Baku-Tbilisi-Ceyhan pipeline

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The Baku-Tbilisi-Ceyhan pipeline (sometimes abbreviated as BTC pipeline) transports crude petroleum 1,768 kilometres (1,099 mi) from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean Sea. It passes through 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 (the longest being the Druzhba pipeline from Russia to central Europe). The first oil that was pumped from the Baku end of the pipeline on May 10, 2005 reached Ceyhan on May 28, 2006.[1]

Route of the Baku-Tbilisi-Ceyhan pipeline
Route of the Baku-Tbilisi-Ceyhan pipeline

Contents

The Caspian Sea lies above one of the world's largest group of oil and gas fields , but its full potential was not exploited under the Soviet Union due to a lack of investment and modern technology. This changed with the independence in 1991 of the countries around the Caspian Sea, when the Western oil companies were able to begin investing in the local oil industry. Caspian Sea oil production is forecast to rise rapidly to a maximum of about 1.5 million barrels (240 000 m³) per day, roughly equivalent to the petroleum output of Mexico, with reserves in the region estimated at around 220 billion barrels (35 km³) of oil – enough to meet the entire world demand for oil for eight years. (It should be noted, though, that it has been suggested that this is a gross overestimate, with Azerbaijan's oil reserves estimated by some to be a mere 32 billion barrels—5.1 billion m³.)

The geographical situation of the Caspian Sea – which is totally landlocked – makes transportation of the oil significantly difficult. The local geopolitical situation is also problematic for the West, as the two countries best placed to transport the oil, Russia and Iran, have for various reasons been seen as unreliable or undesirable partners by the West. A "Western Early Oil" pipeline from Azerbaijan to the Georgian Black Sea port of Supsa had already been built, but this has a very limited throughput (only 115,000 barrels per day) and the amount of oil that can be shipped via the Black Sea is severely limited by congestion in the Bosphorus and Dardanelles straits that bisect Istanbul and separate European from Asian Turkey. The only way of getting around the Bosphorus/Dardanelles problem is to route oil supplies to a location where tankers do not have to navigate those straits. This required it to be piped to the Mediterranean, the Persian Gulf or perhaps even across Europe to the North Sea or Baltic Sea.

Discussions about a new pipeline began in the late 1990s with Russia first insisting that it should pass through Russian territory, then declining to participate at all. Russia's unreliable business environment was also seen as a problem. A straight line 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 ongoing nuclear program and the United States' sanctions of the regime, which greatly restricts Western investment (especially American companies) in the country, and most importantly, United States, particularly for this matter, resorted to tough diplomacy to prevent any agreement that would benefit Iran.

These issues narrowed down the choice of route for Western interests to an outlet on Turkey's Mediterranean coast, to be reached via two of the three countries of the South Caucasus region – from Azerbaijan via either Georgia or Armenia. A route through Armenia was politically inconvenient for three basic reasons:

This left the Azerbaijan-Georgia-Turkey route as the most politically expedient one for the major parties, although it was longer and more expensive to build than the other options.

A decision to move forward with the pipeline was reached at the meeting of the Organization for Security and Cooperation in Europe (OSCE) in Istanbul, Turkey on November 18, 1999. The meeting also issued a declaration of intent to construct a Trans-Caspian gas pipeline from Turkmenistan to Baku to transport gas to Turkey.

The construction of the BTC pipeline was one of the biggest engineering projects of the decade, and certainly one of the biggest to have occurred anywhere in western Asia since the fall of the Soviet Union. The construction was largely overseen by David Woodward, BP Azerbaijan Associate President and his understudy Michael Townshend, Executive Director of the Baku-Tbilisi-Ceyhan (BTC) pipeline project.

Construction began in September 2002. Petrofac International was a major contractor in constructing the pipeline, pumping stations, pigging stations and block valve stations in the Azerbaijan and Georgia sections.

Three official inauguration ceremonies were held. On 2005-05-25, the pipeline was officially inaugurated at the Sangachal terminal, near Baku, 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. The inauguration of the Georgian section of the pipeline was hosted by President Mikheil Saakashvili at the BTC pumping station near Gardabani on 2005-10-13. The inauguration ceremony at the Ceyhan terminal was held on 2006-07-13.

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 from Haydar Aliyev Sea Terminal onto a ship named The British Hawthorn.[2] The tanker sailed away from the new Ceyhan Marine Terminal on the Mediterranean coast 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, bypassing the Turkish straits (Bosporus and Dardanelles).

The route of the pipeline crosses Azerbaijan and skirts Armenia to pass through Georgia and Turkey to the Ceyhan Marine Terminal. Of its total length of 1,768 kilometres (1,099 mi), 443 kilometres (275 mi) lies in Azerbaijan, 249 kilometres (155 mi) in Georgia and 1,076 kilometres (669 mi) in Turkey. It crosses several mountain ranges at altitudes of up to 2,830 metres (9,300 ft). It also has to traverse 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). The pipeline is buried along its entire length.[1]

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 (1.6 million m³) of oil, which will flow through the pipeline at 2 metres (7 ft) per second. The pipeline will supply approximately 1% of global demand. 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.[1] 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.

The pipeline is owned by a consortium of energy companies led by BP (formerly British Petroleum), the operator of the pipeline.[3] The shareholders of the consortium are:

The pipeline cost US$3.6 billion. It was funded largely through the World Bank's International Finance Corporation and the European Bank for Reconstruction and Development which both provided US$250.0 million of their balance sheet. Around 15,000 people were employed during the construction of the pipeline.

The completion of the BTC pipeline gained Azerbaijan a direct connection to international energy markets, and its economy is expected to grow by 18% as a result. Substantial transit fees accrues to Georgia and Turkey. For Georgia the transit fees are expected to produce about 1.5% of national income. The BTC also supports Georgia's independence from Russian influence. Thanks to this project, Turkey is expected to earn about $300 million annually. The project constituted an important leg of the East-West energy corridor, gaining Turkey greater geopolitical importance thanks to the BTC pipeline. Ceyhan will be an important international oil market and the reduction of oil tanker traffic on the Bosphorus will contribute to greater security for Istanbul.[4]

The government of Kazakhstan has announced that it would seek to build a trans-Caspian oil pipeline from the Kazakhstani port of Aktau to Baku in Azerbaijan, connecting with the BTC pipeline, to transport oil from the major Kazakhstani oilfield at Kashagan as well as points further afield in central Asia. However, due to opposition to any Caspian offshore pipeline by both Russia and Iran, the oil pipeline is not very realistic. Therefore Kazakhstan has announced construction of the US$1.6 billion 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.[5] The project is at the pre-feasibility stage.

The following related natural gas pipeline projects are discussed:

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 criticised this degree of involvement, arguing that it has led to an unhealthy dependence on undemocratic leaders. 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.

The pipeline has affected politics in both Caucausian countries. 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 the EITI — a British-led Extractive Industry Transparency Initiative, for which it won major praise, including from George Soros. Azerbaijan has already issued its second EITI report — ahead of schedule.

In Georgia, 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 November 26, 2003. It remains to be seen how transparently Saakashvili's government will treat the Georgian share of the pipeline revenues.

Concerns have also been addressed about the security of the BTC pipeline. 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 guerrillas). 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.

Although some have touted the pipeline as potentially removing the dependence of the US and other Western nations on oil from the Middle East, in reality it will do little to change global dependence on Middle Eastern oil. This is inevitable, given that two thirds of proven oil reserves are located in the Middle East and 50% of global oil supplies come from the region (in the case of the U.S., about 8–9% of its oil supply is Middle Eastern). The BTC pipeline will supply only 1% of global demand at first stage. However, the pipeline will help to diversify the global oil supply and so will insure to an extent against a failure in supply elsewhere.

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 national park (albeit not entering the park territory), an area of mineral water springs and outstanding natural beauty in Georgia. 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." The organizers were joined by the Kurdish Human Rights Project though the pipeline does not pass through Kurdish areas. The inhabitants of the Borjomi region have also been unhappy, as the park's mineral water is a major export commodity and any oil spills there would have a catastrophic effect on the viability of the local water bottling industry that would be difficult, if not impossible, to reverse.

The field joint coating of the pipeline has also been an area of controversy. The preferred sealant, called SPC 2888, had failed to consistently perform well in all ten tests. Adhesion is another watershed test that any field joint coating must pass.[6]

On the positive side, BTC 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 CO and VOC emissions by greater than 90% providing a significant air quality improvement over the 350 tanker shipments through the Bosphorus. [7]

Human rights activists criticized Western governments for going ahead with the pipeline plans, despite the reported human and civil rights abuses by the Aliyev regime.[8] 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.[9][10]

The BTC pipeline has already 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.

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  1. ^ a b c d Operations of the BTC pipeline BP website, retrieved 1 March 2007
  2. ^ Caspian Oil Reaches Turkey's Mediterranean Port Ceyhan, by Turkish Weekly, 29 May 2006. Retrieved 1 March 2007
  3. ^ BTC Celebrates Full Commissioning, press release of BP, 13 July 2006
  4. ^ Loading of Azeri Crude Oil from BTC Pipeline Begins, by Today's Zaman. 3 June 2006. Retrieved 1 March 2007
  5. ^ Kazakhstan Trans-Caspian Oil Transportation System, KOGIG UK website
  6. ^ http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article381934.ece
  7. ^ http://www.dcl-inc.com/case.cfm?autoid=16&lg=EN
  8. ^ Human Rights Overview - Azerbaijan. Human Right Watch
  9. ^ Source, review by Eddie Cockrell
  10. ^ Source, 2006. Review by acquarello on 13 June 2006. Retrieved 1 March 2007
  • Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power. The Pulitzer Prize winner for history sets oil pipelines in a larger context.
  • Turab Gurbanov, Le pétrole de la Caspienne et la politique extérieure de l'Azerbaïdjan : tome 1- Questions économiques et juridiques, l’Harmattan, 2007, 304 pages,
Please add ISBNs for the books listed in this 978-2-296-04019-9 .
Listing ISBNs makes it easier to conduct research. Improve the article or discuss this issue on the talk page.
  • Turab Gurbanov, Le pétrole de la Caspienne et la politique extérieure de l'Azerbaïdjan : tome 2- Questions géopolitiques, l’Harmattan, 2007, 297 pages,
Please add ISBNs for the books listed in this 978-2-296-04020-5 .
Listing ISBNs makes it easier to conduct research. Improve the article or discuss this issue on the talk page.
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