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Azerbaijan/Georgia: Oil To Flow Through Baku; Tblisi At The Heart Of Silk Road

Prague, 29 June 1998 (RFE/RL) -- It is no accident that Georgian President Eduard Shevardnadze has taken a leading role among the heads of former Soviet republics on the transport corridor. Georgia sits at the heart of the Silk Road. Major road, railway and pipeline routes all cross its borders, making Georgia one of the most important transit countries in the world. The transport corridor also would bring a considerable amount of foreign currency into Georgia. But the EBRD says modernization is needed before Georgia can become a conduit of trade.

Georgia's two main Black Sea ports, Poti and Batumi, must be upgraded to handle the expected increase in cargo ships that would carry freight to international markets. One major Traceca project is the construction of a container terminal at Poti. Another calls for new ferry terminals and general cargo facilities at both Poti and Batumi. The EU has offered more than one million dollars in technical assistance.

The World Bank is loaning $13 million for highway improvements within Georgia. The EU also is offering about $400,000 in aid for road projects.

A five million dollar railway project would improve tracks within Georgia, as well as cross-border links with Armenia and Azerbaijan. New railroad tracks also must be laid to connect the Georgian network with northern Turkey.

Tbilisi also hopes that the Azerbaijan International Operating Consortium (AIOC) will route its main export pipeline for Caspian oil through Georgia. A decision is expected from the consortium later this year.

Azerbaijan: Cross-roads Affords Convenient Distribution Point

Azerbaijan's position as a cross-roads for the Caucasus and Caspian Sea region also could allow it to become an international distribution point.

From its Caspian Sea terminals, Azerbaijan conducts passenger and cargo transportation with Russia, Iran, Turkmenistan and Kazakhstan. But Baku, the major port on the Caspian Sea, requires better cargo-handling facilities and improvements at its ferry terminal to meet future traffic demands.

More than 1.2 million tons of Kazakh oil is expected to be sent per year through Baku by tanker from the Tenghiz oil fields until Kazakhstan resolves its own pipeline problems. Some Kazakh oil already has been sent through Baku and on to Georgia's Black Sea ports by railroad. Construction of the main Caspian export pipeline is expected to start after the Azerbaijan International Operating Consortium (AIOC) announces its decision on a route later this year.

The presidents of Georgia, Azerbaijan and Turkey already have endorsed a route that passes from Baku through eastern Georgia before turning south to Turkey's Mediterranean port of Ceyhan. The Economist Intelligence Unit predicts that this route will be chosen over a less expensive route to Russia's terminal at Novorossisk. Azerbaijan's highway system includes three routes linking Baku with Russia, Iran and Georgia. Although these roads were built to good standards, they are aging and suffer from a lack of maintenance. Finances are being gathered for improvements through a road tax.

Azerbiajan's government is seeking investments to modernize its ship-repair plant KaspSudRemond. It also needs funds to complete an underground metro system in Baku and to reconstruct bridges and sections of highways that cross into Iran and on to Turkey.

The railroad network in Azerbaijan consists of four main routes radiating from Baku. One goes north to Russia through Dagestan. Others go south to Iran, northwest to Georgia and south-west across Armenia to Azerbaijan's exclave of Nakhcivan.