A major Caspian Sea oil export pipeline proposal, the Baku-Ceyhan route through Turkey, seems to be making progress at last.
BP Amoco PLC recently endorsed the project, according to some unconfirmed press reports (OGJ, Oct. 25, 1999, Newsletter).
Turkey and Azerbaijan are expected to sign a framework agreement for the pipeline Nov. 18. President Bill Clinton, who will be in Istanbul for a summit on European security, will witness the signing.
Ambassador John Wolf, the Clinton administration's special adviser on Caspian Basin energy diplomacy, told a Washington, DC, meeting of the US-Azerbaijan Chamber of Commerce that Caspian nations and international oil companies must agree now to build the $2.4 billion pipeline so that development projects can proceed.
The administration favors construction of a 1,070-mile line from Baku, Azerbaijan, to Ceyhan on Turkey's Mediterranean coast.
Wolf said, "Prospects for Baku-Ceyhan have improved significantly in the last few weeks." He said Azeri and Turk negotiators met recently for 22 straight days.
"The progress notwithstanding, there is much to do," Wolf said.
Oil, gas lines
Wolf said it is apparent that the oil pipeline should, and could, be financed commercially.
For that to happen, he said, it will need more crude than Azerbaijan International Operating Co. can supply. He said other oil company shippers should be given access to the line.
Wolf said it's clear that Turkey will frown on any project involving additional tanker shipments through the Bosporus Strait: "The Bosporus must not become the pathway for additional exports from the region."
And he said oil companies will limit spending until a pipeline is assured, to prevent their upstream projects from being "stranded and waiting for an export solution."
Wolf also said Azerbaijan and Turkmenistan must change their views about a gas export line.
"Turkmenistan must recognize that Azerbaijan eventually will be a major gas exporter and not merely a transit country, and it must accommodate Azeri gas into the trans-Caspian pipeline, once that gas is available.
"At the same time, Azerbaijan must recognize that demanding the right to inject extremely large volumes of gas into the pipeline from the project's onset, and even before those gas volumes are developed and bankable...will only complicate and delay efforts to finance the line."
Iran and Russia
Wolf said the administration's stance toward Iran and Russia is steadfast. "Our policy on Iran is clear, and change is unlikely anytime soon. We will not support pipelines through Iran or any transaction that will increase Iran's influence in the region or give it greater leverage over regional or international energy markets."
He said, in contrast, Russia should be an active participant in major export pipelines and a shipper through those lines.
"We hope Russia will play a positive, cooperative role in the region's energy development. We recognize-and Russia does, too-that countries and companies want multiple export solutions, and that means pipelines that head west as well as north."
