TODAY.AZ / Business

Oil at $75 a barrel makes BTC a fast success

13 July 2006 [11:01] - TODAY.AZ
Warnings from critics 10 years ago against project's cost, difficulty have now dried up.

Almost 10 years ago, then-President Bill Clinton threw his weight behind a multibillion-dollar pipeline designed to bring the oil riches of the Caspian Sea to the West, bypassing Russia and tapping a source of crude outside the unstable Middle East.

Critics derided the proposed 1,100-mile, $3.9 billion pipeline - snaking through Azerbaijan, the mountains of Georgia and northern Turkey before hitting the Mediterranean coast - as too expensive and too difficult to build.

Today, the leaders of those three nations will gather at the port of Ceyhan to formally inaugurate the pipeline. With oil near $75 a barrel - triple the price when Clinton was president - and Iran harboring nuclear ambitions, the once controversial project looks far more attractive.

"No one would have thought that when oil reached Ceyhan it would be $75 a barrel," said Suat Kiniklioglu, the director of the German Marshall Fund of the United States' Ankara office. "It's a huge success."

The pipeline was part of a U.S. strategy to diversify the sources and flow of oil imports, cutting the risk to consumers that any shock would affect oil supplies, sending prices higher, the Associated Press reports.

It began pumping late last month, and about 430,000 barrels of oil are flowing each day, said Norman Rodda, the construction manager for the Turkish section of the pipeline.

That might be only a fraction of the 85 million barrels a day that the world consumes, but with global production stretched and prices skyrocketing, "all supplies matter," said David Knapp, a senior editor for global oil-market analysis at Energy Intelligence group in New York.

"Additional oil coming into the Mediterranean market helps soften the increase in prices," he said. "It hasn't had a major impact yet, but it is possible that prices would have been higher if that oil was not on the market."

Officials at oil company BP PLC, the pipeline consortium's main participant and the largest foreign investor in Azerbaijan's oil sector, said they expect pumping to increase to 1 million barrels a day by 2008.

Kazakhstan recently said it would begin pumping some oil through the pipeline, and Azeri production is expected to be increased to reach that goal.

There is also talk of building pipelines across Turkey that would bring Russian oil and natural gas to European markets and of another pipeline across Bulgaria and Greece that would allow Russian oil exports to bypass the crowded Bosporus, the strait that cuts across Istanbul.

With most of the oil destined for European markets, Turks are hopeful that the pipeline will expand their influence in Europe as they press for European Union membership.

Oil from Iraq is exported from the same port, but that flow has repeatedly been disrupted by insurgent attacks.

/www.journalnow.com/

URL: http://www.today.az/news/business/28129.html

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