Baku-Tbilisi-Ceyhan Pipeline Breaks Ground September 18th

Plans for an oil pipeline to run from Azerbaijan to Turkey via Georgia, in which Statoil will have an 8.71 per cent interest, were formally approved today, September 18.

The presidents of the three nations involved took part in the ceremony at the existing Sangachal pipeline terminal near the Azeri capital of Baku. Also present were senior executives of the Baku-Tbilisi-Ceyhan Pipeline Company (BTC), which was established on August 1st by a number of international companies to own the line. As the name suggests, the transport system will run from Baku via the Georgian capital of Tbilisi to the Turkish port of Ceyhan on the Mediterranean. It will extend 1,760 kilometers, equal to the distance from Norway's southernmost tip to its northernmost cape. The highest point along its route is more than 2,700 meters above sea level. With a diameter varying from 42 to 46 inches, the pipeline's transport capacity will be roughly one million barrels of oil per day. That is set to make it the most important export route for crude from Azerbaijan and the southern Caspian to the Mediterranean.

BTC is now ready to start the actual design phase and land acquisition for the line, which is expected to cost around US $2.9 billion. Plans call for the transport system be ready when the first production phase of the Azeri-Chirag-Gunashli field comes on stream in the Caspian during the first quarter of 2005.

Apart from Statoil, partners in the project include operator BP with 32.6 percent, Socar 25 percent, Unocal 8.9 percent, TPAO 6.53 percent and Agip five percent. In addition come TotalFinaElf with five percent, Itochu 3.4 percent, Inpex 2.5 percent and Delta Hess 2.36 percent. Interests are due to be transferred to TotalFinaElf and Inpex in early October.