[Ben] OIL - Baku-Ceyhan inaugurated

UPDATE: I want to think more about the financing. See below

After more than 10 years of construction, the first drop of oil from the Caspian Sea reached the Mediterranean.

Wednesday's inauguration at the Sangachal oil terminal near Baku was attended by presidents from Azerbaijan, Kazakhstan, Georgia and Turkey.

US Energy Secretary Samuel Bodman also was present at a ceremony where the taps were turned on.

It is not just BP that built the pipeline:

The shareholders of the BTC (Baku-Tbilisi-Ceyhan) consortium are British Petroleum (30.1%), the State Oil Company of Azerbaijan (25%), Unocal (8.9%), Statoil (8.71%), TPAO (Turkish Petroleum, 6.53%), Eni (5%), Itochu (3.4%), INPEX (2.5%), ConocoPhillips (2.5%), Total (5%), and Amerada Hess (2.36%).

The throughput capacity of the pipe will be at around 1 million barrels per day, or 50 million tons of crude per year. The CPC pipeline from Tengiz to Novorossiysk is currently operating at 600.000 bbl/d, but will transport around 1.34m bbl/d by 2015.

The BTC-pipeline has been subjected to a large degree of controversy. Many people doubted that it was a corporate decision at play - more likely, they thought, it was a political effort that led to today's inauguration. In order to circumvent strategic adverseries North (Russia) and South (Iran) (also East: China), the US allegedly lobbied until BP would agree to build it.

Critics hold that Azerbaijan's oil resources would not have made feasible such a daring investment. Now that the Kazakhs plug in (via tankers across the Caspian) this is looking well different. Also, BP made clear from the beginning that it would not only transport oil via the pipeline but also gas. With no public guarantees or subsidies, the financing is exclusively undertaken by the shareholders. This undertaking was deemed profitable, and no political pressure would have been needed for the consortium to proceed.

I read in the Armenian Weekly that, contrary to my words above, there have been massive subsidies:

He [Ambassador Morningstar] also revealed that in order to make the project more feasible, the US government did, in fact, make financing available from governmental agencies such as the US Export-Import Bank and the Overseas Private Investment Corporation. He noted that after the Turkish government guaranteed that the cost for the Turkish section would remain close to its estimate of $2.4 billion, BP Amoco and the other countries of the Azerbaijan International Oil Consortium broke ground on the pipeline in September 2002.

Anyone who knows more on that issue is welcome to post in the comment.

Related posts on this blog:

Background #3.1: Das Kaspische Meer (German)

Background #3.2: Key Factors Determining the Success of Kazakhstan’s Hydrocarbon Sector