BTC
P/L PROJECT PROGRESS
The oil and natural gas explorations immediately
began soon after Azerbaijan's announcement of split from
the Soviet Union. Turkey has been showing its best effort
to realise the transportation of Caspian Region's oil to
the world markets through the Baku-Tbilisi-Ceyhan route
since 1991.
The Production Sharing Agreement on exploration, production
and sharing of the fields of Azeri, Chiraq and deep-sea
portion of Gunashli has been signed on April 20, 1994 between
SOCAR, the Azerbaijan National Oil Company and AIOC, the
Consortium formed by foreign oil companies. Currently, TPAO
has also a share of 6.75% in the AIOC Consortium.
Taken into account the fact that the construction of the
main export pipeline will take several years, AIOC Members
have decided, in June 1995, to export their "early
oil" via already-in-place infrastructure.
In August 1995, Turkey proposed the transportation of crude
oil through the "Western Route" to the Supsa Export
Terminal in Georgia. Nevertheless, AIOC members decided,
in October 1995, to export their" early oil" through
the Western and Northern routes. In this context, 5 million
ton/year crude oil transportation has been achieved since
1998.
Meanwhile the Northern Route had been stopped several times
in connection with the conflict in Chechnya, and finally
this route has been abandoned in July 1999 after a major
attack to the pipeline. Today, Russia is planning to revitalised
the Northern Route by constructing a by-pass through the
Republic of Dagestan. Nonetheless, oil producers and other
stakeholders in the energy sector have directed their attention
to the secure as well as economical BTC Project.
Turkey as a reliable and stable transit country providing
low cost and secure transmission of energy from the Caspian
Region, developed Baku-Tbilisi-Ceyhan Crude Oil Pipeline
Project by benefiting from her geographical advantages.
This project, will not only provide a secure way of transportation
but also a reliable, cost effective, environmentally sustainable
means of exporting oil to the international market.
The Baku-Tbilisi-Ceyhan Crude Oil Pipeline Feasibility
and Environmental Audit Study has been conducted by PLE
Engineering GmbH (a German originated company), through
the Loan Agreement signed with the World Bank. After evaluating
possible alternatives, PLE was commissioned by Turkey to
perform the feasibility study for the route passing through
Georgia. The study has been finalised in August 1998.
After all studies and negotiations on realisation of the
Project, Turkey, Azerbaijan and Georgia signed a 'Memorandum
of Understanding' (MOU) on May 15, 1998. The MOU involved
the decision of the establishment of working groups for
each country. Turkish Working Group was established following
the meeting under the presidency of Minister of Energy and
Natural Resources. Also, the governmental organisation of
US TDA has granted US $ 1,323,000 to Turkey in order to
be used for the technical consultancy services.
As a result of the mentioned studies of the Working Groups,
the "Intergovernmental Agreement of the Project"
has been signed by the Presidents of Turkish Republic, Republic
of Azerbaijan and Georgia during the OSCE Summit-Istanbul
on November 18, 1999. USA President has also signed the Agreement
as witness. Furthermore, during this Summit,
- The Host Government Agreement,
- The Turnkey Agreement, and
- The Government Guarantee,
have also been initialled as Annexes to the Intergovernmental
Agreement.
The "Intergovernmental Agreement" and the Annexes
mentioned above were ratified by the Azerbaijan Parliament
on May 26 and by the Georgian Parliament on May 29. The
Turkish Parliament also ratified the agreement package on
June 22, 2000.
Azerbaijan has formed a group of sponsors to support the
$2.4 billion pipeline to carry Caspian crude to Turkish
Mediterranean port of Ceyhan on October 3, 2000.
The consortium of 11 sponsors, led by BP, signed an agreement
with SOCAR on October 17, 2000.
In October 2000 SOCAR and seven international oil companies
holding interests in the Azeri-Chirag-Guneshli offshore
oilfields, formed a Sponsor Group to pursue development
of the BTC project and appointed BP as operator.
As it is well known that the members of the Sponsor Group
signed above mentioned agreements with the Governments of
each related states in the dates between October 17-19,
2000.
The Baku-Tbilisi-Ceyhan Project Directorate of BOTAŞ is
working with the Sponsor Group in order to proceed with
the Project in the most robust way. Furthermore, the Turkish
Government gives all kinds of support to the Project.
Commencement Dates:
¢ 3 November 2000: Receipt of "Notice to Proceed"
from the MEP Participants
¢ 14 November 2000: execution of the "Basic Engineering
Agreement" between BOTAŞ and PLE.
¢ 15 November 2000: commencement of the "Basic Engineering"
which is the fisrt phase of the project according to the
Turnkey Agreement.
Practically all of the 600 distinct deliverables prepared
during the "Basic Engineering" that has started
in November 2000, have been submitted to the MEP Participants,
by BOTAŞ BTC Crude Oil Pipeline Project Directorate within
the 6 months envisaged in the Turnkey Agreement.
Deliverable submission dates for the Basic engineering
Phase
¢ Interim Basic Design Report : 12 February 2001
¢ Draft Basic Design Report: 25 April 2001
¢ Final Basic Design Report: 15 May 2001
Actually, one of the important developments of the last
three months was the signing of a Memorandum of Understanding
for the participation of Kazakhstan to the BTC Project on
March 1, 2001 in Kazakhstan between Turkey, Kazakhstan,
Georgia and Azerbaijan. USA representative also signed the
MOU as a witness.
The second phase of the project dubbed "The Detailed
Engineering Phase" is completed. The related tender
process in ongoing. Nowadays "Land Acquisition and
Construction" phase which is the third and last phase
of the project, started.
The BTC pipeline will be operational in early 2005.
The BTC Project Directorate was granted the below mentioned
three standard certificates simultaneously on 21 March 2001:
¢ ISO 9001 "Quality Management Systems"
¢ ISO 14001 "Environmental Management Systems"
¢ OHSAS 18001 "Health and Safety Management"
The BTC Directorate is the first public sector institution
in Turkey to hold these three certificates of major value
and the first institution in the world to be granted these
three certificates at the same time.
Based on its feasibility studies, PLE has estimated the total
investment cost of the Project as US$ 2.4 billion while the
estimated cost for Turkish section, including land costs,
is US$ 1.4 billion.
The Turkish section is completely financed by the Sponsor
Group and not by the Turkish Government. Unless there is a
delay in the completion of the project within the pre-set
period Turkey will not assume any financial burden.
|
Design Capacity
|
|
50 million metric ton per
annum
(approximately 1 billion barrel per day) |
Please click the image for to enlarge. |
|
Total length of the pipeline
|
|
1774 KM |
|
AZERBAIJAN
|
|
440 KM |
|
TURKEY
|
|
1074 KM |
|
Pipeline diameter
|
|
42" /34" |
|
Total Number of pump stations
|
|
10 |
|
Turkey
|
|
2 + 2 booster |
Benefits
of the Project for Turkey
Besides all indirect revenue to be generated in relation
to the BTC Crude Oil Pipeline Project, Turkey will collect
USD 140 to 200 million in the first 16 years of the Project
and USD 200 to 300 million in the 17th to 40th years period
depending on the amount of transported oil, as "transit
fees and operations services payments".
Turkey will assume in the near future a major role in
the transportation of rich reserves of 200 billion barrels
crude oil and 18 trillion m3 natural gas of the Caspian
Region to the world markets and to the European markets
in particular.
Turkey, although rich in minerals, does not have a significant
potential as far as oil and natural gas are concerned.
Due to limited domestic production capacity, Turkey is
64% dependent on imports to offset its energy requirements.
This percentage is expected to increase drastically in
the next 20 years, rising to 72% in 2010 and up to 76%
in 2020.
Considered as a natural bridge between the western markets
with high demand and oil and natural gas exporting countries
like Iraq, Iran, Azerbaijan, Kazakhstan and Turkmenistan,
Turkey is today, and will be in the near future, defined
as a "major transit country". In this context,
Turkey accords a major importance to transportation of
energy through its land and to the pipeline projects in
particular.
The BTC Crude Oil Pipeline is one of the most imperative
energy projects that Turkey has ever performed with respect
to the associated political, economical, strategic and
environmental aspects. On economical basis, Turkey will
be able to purchase crude oil at a lower price. The main
reason for this will be the minimisation of transportation
costs. Another reason will be the dwindling of financial
costs. Oil from the Persian Gulf reaches our refineries
in 15 days but oil from the BTC pipeline is expected to
reach the refineries in only 2 days.
When the maximum capacity of 50 million tons per annum
is reached Turkey plans to purchase 15 to 20 million tons
thereof. Considering that the crude oil exports of Turkey
is expected to reach 48 million tons in 2010 and up to
74 million tons in 2020, Turkey will be 99% dependent
on exports for oil which thus amplifies the value of the
BTC Project regarding supply security and price stability
in the country.
Therefore, the BTC P/L Project is envisioned as the milestone
of an "East and West Transportation Corridor"
linking the South Caucasus and Central Asia to Turkey
and the Mediterranean Sea. This project has also brought
forward the advantage of avoiding the risks associated
with the passage through the congested Turkish Straits.
