US Official Sees Caspian Pipeline Accord Soon

ANKARA (Reuters)–A senior US official said on Friday he believed a proposed $2.4 billion Caspian oil pipeline to Turkey was commercially viable and a project accord could be signed within a fortnight.

John Wolf–President Bill Clinton’s special energy adviser–spoke in the Turkish capital after a two-day meeting of Turkish–US–Turkmen–Azeri and Georgian officials on pipeline projects.

"I am very–very hopeful that there will be something to be signed in two weeks," Wolf told a news conference with reference to the planned pipeline from the Caspian Sea to Turkey’s Ceyhan terminal–by-passing Russia.

Four accords related to the pipeline project–backed by the United States to lessen Russian energy dominance in the region–were expected to be signed at a summit of the OSCE (Organization for Security and Cooperation in Europe) by the leaders of Turkey–Azerbaijan and Georgia in Istanbul on November 18-19.

They consist of an intergovernmental agreement–a host government agreement–a fixed-price turnkey project agreement and commercial (guarantee) contract.

The 1,070-mile pipeline through Georgia will carry up to 50,000 tons (one million barrels per day) of crude annually.

The project received a boost last month when BP Amoco–leader of the Azerbaijan International Operating Consortium producing oil in Caspian fields–said it supported the project.

BP Amoco and other companies in the oil consortium had previously expressed concerns about the cost of the pipeline and whether there would be enough oil to justify the project.

"The pipeline is commercially viable on the basis of throughput guarantees," Wolf said.

"For that to happen–though–it will need to include not only the companies that are part of the AIOC but also other shippers in the Caspian including those in the eastern Caspian."

The US Import-Export Bank and the Overseas Private Investment Corp. could provide financing depending on the level of US goods and services involved in the project–he said

"How much it (the financing) is will depend on the nature of the risks that are in the final package," Wolf said.

Turkey and Azerbaijan have worked in the past seven months to finalize the agreement drafts. Wolf said Georgia must also agree to terms that Turkey and Azerbaijan have already conceded regarding land acquisition and other transit tax concessions.

"The agreemen’s it signs must conform to Georgia’s democratic practices and its constitution."

He said he believed the talks with Georgia could also be concluded in two weeks. "Georgian officials want to be sure that the commitmen’s that they undertake in this legally binding three-party agreement will be commitmen’s that they can fulfill under their constitution."

Once the agreemen’s are signed–said Wolf–an implementation committee with oil shippers would be formed–a financial adviser hired and detailed engineering work done.

"I am hopeful the project will secure financing sometime by the end of 2000 or early 2001 and then construction can start."


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