Ankara to Change Oil Partner if Baku Ceyhan Fails

ANKARA (Reuters)–Turkey will turn to other sources for its own energy needs if its bid for a pipeline to carry Caspian Sea oil is not chosen by the consortium developing the Caspian fields–Foreign Minister Ismail Cem said on Wednesday.

"If the mistake of choosing a project that will carry Caspian oil to Western markets through the (Turkish) straits is made–Turkey will prioritize non-Caspian energy sources and producers for its energy investmen’s and imports," Anatolian news agency quoted him as telling a visiting US official.

"Turkey will not allow the straits to turn to an oil pipeline," Cem told Richard Morningstar–President Bill Clinton’s special adviser for Caspian energy basin.

US oil companies and government officials last week agreed that the 1,080-mile pipeline from Baku to Turkey’s Ceyhan port–first proposed by Turkey in 1992–was not yet commercially viable. Morningstar said the United States and Turkey were working to change that.

Necati Utkan–foreign ministry spokesman–told reporters possible energy sources for Turkey–which buys most of its oil from the Middle East and North Africa–could be Norway–Indonesia and North African countries.

The Azerbaijan International Operating Consortium–a grouping 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.

"Turkey is ready to consider all legitimate commercial concerns of the companies that will pump oil to the Baku-Ceyhan pipeline," Cem said.

Morningstar–in Turkey to reaffirm the US support for the 1,080-mile pipeline–told Reuters Turkey was offering incentives to AIOC companies to make the Baku-Ceyhan pipeline commercially viable.

"I know the Turkish government is very seriously talking about tax holidays,…financing–reduced tariff fees. These are the kind of things that when added up will make the project viable," he said.

But Turkish Energy Minister Cumhur Ersumer–who met Morningstar on Wednesday–declined comment on the incentives. "We are considering all possible things," he said.

Morningstar said he backed Ankara’s insistence that the alternatives to Baku-Ceyhan–routes to the Black Sea ports of Novorossiisk in Russia and Georgia’s Supsa–were unacceptable due to the threat extra tanker traffic would pose to Turkey’s Bosphorus strait.

"What you will find is a strong statement by the governmen’s involved–a strong statement of support for the Baku-Ceyhan pipeline. I think what that emphasizes is the strong political resolve within the region that that pipeline will be built."

Cem said last week Ankara would take steps to reduce tanker traffic through the straits which cut through Istanbul–home to some 10 million people.

But despite Cem’s commen’s–it is not clear to what extent Turkey can limit traffic through the Bosphorus because of the 1936 Montreaux Convention–which assures access through this crucial waterway to countries bordering the Black Sea.

US Energy Secretary Bill Richardson will come to Ankara on Thursday where he and the presidents of Turkey–Azerbaijan–Turkmen’stan–Georgia and Kazakhstan would declare their strong support for Baku-Ceyhan.

The Baku government has the last say in the choice of route but is expected to go along with the AIOC’s recommendation because of its own inability to finance the pipeline.

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

Ersumer said the AIOC’s decision on the Caspian main oil outlet including the Baku-Ceyhan pipeline–estimated to cost up to $4 billion–would not be announced before November 9.

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.

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