Turks Hold Secret Caspian Oil Pipeline Talks

ANKARA (Reuters)–Turkey’s energy ministry officials on Thursday met Caspian oil officials to boost chances of a pipeline route that will carry Caspian oil to world markets–officials said.

"The meeting is being held at a secret state building in Istanbul," said one energy official–who declined to be identified.

"Its contents cover all recent issues involved," the official said–without elaborating.

Azeri and Georgian officials as well as officials from the Azerbaijan International Operating Consortium of oil companies participated in the meeting–expected to focus on Turkey’s offering of easier terms for the Baku-Ceyhan pipeline–proposed to carry oil from the Caspian fields.

Turkey was said last week to have offered a package of incentives to AIOC companies producing Caspian oil since November–1997.

The package–which US officials said included tax holidays as well as right of way and guarantees that transit fees would be non-profit making–is aimed at raising the chances of the Baku-Ceyhan line among its rivals.

In London International oil companies operating in Azerbaijan have delayed a key meeting to decide their recommendation for the main pipeline route for exports of Azeri Caspian crude until early December–Charles Pitman–chairman of Amoco Eurasia said on Thursday.

"By mutual agreement with SOCAR we agreed things needed a little more time," Pitman told Reuters at an industry conference in London.

Amoco is a leading member of the 12-company Azerbaijan International Operating Consortium AIOC which is developing oil fields in the Azeri sector of the landlocked Caspian Sea. Azerbaijan holds a stake through state company SOCAR.

AIOC had been expected on November 12 to make its recommendation to the Azeri government on the new route to export its oil to world markets.

Azerbaijan–Turkey and the United States want the companies to opt for an expensive route to Turkey’s Mediterranean terminal Ceyhan. The United States backs the Ceyhan option for strategic reasons to support its ally Turkey.

But industry sources expect the consortium to decide on a cheaper line to the Georgian Black Sea port of Supsa with the possibility of extending the line to Ceyhan if it becomes financially viable.

They said current knowledge of the Caspian Sea’s reserve base and likely production did not justify the estimated $4 billion cost of the pipeline through Turkey.

Ankara has tried to lever the decision in its favor by suggesting a tax holiday and non-profit making transit fees for the Ceyhan route.

US coordinator for Caspian Sea policy Richard Morningstar has said Washington was ready to offer incentives but could not underwrite direct funding for the Ceyhan route.

Turkey says a pipeline to Supsa will lead to an unacceptable increase in tanker traffic through the Bosphorus.

A third option is to route the line to Russia’s main Black Sea terminal Novorossiisk.

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