Baku-Tbilisi-Ceyhan pipeline

The Baku-Tbilisi-Ceyhan pipeline (sometimes abbreviated as BTC pipeline) transports crude oil 1,760 km (1,093 miles) from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean Sea. 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).

Route of the Baku-Tbilisi-Ceyhan pipeline

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Planning

The Caspian Sea sits atop one of the world's larger oil and gas fields, but its full potential was not exploited under the Soviet Union due to a lack of investment and modern technology. This changed with the independence in 1991 of the countries around the Caspian Sea, when the Western oil companies were able to begin investing in the local oil industry. Caspian Sea oil production is forecast to rise rapidly to a maximum of about 1.5 million barrels (240 000 m³) per day, roughly equivalent to the petroleum output of Mexico, with reserves in the region estimated at around 220 billion barrels (35 billion m³) of oil – enough to meet the entire world demand for oil for eight years. (It should be noted, though, that it has been suggested that this is a gross overestimate, with Azerbaijan's oil reserves estimated by some to be a mere 32 billion barrels—5 billion m³.)

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 regime, which greatly restricts Western investment in the country.

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 conflict 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 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.

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Construction

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 (36 ft) in length. This corresponds to a total weight of approximately 655,000 short tons (594,000 metric tons).

The pipeline was commissioned by a consortium of energy companies led by BP (formerly British Petroleum), which has a 30.1% stake and is the operator of the pipeline. The other members of the consortium are:

Construction began in September 2002. The related BP-led project to construct a trans-Caspian gas pipeline to from Kazakhstan to Turkey is scheduled to finish in 2006.

The route of the pipeline crosses Azerbaijan and skirts Armenia to pass through Georgia and Turkey. Of its total length of 1,760 km (1,073 miles), 440 km (226 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 Cayhan 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 US 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 per cent of national income. Azerbaijan expects its own economy to grow by 18% as a result of the pipeline.

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. The government of Kazakhstan 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.

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Extensions to other sources

The following extensions are discussed:

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Controversial aspects

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Politics

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 separatism 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 US, 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.

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Environment

Several ecological issues have been raised concerning the BTC pipeline. On the positive side, it will eliminate 350 tanker cargoes per year through the sensitive and very congested Bosphorus and Dardanelles.

The Borjomi national park, an area of mineral water springs and outstanding natural beauty in Georgia, is bisected by the pipeline. 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.

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Human rights

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.[1] A Czech documentary film Zdroj (Source) showed abuses of Azeris' rights, such as eminent domain violations in appropriating land for the pipeline's route, and criticism of the government leading to arrest.

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Miscellanea

The BTC pipeline has already featured (in fictional form) in popular culture: it was a central plot point in the James Bond film The World Is Not Enough (1999). One of the film's central characters, Elektra King, is responsible for the construction of an oil pipeline through the Caucasus, from the Caspian Sea to the Mediterranean coast of Turkey. Named the "King pipeline" in the film, it is a thinly disguised version of the BTC.

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See also

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External links

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Russian reaction

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Reference