US Says Russia Can Join Caspian Oil Pipeline Project

MOSCOW (Reuters)–A US state department official said on Wednesday Russia could join a giant pipeline project to carry crude oil from Azerbaijan through Turkey.

"We would look forward to Russia’s participation in the main export pipeline company," Jan Kalicki–Councellor to the US Department of Commerce and Ombudsman for Energy and Commercial cooperation in the former Soviet Union–told an investment conference.

Some foreign operators have questioned the economic viability of the 1,057 mile pipeline from Baku to Turkey’s Mediterranean port of Ceyhan–a route favored by the United States–Turkey and Azerbaijan.

Washington wants to secure multiple routes to the West for Caspian oil and has been seen aiming to minimize the influence of Russia and Iran.

Currently early oil from Azerbaijan has been flowing through the Georgian Black Sea port of Supsa and partly by rail through Russia.

A pipeline through Chechnya was used to transport oil from Azerbaijan to Russia’s Black Sea port of Novorossiisk–but it has been effectively closed–hit in part by violence in the area and a pricing dispute between Moscow and the republic.

Russia has announced plans to build an alternative pipeline through Dagestan bypassing Chechnya. Russia is currently battling Islamic guerrillas in the region and has sent troops to enforce a security zone around Chechnya.

But Kalicki said that even when built the pipeline would be insufficient to carry the main Caspian oil from Azerbaijan.

"We hope the current export capacity problems can be solved on the northern route perhaps by bypass option," he said. "But we firmly believe increasing production volumes will require a larger permanent transportation solution."

"Problems in Dagestan and in Chechnya have interrupted the northern early oil route–making clear once again the wisdom of the multiple pipeline strategy," Kalicki said.

With a capacity of at least one million barrels per day a Baku-Ceyhan pipeline could serve as an export route not only for Azerbaijan but also for Kazakhstan and Turkmen’stan–he said.

Meanwhile–the Russian pipeline monopoly Transneft estimates it would take six months and around $100 million to build a new pipeline to bypass the breakaway Chechnya republic–a Transneft vice-president said on Wednesday.

The new Caucasus line linking Russia to Azerbaijan will pass through Dagestan–a Russian region on the edge of the Caspian Sea.

"We are ready to start building a pipeline to bypass Chechnya right away," Sergei Ter-Sarkisyants told a pipeline conference. "Technically–it can’t take more than half a year–which is a feasible target."

He said the project would cost around $100 million and a consortium including Russian oil companies and Transneft would be formed shortly to build it.

"We have also invited Azerbaijan to participate," Ter-Sarkisyants said.

He said that according to preliminary plans–Transneft would take a 15 percent stake in the project–another 10 percent would be offered to Azerbaijan–while the remaining 75 percent would be distributed among Russian oil companies. "We will also send invitations to Turkmen’stan and Kazakhstan," Ter-Sarkisyants said.

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