BAKU - The Baku-Tbilisi-Ceyhan (BTC) pipeline launched here Wednesday is a four-billion-dollar US-backed oil transport route stretching 1,770 kilometers (1,094 miles) from the Caspian Sea to the Mediterranean Sea, tackling an altitude of 2,800 meters (8,400 feet) at its highest point.
Built with financial support from the United States, the pipeline was initiated in 1994 under the late Azeri president, Heydar Aliyev, as part of Azerbaijan's so-called "deal of the century" -- a massive oil contract signed in the early 1990s to develop Caspian Sea oil.
Azerbaijan was Russia's main source of fuel during the World War II years, but the massive 1994 contract opened the country's considerable oil reserves to the outside world with 33 foreign oil companies operating here today.
British energy giant BP holds a leading 30 percent stake in the consortium running the pipeline. Other consortium members include Azerbaijan's state oil company SOCAR, Amerada Hess, ConocoPhillips, Eni, Inpex, Itochu, Statoil, Total, TPAO and Unocal.
Some argue the project has more geopolitical significance than economic importance. The pipeline gives Caspian oil producers independent export routes sidelining traditional paths through Russia without increasing world oil supplies substantially.
The project was 70 percent financed by US and Japanese government banks, the World Bank and the European Bank for Reconstruction and Development, while 30 percent of the funds came from the consortium members themselves.
The pipeline is to ship one million barrels of Caspian oil daily, roughly one percent of global oil production, once it is fully up and running by the end of the year.
Annual delivery will equal one million barrels per day, or 50 million tonnes of oil, compared with daily global consumption which is expected to hit an average 84 million barrels per day this year.
The oil will travel at two meters per second thanks to eight pumping stations along the route of the pipeline, whose capacities could be expanded with additional investment.
Avoiding a shorter path through Armenia, which is in a state of war with Azerbaijan and under economic blockade from Turkey, the pipeline lies across 445 kilometers of Azerbaijan, 245 kilometers of Georgia and 1,070 kilometers of Turkey.
The pipeline's path straddles three unstable separatist regions in Azerbaijan and Georgia making security, which is handled by each participating country with assistance from the United States, a top priority.
There is a proposal to extend the pipeline to Kazakhstan's Caspian port of Aktau, a plan Kazakhstan's President Nursultan Nazarbayev appeared to endorse on Tuesday
The "South Caucasus Project," a gas pipeline traveling parallel to the BTC, is currently under construction and is expected to be opened in 2006. It diverges to the Turkish city of Erzerum where it will join the existing European gas network.
BP estimates the BTC will bring Azerbaijan 100 billion dollars of oil revenues over the next 30 years, on the basis of an average oil price of 30 dollars per barrel.
05/25/2005 08:22 GMT