A $2.9-billion, 1-million-bbl-per-day oil export pipeline from Baku, Azerbaijan, to Ceyhan, Turkey, to carry Caspian crude to the Turkish Mediterranean via Georgia could begin construction early next year. A group of international oil companies studying the project is expected to sanction it by the end of June, David Woodward, associate president of BP Azerbaijan, said June 5. The report first appeared in Platts Oilgram News, a publication of the McGraw-Hill Cos., which also publishes ENR.
Platts also reported that the European Bank for Reconstruction and Development (EBRD) is negotiating to provide a $150-million syndicated loan to help finance the pipeline. Thomas Moser, EBRD's representative in Azerbaijan told Platts that he hopes the approval process for the loan will be completed by the end of 2002. Companies planning to build the pipeline are expected to seek loans to finance around 70% of the project.
Delivery of equipment for Baku-Ceyhan would begin in the second half of this year. Construction of the 1,750-km line would start in early 2003 and finish in late 2004, Woodward said. Estimated recoverable reserves of 5.3 billion bbl at the BP-operated Azerbaijan International Operating Co. (AIOC) concession in the Caspian Sea were "alone sufficient to make the pipeline commercial," he said.
Companies participating in the pipeline project include BP, Turkey's TPAO, Japan's Itochu, Unocal, Delta/Hess and Azerbaijan's state oil compay Socar. Italy's Eni, the only participant not also a member of AIOC, joined the pipeline project in early 2002. ExxonMobil and Russian Lukoil, both of which have stakes in AIOC, have not joined Baku-Ceyhan.
Participants so far have invested $27 million in a basic engineering study and $150 million in a 12-month detailed study defining among other things the pipeline construction corridor, volume commitments, contracts for construction, final ownership and financing of the project. Once construction is under way, discussions with ExxonMobil and Lukoil about possible transport of crude via the new pipeline are expected to begin, Woodward said.