005.[10] The inauguration ceremony at the Ceyhan terminal was held on 13 July 2006.[11]
Oil that was pumped from the Baku end of the pipeline on May 10, 2005 reached Ceyhan in May 28, 2006 after a journey of 1,770 km.[1] The first oil was loaded at the Cheyhan Marine Terminal (Haydar Aliyev Terminal) onto a ship named British Hawthorn.[12] The tanker sailed away from the port on 4 June 2006 with about 600,000 barrels of crude oil. This marked the start of export of Azerbaijan’s oil via the BTC oil pipeline to world markets.

[edit] Description of the pipeline

[edit] Route
The pipeline starts from the Sangachal Terminal near Baku in Azerbaijan. The route of the pipeline crosses Azerbaijan, Georgia and Turkey to Ceyhan. The pipeline's destination is the Ceyhan Marine Terminal (Haydar Aliyev Terminal) on the south-eastern Mediterranean coast of Turkey. Of its total length of 1,768 kilometres (1,099 mi), 443 kilometres (275 mi) lie in Azerbaijan, 249 kilometres (155 mi) in Georgia and 1,076 kilometres (669 mi) in Turkey. It crosses several mountain ranges at altitudes to 2,830 metres (9,300 ft).[13] It also traverses 3,000 roads, railways, and utility lines—both overground and underground—as well as 1,500 watercourses of up to 500 metres (1,600 ft) wide (in the case of the Ceyhan River in Turkey).[1] The pipeline occupies a corridor eight meters wide, and is buried along its entire length at a depth of no less than one meter.[14] Parallel to the BTC pipeline runs the South Caucasus Gas Pipeline, which transports natural gas from the Sangachal Terminal to Erzurum in Turkey.[13] Between Sarız and Ceyhan, the Samsun-Ceyhan oil pipeline will be laid along the same corridor.[15]

[edit] Technical features
The pipeline has a projected lifespan of 40 years, and when working at normal capacity, beginning in 2009, will transport 1 million barrels (160 000 m³) of oil per day. It has a capacity of 10 million barrels of oil, which will flow through the pipeline at 2 metres (6.6 ft) per second.[1] There are 8 pump stations through the pipeline route (2 in Azerbaijan, 2 in Georgia, 4 in Turkey). The project includes also the Ceyhan Marine Terminal, two intermediate pigging stations, one pressure reduction station, and 101 small block valves.[13] It was constructed from 150,000 individual joints of line pipe, each measuring 12 metres (39 ft) in length. This corresponds to a total weight of approximately 655,000 short tons (594,000 metric tons). The pipeline is 1,070 mm (42 inches) diameter for most of its length, narrowing to 865 mm (34 inches) diameter as it nears Ceyhan.[16]

[edit] Cost and financing
The pipeline cost US$3.9 billion.[17] Around 15,000 people were employed during the construction of the pipeline. Approximately 70% of BTC costs are being funded by third parties, including the World Bank's International Finance Corporation, the European Bank for Reconstruction and Development, export credit agencies of seven countries and a syndicate of 15 commercial banks.[13]

[edit] Source of supply
The BTC pipeline is supplied by oil from Azerbaijan's Azeri-Chirag-Guneshli oil field in the Caspian Sea. In this pipeline may also transport oil from the Kazakhstan's Kashagan oil field as well as from other oil fields in Central Asia.[2] The government of Kazakhstan had announced that it would seek to build a trans-Caspian oil pipeline from the Kazakhstani port of Aktau to Baku and in turn to the BTC pipeline. However, due to opposition to a Caspian offshore pipeline by both Russia and Iran, the oil pipeline is doubtful. Therefore Kazakhstan has announced a new project named Kazakh-Caspian Transportation System, which is scheduled to come into operation in 2010. The project includes a pipeline from Iskene to the Caspian port of Kuryk, terminals in Kazakhstan and Azerbaijan, and construction of oil tankers.[18] The project is at the pre-feasibility stage.

[edit] Possible transhipment via Israel
It has been proposed that oil from the BTC pipeline may be transported to eastern Asia via the Israeli oil terminals at Ashkelon and Eilat, the overland trans-Israel sector being bridged by the Eilat-Ashkelon Pipeline owned by the Eilat Ashkelon Pipeline Company (EAPC).[19][20]

[edit] Shareholders of the pipeline
The pipeline is owned by a consortium of energy companies led by BP (formerly British Petroleum), the operator of the pipeline. The shareholders of the consortium are:
BP (United Kingdom): 30.1%
State Oil Company of Azerbaijan (SOCAR) (Azerbaijan): 25.00%
Chevron (USA): 8.90%
StatoilHydro (Norway): 8.71%
Türkiye Petrolleri Anonim Ortaklığı (TPAO) (Turkey): 6.53%
Eni/Agip (Italy): 5.00%
Total (France): 5.0%
Itochu (Japan): 3.4%
Inpex (Japan): 2.50%
ConocoPhillips (USA): 2.50%
Hess Corporation (USA) 2.36%[11]

[edit] Controversial aspects

[edit] Politics
Even before its completion, the BTC pipeline was affecting the world's oil politics. The South Caucasus, previously seen as Russia's backyard, is now a region of great strategic significance to other great powers. The U.S. and other Western nations have consequently become much more closely involved in the affairs of the three nations through which oil will flow. Some have criticized this degree of western involvement in the South Caucasus, arguing that it has led to an unhealthy dependence on undemocratic leaders.[citation needed] The countries themselves though have been trying to use the involvement as a counterbalance to Russian and Iranian economic and military dominance in the region.[14][21] It is seen similarly by Russian specialists claiming that the pipeline is aimed to weaken the Russian influence in Caucasus. The Russian Parliament Foreign Affairs Committee chairman Konstantin Kosachev even stated that the United States and other Western countries are planning to settle their soldiers in Caucasus on the pretext of instability in regions where the pipeline passes through.[22]
The project also constitutes an important leg of the East-West energy corridor, gaining Turkey greater geopolitical importance. The BTC pipeline also supports Georgia's independence from Russian influence. Former President Eduard Shevardnadze, one of the architects and initiators of the project, saw the construction of the pipeline through Georgian territory as a certain guarantee for the country's future economic and political security and stability. This view has been fully shared by his successor President Mikhail Saakashvili. "All strategic contracts in Georgia, especially the contract for the Caspian pipeline are a matter of survival for the Georgian state," he told reporters on 26 November 2003.[citation needed]

[edit] Economics
Although some have touted the BTC pipeline as potentially removing the dependence of the US and other Western nations on oil from the Middle East, in reality it doesn't change global dependence on Middle Eastern oil as it supplies only 1% of global demand during its first stage.[citation needed] However, the pipeline diversifies the global oil supply and so insures, to an extent, against a failure in supply elsewhere. Critics of the pipeline—particularly Russia—are skeptical about its economic prospects and see this as politically motivated.[23]
Construction of the BTC pipeline has contributed significantly to the economies of the host countries. In the first half of 2007, a year after the completion and launch of BTC pipeline as the main export route for Azerbaijani oil, the real GDP growth of Azerbaijan hit a record of 35%.[24] Substantial transit fees accrues to Georgia and Turkey. For Georgia the transit fees are expected to produce an average of US$62.5 million per year.[21] Turkey is expected to receive approximately US$200 million in transit fees per year in the initial years of operation, with the possibility of increasing to US$290 million per year from year 17 to year 40. Turkey is also benefitting from an increase in economic activity in eastern Anatolia, including increased importance of the port of Ceyhan, which had experienced significant reductions of activities since the 1991 Gulf War.[25] The reduction of oil tanker traffic on the Bosphorus will contribute to greater security for Istanbul.[26]
One of the concerns related to the use of oil revenues is the level of corruption. To counter concerns that oil money would be siphoned off by corrupt officials, Azerbaijan has set up a State oil fund (State Oil Fund of the Republic of Azerbaijan, or SOFAZ), expressly mandated with using natural-resource revenue to benefit future generations, to bolster support from key international lenders and improve transparency and accountability. SOFAZ is audited by Deloitte and Touche. Additionally, Azerbaijan became the first oil producing country in the world to join EITI — the British-led Extractive Industry Transparency Initiative.[14]

[edit] Security
Concerns have also been addressed about the security of the BTC pipeline.[27][28] It deliberately bypasses the border of Armenia (with which Azerbaijan is still technically at war over the status of the Armenian-populated separatist region of Nagorno-Karabakh in Azerbaijan), crosses through Georgia (which has two unresolved separatist conflicts) and goes through the edges of the Kurdish region of Turkey (which has seen a prolonged and bitter conflict with separatist terrorists).[29] It will require constant guarding to prevent sabotage, though the fact that almost all of the pipeline is buried will make it harder to attack.[14]

[edit] Environment
Several ecological issues had been raised concerning the BTC pipeline. Critics of the pipeline have pointed out that the region through which it travels is highly seismic, suffering from frequent earthquakes. The route takes the pipeline through three active faults in Azerbaijan, four in Georgia and seven in Turkey. The pipeline's engineers have equipped it with a number of technical solutions to reduce its vulnerability to earth movements. However, the BTC pipeline for almost half of its entire route goes through the same territory as the Baku-Supsa pipeline, which has been in operation since 1999 and has an exemplary safety record.
The pipeline crosses the watershed of the Borjomi-Kharagauli National Park (albeit not entering the park territory), an area of mineral water springs and outstanding natural beauty in Georgia.[30] This has long been the subject of fierce opposition by environmental activists. Since the pipeline is buried for its entire length, constructing it has left a highly visible scar across the landscape. The Oxford-based "Baku Ceyhan Campaign" averred that "public money should not be used to subsidise social and environmental problems, purely in the interests of the private sector, but must be conditional on a positive contribution to the economic and social development of people in the region."[citation needed] As the Borjomi mineral water is a major export commodity of Georgia, any oil spills there would have a catastrophic effect on the viability of the local water bottling industry.
The field joint coating of the pipeline has also been an area of controversy as there were shortcomings in tests of used sealant SPC 2888.[31] BP and its contractors interrupted work until the problem was eliminated.[25]
On the positive side, the BTC pipeline eliminates 350 tanker cargoes per year through the sensitive and very congested Bosphorus and Dardanelles. The World Bank as a condition of financing required the use of catalytic converters on the 18 large Wärtsilä engine driven compressors used to transport the oil through the pipeline in the Turkish portion. Consequently each of the 7600 hp engines have reduced their carbon dioxide and volatile organic compounds emissions by greater than 90% providing a significant air quality improvement over the 350 tanker shipments through the Bosphorus.[32]

[edit] Human rights
Human rights activists criticized Western governments for the pipeline, due to reported human and civil rights abuses by the Aliyev regime.[33] A Czech documentary film Zdroj (Source) underscores these human rights abuses, such as eminent domain violations in appropriating land for the pipeline's route, and criticism of the government leading to arrest.[34] The project was also criticized by the Kurdish Human Rights Project.

[edit] In fiction
The BTC pipeline has been featured (in fictional form) in popular culture: it was a central plot point in the James Bond film The World Is Not Enough (1999). One of the film's central characters, Elektra King, is responsible for the construction of an oil pipeline through the Caucasus, from the Caspian Sea to the Mediterranean coast of Turkey. Named the "King pipeline" in the film, it is a thinly disguised version of the BTC.[29]

[edit] See also

Wikinews has related news:
First pipeline opens from Caspian Sea
Economy of Azerbaijan
Foreign relations of Azerbaijan
Foreign relations of Georgia
Foreign relations of Turkey
Geostrategy in Central Asia
Petroleum politics
Dutch disease

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