EU Warns Not to Limit Caspian Route

BRUSSELS (Reuters)–European Energy Commissioner Christos Papoutsis cautioned on Thursday against limiting oil supply routes from Central Asia.

"From the political and strategic point of view–it is much better to have more than one route and not to exclude Russia. Diversification of energy supplies is one of our principle objectives in achieving security of supply," spokesman Costas Verros reported Papoutsis as saying.

The Greek commissioner was reacting to news that Turkey and four neighboring states had signed a declaration of support for a planned pipeline to take Caspian Sea oil to world markets via the Turkish port of Ceyhan.

The agreement–signed on Turkey’s national day–has strong symbolic meaning but the final and highly controversial decision is up to a consortium of mostly Western oil companies which will choose from among several rival options in November.

The BP-Amoco-led Azerbaijan International Operating Consortium and senior US representatives agreed last week that the trans-Turkish line was not yet commercially viable–industry sources said.

A series of disappointing exploration wells this year coupled with stubbornly low oil prices over the past year have led to a downgrade of near-term estimates of export volumes and proven reserves from the Caspian.

he proposed 1,080-mile pipeline from Baku to Turkey’s Ceyhan would need to see oil production double to around two million barrels per day (bpd) to make it commercially viable–Verros quoted the industry as saying.

The US government is backing a Baku-Ceyhan line as it would add to northern export routes for Caspian oil already being developed through Russia and Georgia and avoid Iran.

But there have been strong signs that AIOC will back an expanded line through Georgia. Turkey says this will cause an unacceptable increase in tanker traffic through the Bosphorus Straits.

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