Turkey Considers Bypassing the AIOC

ANKARA (Turkish Daily News)–Turkey may select a private company to construct the Baku-Ceyhan pipeline if members of the Azerbaijani International Operating Company–an international consortium–delay its construction.

A source in the government told the Turkish Daily News on Thursday that because of the poor financial outlook caused by the decrease in oil prices–the AIOC and some private oil companies may attempt to delay the construction of the Baku-Ceyhan pipeline.

"We may give permission to a private oil company out of the AIOC–such as Royal/Dutch Shell–for construction of part of the pipeline to pass through Turkey–with the condition of a throughput guarantee [the guarantee for a specific amount of oil to pass through the pipeline]," the official said. The AIOC and some oil companies in the international consortium such as the Norwegian Statoil and the American AMOCO have conveyed negative messages concerning Baku-Ceyhan.

Shell has reportedly been approaching Turkey about constructing the line for the past nine months.

The AIOC is expected to give a decision by the end of 1998–probably in October. Baku-Ceyhan–Turkey’s proposed line for the transportation of Caspian oil to Western markets–is thought to be an expensive option by some energy experts and Turkey’s financial commitment to the pipeline is expected by some oil companies.

Referring to the investment worth $50 billion in Caspian oil–energy officials say that Baku-Ceyhan–which is estimated to cost $2 billion–is not an expensive option.

"While making the comparison between the cost of Baku-Ceyhan and other options–companies should also take the passages via the Turkish Straits into consideration. There is a growing environmental sensitivity among the Turkish people against the oil transfer via the Straits. Not even the government is in control of this," a senior energy official said.

Transportation of the oil via tankers through the Straits would also affect Russian trade badly–experts say.

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