The Construction of Baku-Tbilisi-Ceyhan Oil Export Pipeline Begun
The seventh meeting of the Board of Directors of Baku-Tbilisi-Ceyhan (BTC) Co. took place in Baku April 29. Representatives of 11 companies - shareholders of BTC Co. Took place in it. Reports on condition and statutory indicator of the project in all three countries-Azerbaijan, Georgia and Turkey, on territories of which the pipeline is being constructed and in which the corridor of the Main Export Pipeline Baku-Tbilisi-Ceyhan is located, have been brought to life.
It was satisfactory repeated on the meeting that the work is getting done in accordance with schedule.
The Caspian Sea, which is located on the cornerstone between Europe and Asia, in reality, is the unique locked reservoir with large potential reserves of hydrocarbon that does not have direct exit on world market. The current two pipelines, Baku-Supsa and Baku-Novorossiysk, lead to half-locked Black Sea, which is connected with world oceans via Turkish channels. However, these transit routes have severe drawbacks in terms of delivering raw oil to the world markets. Main drawbacks are possibility of emergency spills of oil and limitations on tonnage of tankers passing through channels. Also, severe climatic conditions of the Black Sea are a major drawback. It leads to situations when ports of this basin are not in working condition more than 100 days a year because of storm winds. At the end, it negatively impacts the efficiency of transportation of raw oil from the Caspian Sea to world markets.
Currently, the Caspian Sea is counted as the most perspective oil-producing region. Its minimum reserves (proved reserves) of hydrocarbon is at 17 billion barrels that equals or is even a little more than reserves in the North Sea. The maximum proved extracting reserves of hydrocarbon in the Caspian is 33 billion barrels that equals the reserves of the Unites States of America.
It is very important then to implement Azeri-Chirag-Guneshli project where 5.4 billion barrels are being in reserve. Peak level of production from these bowels will reach 1 million barrels a day by 2009-2010.
That is why BTC pipeline is getting more important strategic meaning opposing to the above-mentioned two pipelines. The Baku-Tbilisi-Ceyhan route has been chosen out of number of variants at the most commercially profitable and safe in terms of capital expenditures. Also, this route is passing through Turkish channels is getting increased volumes in the nearest future. Calculations show the efficiency of the BTC, which can be very profitable even if the price for raw oil would go down to US $ 12 per barrel on world markets.
The idea of BTC is getting developed for 10 years already. The pipeline will be crossing three countries - Azerbaijan, Georgia and Turkey. The total extension of the pipeline is 1,768 kilometers, including 443 kilometers on the territory of Azerbaijan, 249 - in Georgia and 1,076 - in Turkey.
The oil pipeline is 42 inches in diameter in Azerbaijan, 46 - in Georgia and 34-42 - in Turkey. Thickness of pipeline's walls will vary from 8.74 to 23.8 mm depending on sensitivity of regions to nature preserve. Walls will be thicker in seism-active regions.
The pipeline will be provided with anti-corrosive defense. Pipes with concrete solidification will be used for that along with cathode defense and a three-lay high durable polyethylene tape. The speed of the oil stream will reach 2 meters per sec at full level of capacity, which will let to pipe the oil from Sangachal to Ceyhan terminal for 10 days.
Baku-Tbilisi-Ceyhan pipeline will be provided with high fidelity control measuring stations - per one for Azerbaijan, Georgia and Turkey. Another one will be installed at Ceyhan terminal for the control of metering the volumes of pumped oil.
In Sangachal, Azerbaijan, the terminal will be expanded with construction of two new reservoirs, 127,000 cubic meters each that will add to the four currents ones.
The Ceyhan terminal will be able to load two tankers at the same time, 300,000 tonnage each. The speed of loading is 60,000 barrels per hour. In order to load tankers with oil, the filling aqueduct and the pier will be constructed at 2.5 kilometers from the shoreline. At the Ceyhan terminal seven reservoirs with total reserves at 150.8 cubic meters of oil will be constructed.
The implementing BTC project was going on a following scheme: the route was selected, then works on defining corridors were done. Note that at first, a 10-km corridor has been selected, then 500-m one was pointed out within it, and then the corridor was constricted to 100 m. Finally, the construction corridor was constricted finally at 22 m.
The route of the corridor on laying the oil pipeline in several countries differs from one another with different relief and different climate zones. Thus, the construction corridor from the Sangachal terminal to the border with Georgia is lying on relatively flat lots of earth at no more than 400 m above the sea level. The construction corridor in Georgia lies on crossroad countryside. Peak of heights (there are two of them in Georgia) reaches 2,400 m above sea level. The corridor in Turkey passes mainly through the Anatolian plateau with 2,000 m at peak above the sea level. On the distance of 550 km from Ceyhan the peak height is 2,830 m. Then the relief is slowly getting plain as we get to the Mediterranean.
It has to be noted that the severe climatic conditions are on the Turkish part of the pipeline. In winter the temperature is at minus 30 Celsius.
On the whole distance of the Baku-Tbilisi-Ceyhan route there will be 7 pipe stations. One of them will be constructed in Azerbaijan, 2- in Georgia and the rest 4 in Turkey.
The pipe station that decreases pressure in oil pipeline and is constructed in Turkey will serve for decreasing speed of the oil flow on sharp declining areas. This is the area from peaks in Anatolia to the Mediterranean.
Currently, 70 employees work on a constructing pipe station in Azerbaijan. This number will increase by 320. 101 sealing units (bolts) will be installed on the whole pipeline. It will insure the containment of the pipeline while having planned service repairs and will help when some of sectors will be switched off if necessary.
Currently, the main contractors of the pipeline construction are defined. Bechtel and John Hydrocarbons are doing the projection of the BTC from Azerbaijan to the border with Georgia. Consolidated Constructors International is doing the construction of the pipeline in Azerbaijan, French Spie Capaq and the US PetroFac - in Georgia and Botas is doing the construction in Turkey.
German ILF and two Turkish companies are doing the detailed projection on the Turkish part.
The construction of the pipeline in Turkey is divided into three parts: lots A, B and C.
Lot A (total extension - 275-km) begins from the Georgian border. The Turkish-Denmark joint venture will be carrying out this part of construction. The next intermediate part at 460 km is Lot B and the Turkish-German joint venture is carrying out this job. The extension of Lot C is 326 km and the Turkish-Indian joint venture is carrying out this one.
From the very day of beginning of establishing the pipeline 9 months passed. If we take a glance back in time, we could note that a lot of things have been done during this very short timeframe. First of all, management companies have been established with its financial, technical and commercial sub-committees. They deal with solution of various problems that happen and could happen in the future during the construction of the pipeline in Azerbaijan, Georgia and Turkey. The project of construction of Baku-Tbilisi-Ceyhan has been prepared and all the necessary documentation for the evaluation of the impact of the pipeline on the nature and social sphere has been developed. These documents were presented to international financial institutions and commercial banks for obtaining necessary credits and loans.
Cuurently, the negotiations are being held with the International Financial Corporation (IFC), EBRD, and the US ExImBank and also with export/loan agencies.
Besides, the process of acquiring a land in Azeri sector of the pipeline is fully completed and is about to complete in Georgia. 60 % of land in Turkey has been already acquired and it is already provided for construction purposes. All necessary licenses are already provided and positive decision-making of governments has been received.
The total capital expenditures on pipeline construction are US $2.977 billion and US $ 630 million have been disbursed already. It accounts for 12 % of total work. This number fully complies with the working schedule.
Currently, on-land work within the designated corridor is being held. All the necessary cleaning of territories and planning works on digging required roughs for laying the pipeline is being also held. Pipes for the Turkish part were delivered to Iskanderun on the Meditterenean, and pipes for Azeri and Georgian parts were delivered to Georgian Poti.. Separate pipes for Georgian part was delivered to the Georgian port of Batumi.
In total, 300 km of pipes have been delivered to Turkey already, as well as 80 km - to Georgia and 67 km - to Azerbaijan. The delivery of pipes is being done with full accordance to the schedule. The special pipe preservation camps have been established. In Azerbaijan these are located in Umbaki, Mugan, Kurdamir, Ganja, Yevlah and Poylu. Cuurently, pipes are being delivered to field sites from these camps. Concrete-applied pipes are being laded on the surface along the corridor, the planning and cleaning of the territory is implemented. After that the pipes will be cemented and laded down.
In Azerbaijan the Baku-Tbilisi-Ceyhan pipeline will cross 13 administrative formations, 131 cities, towns and villages. Depending on the form of property, 6,672 land lots have been provided along the corridor of the construction. Out of this number, 567 is owned by the government, 1,840 - by the municipality and 4,265 are owned by sole proprietors, farmers. Finishing the construction of BTC and making it functional is scheduled by September 2004. By October 2004 all the construction work are scheduled to finish in Georgia and by December 2004 - in Ceyhan. At the 4th quarter of 2004 it is scheduled to start operations with pipeline and the first tanker with Azeri oil will take off at the 1st or 2 nd quarter of 2005.
The publicity rating of the project is getting increased on a daily basis, thanks to the sanctioning of the first phase of developing Shakhdeniz, a unique gas condense field and the construction of South Caucasus gas pipeline Baku-Tbilisi-Erzerum with the same corridor with BTC. Joining of Kazakhstan to the BTC project in Almaty on March 10 also benefited the publicity. The particular protocol was signed in Almaty between Azeri and Kazakh parts about conditions and main principles of inter-governmental agreements and contracts on transporting of oil via route Aktau-Baku and further on via the pipeline Baku-Tbilisi-Ceyhan. Currently, all the necessary work is being done on analysis of possibilities of infrastructure in Kazakhstan and Azerbaijan, all the required indicators of capital expenditures are defined. Also, volumes of construction of new entities for providing transporting the oil, receiving it in Azerbaijan and including this share to the BTC.
During the meeting of BTC's Board of Directors, issues of communication with NGO's were covered. Particularly, the issue of its participation in developing documents on nature preserves and documents on social security were extensively covered. These problems are very much up-to-date, because some of NGO's are still holding campaigns against the BTC pipeline. The main reason for that is in their assuredness in negative impact of the pipeline on the nature. Another reason is that the pipeline violates civil rights of population, quoted by some of NGO's.
During the meeting of BTC Co. shareholders, it was definitely declared that the pipeline project and its realization are being done in accordance with all adopted international standards. As for the issue of acquiring land lots, it was noted that all compensations would be disbursed to tenants and proprietors of these land lots in accordance with acting legislation approved also by governments and financial institutions. Besides, it was decided on the meeting that a specific amount would be disbursed for the social programs in Azerbaijan, Georgia and Turkey. The amount would go for solution of technical and social problems of regions, through which the pipeline will pass. Also some amount would be disbursed to farmers. The amounts would be provided on a tender basis within the framework of programs that will be implemented by NGO's.
A very good start to the construction of Baku-Tbilisi-Ceyhan pipeline has been given in all three countries and it benefits to the level of optimism of BTC Co. shareholders as well as to companies implementing the project.
The material submitted by Mamed Mirzoyev, SOCAR Press Center, Director