18 September 2008
Following the August 25 reopening of the Baku-Tbilisi-Ceyhan Pipeline after the armed conflict in Georgia, the BTC has faced several technical and strategic issues when it comes to its future and viability.
On September 12, a faulty valve at a pumping station in Sivas province, Turkey caused a temporary disruption of flow of oil. The incident appears to be unintentional and unrelated to the August 5 explosion in Erzincan province that was linked to the Kurdistan Workers Party (PKK) and its efforts to sabotage the pipeline. The Erzincan explosion and subsequent fire halted pipeline operations for twenty days.
The BTC pipeline’s production was further affected on September 17, when BP halted oil production at one of its platforms in the Azeri-Chirag-Guneshli oilfield due to a gas leak. The oilfield is the main source for the BTC. Due to the large amount of oil stored at the Ceyhan terminal, however, the supply for tankers has remained unaffected by the flow interruption from BP’s Caspian oilfields.
The recent events have further concerned civil society representatives, adding worries over safety and security to a list of issues that includes questions about the BTC project’s labor practices, impact on the environment and compensation issues. NGO’s like The European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC) have contributed significantly to the pipeline’s construction and development through loans. IFC and EBRD have provided $250 million and $280 million, respectively, together constituting approximately 15% of the entire BTC project’s $3.6 billion cost.
Security problems experienced by the BTC mirror concerns faced by the Nabucco gas pipeline project. Nabucco’s Vienna-based consortium is considering other oil and gas producers besides Azerbaijan, in order to secure an alternate to a Georgian route. In response, Azerbaijan is in talks with Gazprom, which agreed to increase payments for Caspian gas in order to promote an increase of exports through Russian pipelines. In a note of support for the original Nabucco routes, utility companies OMV (Austria) and RWE (Germany), two of the largest Nabucco shareholders, have said that their plans vis-à-vis the project have remained unaffected.
Despite BTC’s August 25 reopening, the Baku-Supsa pipeline, stretching west to the Black Sea coast is of yet to reenter operation.
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