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Eurasia: Kazakhstan Squeezes In On BTC Pipeline Project

The Sangachal terminal of the BTC (file photo) (Courtesy Photo) Oil-rich Kazakhstan today officially joined a major pipeline project to transport oil from Central Asia to the Mediterranean. The deal comes as the Baku-Tbilisi-Ceyhan (BTC) pipeline is set to be inaugurated in mid-July. The presidents of Kazakhstan and Azerbaijan sealed today's agreement in the Kazakh commercial capital, Almaty.

PRAGUE, June 16, 2006 -- Addressing reporters after the signing ceremony, Kazakh President Nursultan Nazarbaev said that the agreement marks a milestone in the history of Kazakh-Azerbaijani relations and in the development of the Caspian Sea basin.

“It is a very important agreement, which took us a long time to finalize," Nazarbaev said. "Our specialists have done a good job and made this signature possible. It is difficult to overestimate the importance of this agreement, [because] Kazakhstan and Azerbaijan are considered the two main links in the [chain of] trade that exists between Central Asia and the Caspian region.”

Azerbaijani President Ilham Aliyev said the deal testified to the good relations that exist between the Caspian coast neighbors.

“Today’s intergovernmental agreement between Kazakhstan and Azerbaijan, which provides that Kazakh oil will be shipped through the Baku-Tbilisi-Ceyhan pipeline, is yet another evidence of the high level of relations between our countries," Aliyev said.

Squeezing It Out

Under today’s deal, Kazakh oil should be carried by tankers through the Caspian Sea to the Sangacal oil terminal, near Baku, and then pumped through the BTC to the Turkish Mediterranean port of Ceyhan.

The 1,770-kilometer pipeline has a planned annual capacity of 50 million tons, which would be just enough to carry Azerbaijan’s output meant for Western markets.

But industry officials say technical adjustments will make it possible to upgrade BTC’s capacity by 50 percent to make room to Kazakh oil.

Aliyev suggested today that, if the need arose, it would be possible to even double the pipeline’s capacity.

Azerbaijani State Oil Company President Rovnaq Abdullayev told reporters in Almaty that, initially, 10 million tons of Kazakh oil should be shipped through BTC each year.

Kazakh Momentum

Nazarbaev noted that his country needs as many export outlets as possible, if only because its oil production is expected to continue increasing in the next 10 years.

"One can say that [today’s agreement] is very profitable for us. As I keep saying, Kazakhstan's oil [and] Kazakhstan gas are worthless if they remain underground," Nazarbaev said. "Under market-economy circumstances, it is necessary to find ways to bring [this oil and gas] to world markets. With today’s agreement, we have now the possibility of shipping our oil, first, through Russia, second, through China, [and] third, through the Caucasus region. Huge new [oil] facilities will start operating along the Caspian shore near Baku, Azerbaijan, and along our own Caspian shore."

On June 6, U.S. President George W. Bush sent Aliyev a letter, in which he expressed support to Kazakhstan’s bid to join the project.

The BTC is one of Washington’s long-term geopolitical endeavors in the Caspian region and one of two pet economic projects.

The other one is a projected natural gas pipeline that should eventually link Baku to the eastern Anatolian city of Erzurum, through Tbilisi.

The BTC and Baku-Tbilisi-Erzerum are designed to reduce the dependence of Caspian countries on Russia’s pipeline networks for their exports.

Moscow has long ceased actively opposing those projects. But it keeps saying they will not be profitable.

Meanwhile, preparations continue in Turkey in the run-up to the BTC’s inauguration, which is schedule to take place on July 13.

Western media this week said that Turkish authorities have invited some 50 heads of state or government to attend the ceremony.

Caspian Energy Special

Caspian Energy Special

For a complete archive of RFE/RL's coverage of energy issues in the Caspian Sea region and Russia, click here.

HOW MUCH OIL? The U.S. Energy Information Administration has estimated that the Caspian could hold between 17 billion and 33 billion barrels of proven oil. ("Proven reserves" are defined by energy experts to be 90 percent probable.) Other experts estimate the Caspian could hold "possible reserves" of up to 233 billion barrels of oil. ("Possible reserves" are considered to be 50 percent probable.) By comparison, Saudi Arabia has 261 billion barrels of oil and the United States 23 billion...(more)

See also:

Economic Forecast For 2006 Sees Growth, But Danger In Continued High Oil Prices

How Vast Are The Riches In The Caspian?

Experts Envision A Future Beyond Oil