Sunday, July 16, 2006

Baku-Tbilisi-Ceyhan Pipeline

(Ceyhan, Turkey) A story that merits emphasis is the opening of the Baku-Tbilisi-Ceyhan (BTC) pipeline which connects the oil fields of the Caspian Sea to a terminal on the Mediterranean. Most noteworthy is that the 1,100-mile pipeline strategically bypasses Russia and the Middle Eastern nations of Iran, Iraq and Syria.

Starting in Azerbaijan and coursing through Georgia to Turkey, the flow of crude oil will improve Europe's energy security while helping nurture a closer link between the Caspian region and the West.

The opening ceremony on Thursday was a big event with Azerbaijani President Ilham Aliev, Georgian President Mikhail Saakashvili, and Turkish President Ahmet Necdet Sezer connecting sections of pipe on a commemorative model of the BTC pipeline.

Baku-Tbilisi-Ceyhan Pipeline
Crude oil flow begins at Baku, Azerbaijan (green), through Georgia (blue) and onto the refineries and sea oil terminal at Ceyhan, Turkey (yellow).
The BTC was built by a number of international companies led by British titan BP at a cost of $4 billion. Participants included Azerbaijan's public oil group Socar, Unocal of the United States, Norway's Statoil, the Turkish Petroleum Corporation (TPAO), Italy's ENI, France's Total, Japan's Itochu and Inpex and U.S. firms ConocoPhillips and Amerada Hess. The final cost was $1 billion over budget partly due to environmental and expropriation problems in Georgia and extensive rerouting in Turkey to avoid 350 newly found archeological sites.

The great investment in the BTC does raise security concerns, however, the U.S. is spending $100 million on a special force called the Caspian Guard to provide security and respond to threats. With a command center in Baku, Azerbaijan, the Caspian Guard is a multinational effort partnering U.S. and host nation military and nonmilitary agencies with private companies to establish air, land and sea security.

Many nations are expected to benefit from the BTC which currently has a capacity of 430,000 barrels per day and is totally independent from Russia. Capacity is expected to increase to 1 million bpd by 2008. Already, the pipeline's influence in the region is substantial with the creation of a new geopolitical block tied to the West and with the promise of increased prosperity for all countries involved.

In the words of BP group's CEO Lord John Browne, "It changes the energy map of the world." Indeed, it does.

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