It passes through Baku, the capital of
Azerbaijan; Tbilisi, the capital of Georgia; and Ceyhan, a port on the
south-eastern Mediterranean coast of Turkey, hence its name. It is the
second longest oil pipeline in the world (the longest being the Druzhba
pipeline from Russia to central Europe). The first oil that was pumped
from the Baku end of the pipeline on May 10, 2005 reached Ceyhan on May
The geographical situation of the Caspian Sea – which is totally landlocked – makes transportation of the oil significantly difficult. The local geopolitical situation is also problematic for the West, as the two countries best placed to transport the oil, Russia and Iran, have for various reasons been seen as unreliable or undesirable partners by the West. A "Western Early Oil" pipeline from Azerbaijan to the Georgian Black Sea port of Supsa had already been built, but this has a very limited throughput (only 115,000 barrels per day) and the amount of oil that can be shipped via the Black Sea is severely limited by congestion in the Bosphorus and Dardanelles straits that bisect Istanbul and separate European from Asian Turkey. The only way of getting around the Bosphorus/Dardanelles problem is to route oil supplies to a location where tankers do not have to navigate those straits. This required it to be piped to the Mediterranean, the Persian Gulf or perhaps even across Europe to the North Sea or Baltic Sea.
Discussions about a new pipeline began in the late 1990s with Russia first insisting that it should pass through Russian territory, then declining to participate at all. Russia's unreliable business environment was also seen as a problem. A straight line across Iran from the Caspian Sea to the Persian Gulf would have provided the shortest route, but Iran was considered an undesirable partner for a number of reasons: its theocratic government, concerns about its ongoing nuclear program and the United States' sanctions of the regime, which greatly restricts Western investment (especially American companies) in the country, and most importantly, United States, particularly for this matter, resorted to tough diplomacy to prevent any agreement that would benefit Iran.
These issues narrowed down the choice of route for Western interests to an outlet on Turkey's Mediterranean coast, to be reached via two of the three countries of the South Caucasus region – from Azerbaijan via either Georgia or Armenia. A route through Armenia was politically inconvenient for three basic reasons:
* The unresolved military
between Armenia and Azerbaijan over Nagorno-Karabakh;
* Turkey's close ethnic ties with Azerbaijan, for which reason it had closed its border with Armenia;
* Political tensions between Armenia and Turkey stemming from the unresolved dispute regarding the Armenian Genocide.
This left the Azerbaijan-Georgia-Turkey route as the most politically expedient one for the major parties, although it was longer and more expensive to build than the other options.
A decision to move forward with the pipeline
was reached at the meeting of the Organization for Security and Cooperation
in Europe (OSCE) in Istanbul, Turkey on November 18, 1999. The meeting
also issued a declaration of intent to construct a Trans-Caspian gas pipeline
from Turkmenistan to Baku to transport gas to Turkey.
The construction of the BTC pipeline was one of the biggest engineering projects of the decade, and certainly one of the biggest to have occurred anywhere in western Asia since the fall of the Soviet Union. It was constructed from 150,000 individual joints of line pipe, each measuring 12 m (39 ft) in length. This corresponds to a total weight of approximately 655,000 short tons (594,000 metric tons). The construction was largely overseen by David Woodward, BP Azerbaijan Associate President and his understudy Michael Townshend, Executive Director of the Baku-Tbilisi-Ceyhan (BTC) pipeline project.
The pipeline is owned by a consortium of energy companies led by BP (formerly British Petroleum), the operator of the pipeline. The shareholders of the consortium are:
* BP (United Kingdom):
* State Oil Company of Azerbaijan (SOCAR) (Azerbaijan): 25.00%
* Chevron (USA): 8.90%
* Statoil (Norway): 8.71%
* Türkiye Petrolleri Anonim Ortakl (TPAO) (Turkey): 6.53%
* Eni/Agip (Italy): 5.00%
* Total (France): 5.0%
* Itochu (Japan): 3.4%
* Inpex (Japan): 2.50%
* ConocoPhillips (USA): 2.50%
* Amerada Hess (USA) 2.36%
The route of the pipeline crosses Azerbaijan and skirts Armenia to pass through Georgia and Turkey. Of its total length of 1,760 km (1,094 miles), 440 km (273 mi) lies in Azerbaijan, 244.5 km (152 miles) in Georgia and 1,070 km (665 mi) in Turkey. It crosses several mountain ranges at altitudes of up to 2,830 m (9,300 ft). It also has to traverse 3,000 roads, railways and utility lines, both overground and underground, as well as 1,500 watercourses of up to 500 m wide (in the case of the Ceyhan River in Turkey).
Its structure includes 8 pumping stations, 2 intermediate pigging stations and 101 block valve stations. It will be patrolled by national guards and buried for its entire length, making it less vulnerable to sabotage. The pipeline is 1,070 mm (42 inches) diameter for most of its length, narrowing to 865 mm (34 inches) diameter as it nears Ceyhan.
It has a projected lifespan of 40 years, and when working at normal capacity, beginning in 2009, will transport 1 million barrels (160 000 m³) of oil per day. It has a capacity of 10 million barrels (1.6 million m³) of oil, which will flow through the pipeline at 2 m (6 ft) per second. The pipeline will supply approximately 1% of global demand.
Funding for the BTC pipeline is largely through the World Bank's International Finance Corporation and the European Bank for Reconstruction and Development. The cost has been reported at $3.6 billion, with the three principal stakeholders being BP (at 30.1%), AzBTC (a subsidiary of Azerbaijan's state-run oil company, at 20%) and the U.S. oil company Unocal (at 8.9%).
Substantial transit fees will accrue to Georgia and Turkey, which are expected to produce for Georgia about 1.5% of national income. Azerbaijan expects its own economy to grow by 18% as a result of the pipeline. Turkey expects to obtain $200 million US per year in transit fees.
The pipeline was officially opened on May 25, 2005 in the presence of President Nursultan Nazarbayev of Kazakhstan, President Ilham Aliyev of Azerbaijan, President Mikhail Saakashvili of Georgia, and President Ahmet Necdet Sezer of Turkey, as well as United States Secretary of Energy Samuel Bodman. By May 2006, oil had started to flow through the pipeline.
The government of Kazakhstan has announced
that it would seek to build a trans-Caspian oil pipeline from the Kazakhstani
port of Aktau to Baku in Azerbaijan, connecting with the BTC pipeline,
to transport oil from the major Kazakhstani oilfield at Kashagan as well
as points further afield in central Asia. However, due to opposition to
any Caspian offshore pipeline by both Russia and Iran, the oil pipeline
is not very realistic. Therefore Kazakhstan has announced construction
of the US$1.6 billion Kazakh-Caspian Transportation System, which is scheduled
to come into operation in 2010. The project includes a pipeline from Iskene
to the Caspian port of Kuryk, terminals in Kazakhstan and Azerbaijan, and
construction of oil tankers.
|First oil in Ceyhan Port|
Oil that was pumped from the Baku end of
the pipeline on May 10, 2005 reached Ceyhan in May 28, 2006 after a journey
of 1,770 km. The first oil was loaded from Haydar Aliyev Sea Terminal onto
a ship named The British Hawthorn. The tanker sailed away from the new
Ceyhan Marine Terminal on the Mediterranean coast on 4 June 2006 with about
600,000 barrels of crude oil. This marked the start of export of Azerbaijan’s
oil via the BTC oil pipeline to world markets, bypassing the Turkish straits
(Bosporus and Dardanelles).
|Contribution of the BTC to Azerbaijan, Georgia and Turkey|
The BTC pipeline is expected to make a major contribution to the development of world energy supply with its annual 50 million ton capacity. Thanks to this project, which was created with a sustainable environmental and economic system, Turkey is also expected to earn about $300 million annually. Around 15,000 people were employed during the construction of the pipeline which cost over $3 billion.
The project constituted an important leg of the East-West energy corridor, gaining Turkey greater geopolitical importance thanks to the BTC pipeline. Ceyhan will be an important international oil market and the reduction of oil tanker traffic on the Bosphorus will contribute to greater security for Istanbul.
Georgia has also welcomed the development. The BTC will not only contribute to the Georgian economy, it also supports Georgia's independence from Russian influence. Russia has become aggravated over the situation and have even been accused of a plot to sabotage the pipeline.
Azerbaijan with the BTC gained a direct
connection to international energy markets. The South Caucasus gas pipeline,
using same route as the BTC, came operational at the end of 2006.
|Extensions to other sources|
The project of Trans-Caspian Oil Pipeline
(Aktau-Baku Oil pipeline) under the Caspian Sea, connecting Kazakhstan
to Azerbaijan and through the BTC pipeline to the World market, is at the
|Related natural gas pipeline projects|
The following related natural gas pipeline projects are discussed:
* South Caucasus Pipeline
– SCP (sometimes called Shah-Deniz Pipeline), a Natural Gas pipeline, connecting
Baku, Tbilisi and Erzurum and through existing pipelines to the World market,
came operational at the end of 2006.
* Trans-Caspian Gas Pipeline (Aktau-Baku Natural Gas pipeline) under the Caspian Sea, connecting Kazakhstan to Azerbaijan and through existing pipelines to the World market, pre-feasibility stage.
* Turkmenbashi-Baku Natural Gas undersea pipeline, connecting Turkmenistan to Azerbaijan and through BTC/BTE pipelines to the World market, discussions only. The currently unresolved dispute about Caspian Sea borders between the two states is hampering the progress. Another possibility is land linking to the TCGP.
Even before its completion, the BTC pipeline was affecting the world's oil politics. The South Caucasus, previously seen as Russia's backyard, is now a region of great strategic significance to other great powers. The U.S. and other Western nations have consequently become much more closely involved in the affairs of the three nations through which oil will flow. Some have criticised this degree of involvement, arguing that it has led to an unhealthy dependence on undemocratic leaders. The countries themselves though have been trying to use the involvement as a counterbalance to Russian and Iranian economic and military dominance in the region.
The pipeline has affected politics in both Caucausian countries. To counter concerns that oil money would be siphoned off by corrupt officials, Azerbaijan has set up a State oil fund (State Oil Fund of the Republic of Azerbaijan, or SOFAZ), expressly mandated with using natural-resource revenue to benefit future generations, to bolster support from key international lenders and improve transparency and accountability. SOFAZ is audited by Deloitte and Touche. Additionally, Azerbaijan became the first oil producing country in the world to join the EITI — a British-led Extractive Industry Transparency Initiative, for which it won major praise, including from George Soros. Azerbaijan has already issued its second EITI report — ahead of schedule.
In Georgia, former President Eduard Shevardnadze, one of the architects and initiators of the project, saw the construction of the pipeline through Georgian territory as a certain guarantee for the country's future economic and political security and stability. This view has been fully shared by his successor President Mikhail Saakashvili. "All strategic contracts in Georgia, especially the contract for the Caspian pipeline are a matter of survival for the Georgian state," he told reporters on November 26, 2003. It remains to be seen how transparently Saakashvili's government will treat the Georgian share of the pipeline revenues.
Concerns have also been addressed about the security of the BTC pipeline. It deliberately bypasses the border of Armenia (with which Azerbaijan is still technically at war over the status of the Armenian-populated separatist region of Nagorno-Karabakh in Azerbaijan), crosses through Georgia (which has two unresolved separatist conflicts) and goes through the edges of the Kurdish region of Turkey (which has seen a prolonged and bitter conflict with separatist guerrillas). It will require constant guarding to prevent sabotage, though the fact that almost all of the pipeline is buried will make it harder to attack.
Although some have touted the pipeline as potentially removing the dependence of the US and other Western nations on oil from the Middle East, in reality it will do little to change global dependence on Middle Eastern oil. This is inevitable, given that two thirds of proven oil reserves are located in the Middle East and 50% of global oil supplies come from the region (in the case of the U.S., about 8–9% of its oil supply is Middle Eastern). The BTC pipeline will supply only 1% of global demand at first stage. However, the pipeline will help to diversify the global oil supply and so will insure to an extent against a failure in supply elsewhere.
The pipeline crosses the watershed of the Borjomi national park (albeit not entering the park territory), an area of mineral water springs and outstanding natural beauty in Georgia. This has long been the subject of fierce opposition by environmental activists. Since the pipeline is buried for its entire length, constructing it has left a highly visible scar across the landscape. The Oxford-based "Baku Ceyhan Campaign" averred that "public money should not be used to subsidise social and environmental problems, purely in the interests of the private sector, but must be conditional on a positive contribution to the economic and social development of people in the region." The organizers were joined by the Kurdish Human Rights Project though the pipeline does not pass through Kurdish areas. The inhabitants of the Borjomi region have also been unhappy, as the park's mineral water is a major export commodity and any oil spills there would have a catastrophic effect on the viability of the local water bottling industry that would be difficult, if not impossible, to reverse.
Critics of the pipeline have pointed out that the region through which it travels is highly seismic, suffering from frequent earthquakes. The route takes the pipeline through three active faults in Azerbaijan, four in Georgia and seven in Turkey. The pipeline's engineers have equipped it with a number of technical solutions to reduce its vulnerability to earth movements.
However, the BTC pipeline for almost half of its entire route goes through the same territory as the Baku-Supsa pipeline, which has been in operation since 1999 and has an exemplary safety record. While environmental and other problems are unavoidable, proponents claim that the benefits outweigh all those concerns and coupled with better technology and greater financial resources will allow to mitigate most problems.
The field joint coating of the pipeline has also been an area of controversy. Paul Stretch and Rod Hensman, BP’s senior project engineer, were alarmed at what appeared to be a strong push for a liquid epoxy paint manufactured by the Canadian firm, Speciality Polymer Coatings (SPC). It had no track record on a plastic coated pipeline. The two BP managers contacted a leading pipeline corrosion engineer for a second opinion. Derek Mortimore was already advising BP on its $3.2 billion offshore Azeri-Chriag-Guneshli field, which the BTC pipeline is intended to connect to European markets.
Mortimore is one of a handful of world experts called on when pipelines fail. ‘We are the real environmentalists. We try to stop pipelines from rupturing. The most frequent cause is external corrosion, mostly down to the coating,’ says Mortimore.
In his time, he has advised Saudi Aramco, the world’s largest oil producer, and Gazprom, the world’s largest gas producer. But his experience in the Caspian would eventually lead him, albeit reluctantly, to speak out to British MPs.
‘I told Stretch the basic premise for using that type of coating on the BTC pipeline was wrong,’ says Mortimore. ‘Liquid epoxy paints have very limited flexibility and adhesion when applied to plastic-coated pipeline and would not protect the field joint from rapid corrosion. I felt BP would be burying thousands of environmental time bombs.’
Hensman took heed. On 27 July he wrote urgently to materials consultant Trevor Osborne, who was driving the selection process from London. ‘We should not be a testing ground for new materials…the selection of the field joint coating is one of the most important technical decisions on the project,’ Hensman wrote.
Osborne is a key member of the projects team BP had set up after awarding Bechtel and John Brown Hydrocarbons the $150 million engineering and procurement contract for the Azeri and Georgian sections of the pipeline in June 2001.
The projects team dismissed the concerns of the BP men in Baku, without showing them the final results of a confidential Advantica (a highly regarded British based consultantcy) report.
This concluded that the preferred sealant, called SPC 2888, had failed to consistently perform well in all ten tests and had actually performed ‘poorly’ on certain key ones like impact resistance and flexibility. Adhesion is another watershed test that any field joint coating must pass. The memo attached to the confidential Advantica report recognised there was a ‘question’ over SPC 2888’s ability to stick to the plastic coated pipeline. This bond ‘dramatically reduced’ in cold weather,it said.
The memo also reveals that the BP projects team simply ‘omitted’ from the ranking table the results of these tests and others like drying time and water absorption, where SPC 2888 had also performed badly. This meant it came first.
The apparent push for SPC was supported by a BP peer review whose two members did see the controversial Advantica report and then met with the projects team on 5 September 2002.
The minutes show construction consultant Jim Mooney from the Upstream Technology Group, and Kevin Muller, BP’s global integrity assurance manager, recognised SPC 2888 was ‘unproven’ on plastic-coated pipeline and marked ‘a step change in present industry practise, both technically and commercially.’
They recommended a full field trial ‘to ensure repeatable performance’ before selecting it as the field joint coating. Further tests on alternative coatings were also recommended as a ‘fall back’ in case SPC 2888 failed during the construction phase.
It looked like BP’s much-vaunted management
culture had caught the problem before it was too late. But documents seen
by SpinWatch suggest neither recommendation was implemented. Instead, on
2 October the projects team issued an extraordinary field joint coating
specification prepared by Osborne.
Human rights activists criticized Western governments for going ahead with the pipeline plans, despite the reported human and civil rights abuses by the Aliyev regime. A Czech documentary film Zdroj (Source) underscores these human rights abuses, such as eminent domain violations in appropriating land for the pipeline's route, and criticism of the government leading to arrest.
|See also: oil, consultants, legislation, government, Heydar Aliyev, economy, maps, places, images|
|A to Z of Azerbaijan / A dan Z ye Azerbaycan||