BTC PIPELINE COULD MAKE CEYHAN AN ENERGY HUB

On Thursday, July 13, the Baku-Tbilisi-Ceyhan (BTC) pipeline will be inaugurated at a ceremony in Ceyhan, Turkey. More than 40 high-level officials from some 30 countries plan to attend (Trend.az, July 11). President Ilham Aliyev of Azerbaijan and President Mikheil Saakashvili of Georgia have already arrived in Istanbul, where they will join a dinner reception hosted by Turkish President Necdet Sezer today (July 12).

In the words of Turkish Energy Minister Hilmi Guler, “We understand very well the significance of the BTC project and we have conducted delicate energy diplomacy for its successful implementation.” Furthermore, the BTC pipeline “will not only bring Turkey big economic benefits, but also huge political dividends” (Trend.az, July 12).

“At the moment a strategy to make Ceyhan an energy center is under development,” Guler declared. He also noted that Turkey plans to set up a petroleum stock market at Ceyhan and to further expand the port’s oil transfer capacity.

For a long time the Ceyhan port was used as a major outlet for oil shipments from Iraq via the existing pipeline from Kirkuk. But since the beginning of the Iraq war in 2003, Iraqi oil shipments have been rather sporadic. The completion of the BTC pipeline has created new opportunities to expand the Ceyhan port.

In addition to BTC, Turkey and Russia plan to build a new oil pipeline from the Turkish city of Samsun, near the Black Sea coast, to Ceyhan. The 550-km long pipeline will have an annual capacity of 50-70 million tons of oil. A feasibility study conducted by two Turkish firms is presently underway. Ankara and Moscow think that this pipeline will ease the heavy traffic in the Bosporus by carrying some of the Russian and Kazakh oil that is currently transferred by oil tankers entering the Turkish Straits.

“Reducing the traffic of ships with hazardous cargo will reduce the risk of environmental catastrophes [in the Bosporus],” stated Mithat Rende, a senior Turkish diplomat in charge of energy issues at the foreign ministry (Trend.az, July 10).

The opening of the BTC pipeline has already decreased the volume of traffic through the Straits. Commenting on the BTC pipeline’s contributions, Rende noted that the BTC pipeline has cut the number of oil vessels passing through the Bosporus by 350 tankers per year (Trend.az, July 10).

According to Turkish officials, unlike the Turkish Straits, Ceyhan can accommodate larger ships. The oil loading capacity of tankers used in the Black Sea and the Bosporus is 120,000 tons, compared to 350,000 tons for tankers used in the Mediterranean Sea (Trend.az, July 6)

Although the current BTC output is below its normal capacity (50 million tons per year or one million barrels a day), the volume of oil shipments via the BTC pipeline is expected to increase as Kazakhstan begins to pump some of its oil through this pipeline.

Azerbaijan produced roughly 10 million tons of oil in 2005, a quantity it expects to triple by the end of 2006 (Azernews, June 14). Yet, oil production in Azerbaijan will remain below 50 million tons a year for another two years. Hence, additional Kazakh oil will help keep the BTC pipeline operating at its full capacity.

Last month, Elshad Nasirov, vice-president of the State Oil Company of Azerbaijan (SOCAR), told local journalists, “The transportation of Kazakh oil should not be related to the major Kashagan field alone. There is plenty of oil elsewhere in [Kazakhstan] that could be exported via the BTC pipeline.” The shipment of oil produced from the Tengiz field “will begin in the second quarter of 2007,” noted Nasirov (Assa-Irada, June 29).

As Azerbaijan and Kazakhstan gradually increase their oil export via the BTC pipeline, additional adjustments will be needed. The 20-year BTC agreement signed between Baku and Astana in June allows the shipment of up to 25 million tons of Kazakh oil through the BTC pipeline. This means that the capacity of the BTC pipeline will have to be expanded at some point in the future.

Azerbaijan’s Industry Minister Natig Aliyev has already indicated that BTC pipeline capacity could be expanded to 75 million tons a year (or 1.7 million barrels per day) by adding new pumping stations along the route. This will be enough to accommodate both Azerbaijani and Kazakh oil outputs,

If all available pipelines operate at full capacity and the Samsun-Ceyhan pipeline is constructed, the oil exports through Ceyhan could reach as much as 200 million tons per year. This will make Ceyhan a strategic energy port that will connect the Caspian and Middle Eastern oil producing countries with the United States and European energy markets.