War forces Central Asian oil exporters to reroute

Tamsin Carlisle

  • Last Updated: August 21. 2008 9:58PM UAE / GMT

The continuing presence of Russian troops in the South Caucasian republic of Georgia is causing a headache not only for the White House, but also for Central Asian countries that normally export oil through Georgia.

Yesterday, Azerbaijan made arrangements to start exporting oil to Iran – a move that could put the Caspian oil producer at odds with its most powerful ally, the US.

The State Oil Company of Azerbaijan (Socar) awarded a tender for 300,000 tonnes of Azeri light crude to Middle East Petrol Farm (MEPF), an oil trading and shipping company in Dubai, for loading in late September or early October, Bloomberg reported, citing a Socar official. A decision on whether to export the oil to Iran would depend on the operational status of the Baku-Tbilisi-Ceyhan (BTC) Pipeline, the official said.

MEPF provides oil transshipment services throughout the Caspian region and Middle East, including Iran. It owns the Dubendi oil terminal on the Caspian Sea, about 50km northeast of Baku, the Azeri capital, at which Caspian crude is unloaded from tankers and transferred to pipelines or rail cars for export.

The BTC Pipeline, with a capacity of one million barrels per day (bpd), is the largest of two oil pipelines that normally transport Azeri crude westward through Georgia to Black Sea and Mediterranean ports. The Aug 5 closure of the BTC line, which discharges oil at the Turkish oil export terminal of Ceyhan, predates Russia’s recent invasion of Georgia by about a week, and was caused by an explosion and fire in the pipeline’s Turkish section. It is still unclear whether damage to the line was caused by a technical fault or sabotage.

BP, the British oil company that operates the pipeline, said test flows would start yesterday and normal operations could resume as early as Aug 27. But that schedule could be disrupted by events in Georgia.

“It turns out that it’s going to take longer than expected to get BTC up and running,” said Kate Hardin, an analyst at the US consulting firm Cambridge Energy Research Associates.

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