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Oil & Gas Journal

Eric Watkins
Senior Correspondent

LOS ANGELES, Aug. 26 -- Some 1.7 million bbl of Azeri crude were loaded aboard two tankers at Turkey's Mediterranean port of Ceyhan, the first transfer since the closure of the Baku-Tblisi-Ceyhan oil pipeline on Aug.5 due to an explosion and fire.

In addition to the disruption in the Turkish sector, operation of the BTC line and other export outlets for Azeri oil across Georgia were shut down due to hostilities in early August between Russian and Georgian military forces.

As head of the BTC consortium BP PLC operates the BTC line that transports oil from Azerbaijan's Azeri-Chirag-Gunashli fields complex to world markets. It transported 670,000 b/d in 2007 and plans throughput of 840,000 b/d in 2008 and 1 million b/d in 2009.

The Russian incursion into Georgia raised fears over the security of the trans-Caucasus as an energy corridor for oil and gas from the Caspian region, as well as from countries of Central Asia, such as Kazakhstan and Turkmenistan.

According to an oil industry analyst, "Victory in Georgia now gives Russia the edge in the struggle over access to the Caspian's 35 billion bbl of oil and trillions of cubic feet of gas." The analyst said probable losers include "the US and those Western oil companies that have bet heavily on the Caspian as one of the few regions where they could still operate with relative freedom."

Kazakhstan undeterred
However, despite the shutdown of the BTC line and the other export options via Georgia, neighboring Kazakhstan has denied reports that it will withdraw its planned support for the project.

"In order for Kazakhstan to withdraw from BTC, it would have to renounce, that is suspend, the operation of several agreements, including the one on Kazakhstan joining the BTC," said Kazakh foreign ministry spokesperson Yerzhan Ashikbayev.

"That hasn't happened yet. Where these rumors are coming from, I have no idea," Ashikbayez said in response to media reports that his country might withdraw from the BTC project due to the conflict between Georgian and Russia over South Ossetia.

In 2006, Kazakhstan said it will begin transporting oil through the BTC pipeline following an agreement signed June 16 by Kazakh President Nursultan Nazarbayev and Azeribaijan President Ilham Aliev (OGJ, June 26, 2006).

Some 25 million tonnes/year of Kazakh oil will be shipped by tanker from the northern Caspian port of Aktau to Baku. The project envisions eventual construction of subsea pipelines between Kazakhstan and Azerbaijan.

Operator BP owns 30.1% of the BTC line, while the State Oil Co. of the Azerbaijan Republic holds 25%. Other shareholders include Chevron 8.90%, StatoilHydro 8.71%, TRAO 6.53%, Eni 5.0%, Total 5.0%, Itochu 3.40%, Inpex 2.50%, ConocoPhillips 2.50%, and Hess 2.36%.

Contact Eric Watkins at hippalus@yahoo.com.