Prof. Dr. Roin Kavrelishvili Rector of Akhalkalaki State Higher Educational Institution (Georgia)

And Professor

of Akhaltsikhe(Georgia) and Ardahan (Turkey) State University

In the modern Georgian press due attention is paid to the construction of

the pipe line Baku - Tbilisi - Ceyhan and Baku - Tbilisi -

Erzurum. Considerations expressed in Georgian

press is briefly introduced in this article.

Georgia, located on the border of Europe and Central Asia is a linking bridge of some important economic regions. The nearest route of oil and gas transit from Central Asia to Western Europe passes through Georgia. Significant part is being acted by the Black Sea ports, railway infrastructure and airports in connceting eastern and western parts of world.

In order to be realized energy aspirations of Asia and Europe, Georgia is becoming more and more interesting. Currently four transport corridors to be already operated by 2015 passing through Georgia are being reviewed.Pursuant to the statement of experts the most favourable way is the corridor of Caucasus providing delivery of various origins gas to market. Not only one, but several oil and gas pipelines should be passed through Georgia. In this case country will have higher security guarantee.

Baku-Tbilisi-Ceyhan pipeline provides oil transportation by passing Georgia from Baku to Turkey and its terminal is Seaport of Turkey, called Ceyhan located on Mediterranean Sea, after that oil is supplied to European market by liquid carriers (tankers).

Dynamic cooperation is among three countries in South Caucasian Region – Georgia, Azerbaijan and Turkey, that has a structure oriented on specific results especially within last period:

1. Favorable trilateral and multilateral political dialogue;

2. Cooperation within the frameworks of international organization;

3. Regional cooperation aiming maintenance of security and sustainable economic growth in region.

4. It is significant to be cooperated from the standpoint of provision energetic security of Georgia and complete application of energy and transportation potential of region. Such considerable projects are linked with the three of those countries, as Baku-Tbilisi-Ceyhan oil and Baku-Tbilisi-Erzurum gas pipeline. Cooperation is successfully being developed in energy sector. It is important to be implemented Baku-Tbilisi-Kars railway trunk line project.

 

Baku-Tbilisi-Ceyhan Oil and

Baku-Tbilisi-Erzurum Gas Pipeline Projects

Statement on construction Baku-Tbilisi-Ceyhan oil and Baku-Tbilisi-Erzurum gas pipeline was made by presidents of Georgia, Azerbaijan and Turkey in Baku in September 18, 2002 [1].

In July 13, 20006 Baku-Tbilisi-Ceyhan oil pipeline was officially opened. Though, shipment activities were launched before, in June 2. Oil pipeline is equipped with 8 pumping stations and 98 special valves. Its constraction covered approximately 4 lilliard USD [2].

Baku-Tbilisi-Ceyhan oil pipeline is 1760 km. long line and its function is to provide transportation of crude oil from Azerbaij Chirag-Guneshli oil depost in the Caspian Sea to the Mediterranean Sea. It passes Baku, Tbilisi and ends in Ceyhan in Mediterranean Sea Port of Turkey. It is the second longest oil pipeline throughout the world (the first is Druzhba oil pipeline providing oil transportation from Russia to Europe) [3]. 443 kilometers of oil pipeline is located on the territory of Azerbaijan, 248 km on Georgia and 1768 km on the territory of Turkey. Shareholders of oil pipeline are BP (30,1%), SOCAR (25%), CHERVON (8,9%), STATOIL (8,71%), TRAO (6,53%), ITOCHU (3,4%), AMERADA HESS (2,36%), ENI (5%), CONOCOPHILIPS (2,5%), IXPEX (2,5%), TOTAL (5%) [4].

In May 2005 was launched transportation of oil via Baku-Tbilisi-Ceyhan oil pipeline. But in October 2005 presidents of Georgia, Azerbaijan and Turkey officially opened Georgian line of Baku-Tbilisi-Ceyhan in Gardaban. As a result of handling aforesaid oil pipeline by way of direct transit incomes, budget of Georgia will have 50 mln. USD during project’s operation [5].

Stand of America

regarding Baku-Tbilisi-Ceyhan

According to the standpoint of American Congressman from Republican Party, John McCain “Russia will utilize oil and gas as a strategic instrument and USD is to be harassed by the security of Baku-Tbilisi-Ceyhan, international oil pipeline passing through Georgia.

Russia owns great wealth of oil and its great influence became strategic instrument at the world oil and gas market that will be applied by Russia. Georgia holds strategic crossroad in Caucasus. Baku-Tbilisi-Ceyhan oil pipeline providing oil transportation from the Caspian Sea to the west passes the territory of Georgia. If this oil pipeline is destroyed or is under control of Russia, energetic supply of Europe will become more dependent on Russia [6].

Caspian Sea Project Chairman of the Center for Strategic and International Studies in Washington, Bulent Aliriza comments on USA stand related to oil pipeline project: “this historical fact would not take place if there is no cooperation among three countries of region – Turkey, Georgia and Azerbaijan and of course USA support. What about the American delegation introduced at the inauguration, there was invited USA President. Though, he was in Germany under official visit. So, it was impossible for him to arrive in Turkey. Though, delegation attending this ceremony by the assistant of deputy state secretary and other officials does not mean that USA pays less attention to the construction of oil pipeline within its foreign priorities” [7].

Stand of Russia towards Baku-Tbilisi-Ceyhan

Oil Pipeline

The same Bulent Aliriza expresses its opinion on the stand of Russia regarding aforesaid project: “as far as it is political initiative and uniform political statement – it is obvious that Russia has a negative response. This oil pipeline reduces monopoly of Russia on energy line. President of Russia was invited at the inauguration of project. Though, he did not attend it that is also the evidence of the stand of Russia. Though, Russia and Turkey have good partnership relations with each other. On the same background Russia would possibly abstain from great opposition, because Turkey is important partner for them. Notwithstanding aforesaid issue, it is not excluded to have again faced problems regarding Georgia from Moscow and fear that Russia will show its stand more strictly in relation to Georgia [7].

Prospects of Regional

Cooperation

At present Baku-Tbilisi-Ceyhan oil pipeline is not completely operated and is able to lead even additional volumes. Plenty of companies are interested in this pipeline. At this stage Russian giant “LUKOIL” is being planning to lead oil through Baku-Tbilisi-Ceyhan. Caspian oil that extraction was launched by the company in April possibly may pass through this pipeline. Currently negotiations with operators are being conducted by Russian party regarding the tariffs of transportation. Also it desires to have even a share from LUKOIL project, because exactly in this case transportation will be more profitable for them.

According to the explanation of representative of the company “RUSENERGY”, Mikhail Krutikhin, currently two tariffs are active on the application of this system for the participants of consortium and foreign companies. That is why according to the Kutikhin’s statement it is profitable for “LUKOIL” to apply this pipeline only if Russian company becomes the member of consortium [8]. Under the supposition of experts, complete transportation of oil streams mainly will depend on the prospects of growth of conduction and load of two pipelines.

In the event of complete loading of Baku-Tbilisi-Ceyhan and the growth of Caspian pipeline consortium (CPC) conduction passing through Russia, it will be possible to regularly supply oil streams at world market planned by 2015, but (CPC) in case of maintenance of existed conduction in order to be provided free transportation of oil it will be essential to additionally expend the powers of various transportation systems (pipeline, railway, SWAP) with quite a little conduction.

According to the calculations of experts, upon transportation of Kazakhstan oil in future more advantageous will be the pipeline (Baku-Tbilisi-Ceyhan) than CPC. At the same time, if you take into account tense relations between Russia and Azerbaijan caused due to the disagreement on gas prices, prospects on development of oil transportation routes by avoiding the territory of Russia are clear.

Lately, extraction of oil from Tengiz (Kazakhstan) deposit is grown by 12 mln. tons. In 2007 agreement is negotiated that considers oil transportation from Tengiz deposit by passing the Caspian Sea to Baku, after that oil will be shipped by Baku-Tbilisi-Ceyhan pipeline at the world market.

For 2015 it is difficult to imagine complete view on the transportation of oil streams, because it depends on many difficultly predicting factors. Among them on intensity of oil extraction in Azerbaijan and Kazakhstan (Kashagan) oil deposits.

In case of reduction of development of pessimistic

prospect scenario and extraction of oil in

Azerbaijan oil deposits by 2015, the growth of oil

export will be compensated by growing extraction in Kashagan (Kazakhstan)

deposit.

This scenario will slightly change the case of oil transportation in region. Baku-Tbilisi-Ceyhan pipeline remains as one of the major and stable transportation system in the region. Under the basis of current case, instead of 90% shipped Azerbaijani oil via Georgia/Azerbaijan transportation systems (railway/pipeline), by 2015 approximately 40-50% will have oil from Kazakhstan. Thus, share of Russia in general export may be decreased to 38%.

Development of optimistic scenario will be significant examination for transportation systems of region. In the event of additional transportation of oil from Kazakhstan - 45 mln. Tons and from Azerbaijan - 17 mln. tons there will be applied conductivity of major transportation pipelines in region: Baku-Tbilisi-Ceyhan and CPC. Though, in the event of complete consumption of powers of major pipelines, by that time there may be applied even reserve of conduction of Russia and Azerbaijan/Georgia Railway Systems.

If such scenario takes place then one third of region’s export will be

oriented towards Russia, almost half 50% towards

Caucasus and 10% towards China.

Today, main volumes of Caspian oil and oil products will be shipped by four major transport routes:

- Today, 66% oil export of Caspian region to European markets by northern and western pipelines and railway lines of Russia will be shipped via Russian territory;

- Via transport infrastructure of Azerbaijan and Georgia will be shipped (22%) to European markets;

- Via transport infrastructure of Iran will be shipped (8%) to Asian markets;

- Will be shipped (4%) via pipeline towards China [9].

Bibliography 1. www.matsne.gov.ge 2. www.Radiokalaki.ge 3. www.wikipedia.org

4. Newspaper ,,24 Saati’’, 12.04.2011 5. www.gogc.ge

6. www.business.info.ge 7. Ana Kalandadze, www.vianews.com 14.07.2006

8. Maka Kharazishvili, Georgia is apparent country on energetic map, newspaper “Rezonansi”, 13.10.2010

9. Paata Tsagareishvili, Gogita Gvenetadze, energy corridors and prospects on diversification of Caspian

oil streams, Magazine “Business & Management”, # 3 (19), 2008.

 

Prof. Dr. Roin Kavrelishvili Rector of Akhalkalaki State Higher Educational Institution (Georgia) and

Professor of Akhaltsikhe(Georgia) and Ardahan (Turkey) State University

In the modern Georgian press due attention is paid to the construction of the

pipe line Baku - Tbilisi - Ceyhan and Baku - Tbilisi - Erzurum.

Considerations expressed in Georgian press is briefly introduced in this article.