Ceyhan Supsa Pipeline to Begin Operation as US Supports Baku

TBILISI–ISTANBUL (AP–Reuters)–A pipeline across Georgia for transporting Azerbaijan’s Caspian Sea oil to the West will begin operating in less than six months–while the US continued to express its support for a doomed pipeline connection Baku to the Turkish port city of Ceyhan.

The line connecting Azerbaijan’s capital–Baku–and the Georgian Black Sea port of Supsa will start pumping oil on April 1–Natik Aliev said. Aliev was in Georgia’s capital for talks with President Eduard Shevardnadze.

The United States on Tuesday–meanwhile–signaled continuing support for the Baku-Ceyhan pipeline–awarding a grant to a Turkish pipeline company and announcing plans for a Caspian trade center in Ankara.

The Trade and Development Agency (TDA) backing came after US oil companies and government officials last week agreed the Azerbaijan to Turkey pipeline was not yet commercially viable.

However–US officials say the pipeline will be built if Caspian oil exports grow sufficiently–and the TDA on Tuesday signed a $823,000 grant for Turkey’s pipeline company Botas.

"These efforts reflect the US government’s intensive effort to develop a network of multiple east-west pipelines to bring Caspian energy resources to world markets," Ambassador Richard Morningstar–President Bill Clinton’s special adviser on Caspian Basin energy diplomacy–said in Istanbul.

The US administration sees the 1,080-mile pipeline–from Baku to Turkey’s Mediterranean oil outlet at Ceyhan–as key to ensuring a Caspian oil export route that avoids Iran and is not dependent on northern routes through Russia and Georgia.

"The US government’s support for Baku-Ceyhan is unwavering," Morningstar said at a TDA-sponsored seminar on Caspian trade and investment.

The grant gives Botas access to US technical–financial–environmental and legal advice in negotiations on Baku-Ceyhan and the Trans-Caspian gas pipeline–which would bring gas from Turkmen’stan to Turkey via the Caspian–Azerbaijan and Georgia.

Construction of the two pipelines is expected to cost more than $5 billion.

US officials also announced the opening in November of the Caspian Trade and Investment Finance Center in Ankara.

The center–staffed by representatives of the three US government trade agencies–will work on mobilizing financing for projects in the region.

The Azerbaijan International Oil Co.–a consortium of 12 private and state companies led by BP-Amoco–is due to give the Azerbaijan government in November its recommendation on which should be the main initial export route from Baku.

Low oil prices over the past year and disappointing exploration wells this year have led to a downgrade of near-term estimates of export volumes from the Caspian.

Oil industry officials say the US government recognizes that the initial focus of investment will be on the route taking oil from Baku to the Georgian Black Sea port of Supsa–the first phase of which is already near completion.

They also said there is likely to be investment in the existing northern route to Russia’s Black Sea oil port–Novorossiisk.

US oil company executives–and top US government officials agreed at a special meeting on Thursday that a key pipeline from Baku in Azerbaijan through Turkey to the Mediterranean port of Ceyhan is not currently commercially viable–though they stressed that it would be built if Caspian oil exports grow sufficiently.

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