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  • Engineering wonder takes oil the long way round

    Engineering wonder takes oil the long way round
    by Oliver Poole in Ceyhan

    The Daily Telegraph (LONDON)
    July 14, 2006 Friday

    AT 1,100 miles long, crossing mountain ranges and 1,500 waterways,
    the Baku-Ceyhan pipeline has been hailed as the first engineering
    wonder of the 21st century.

    A decade after it was conceived it finally opened yesterday at the
    eastern Turkish port of Ceyhan.

    An epic feat of construction that cost pounds 2.4 billion and employed
    up to 22,000 workers at a time, the pipeline will ensure that the
    precious reserves of the Caspian Basin - believed to be the largest
    remaining oil deposit outside the Middle East - can now be pumped to
    the edge of the Mediterranean and shipped on for the European market.

    Starting in Baku, the capital of Azerbaijan, the pipeline passes
    through Tbilisi in Georgia before reaching Ceyhan, where it is
    expected that a million barrels of crude oil will arrive each day
    when the pipeline is working at full capacity.

    Although it was two years behind schedule and pounds 600 million over
    budget, the pipeline was hailed at an opening ceremony in Ceyhan
    yesterday, where the presidents of the three countries were joined
    by the head of BP, which leads the consortium that built and runs
    the pipeline.

    As the heads of state and hundreds of dignitaries watched, oil was
    pumped into a tanker, the British Hawthorn, to be taken to Genoa in
    Italy. Lord Browne, the chief executive of BP, described it as an
    "historic achievement".

    It is certainly an impressive engineering feat. Some 150,000 pipes
    were used and all were buried to avoid sabotage or theft. Each barrel
    of oil takes about a year to make the journey from Azerbaijan to the
    terminal in Turkey.

    Its scale has more to do with geopolitical reasons than commercial
    ones. A simpler route would have taken the oil from Baku through
    Russia to the Baltic Sea or via Iran to the Persian Gulf. Neither
    was acceptable to the United States, which insisted that "strategic
    importance" had to be a priority.

    Therefore the route west was chosen through "friendly" countries. It
    first heads north-west as Azerbaijan is officially at war with its
    western neighbour Armenia over a disputed border. Then it wiggles west
    to avoid Georgian separatist movements, before taking a large detour
    around Turkey's troubled Kurdish regions in its eastern provinces
    before finally going south.

    The project was so politically charged that it has been alleged that
    US backing for Georgian democrats in the country's Rose Revolution
    was due to the previous regime's sudden cooling in its enthusiasm
    for the project.

    There was also little diplomatic support for pro-democracy activists
    when Azerbaijan's government remained in power last year after disputed
    election results.

    Russia was reportedly so angry at being snubbed that in 2003 it was
    accused by Georgia of training ecological saboteurs to damage the
    pipeline. It is also attempting to expand its existing pipeline from
    the Caspian.

    Michael Townshend, the executive in charge of the BP project, said
    yesterday that the result had been worth the effort as its completion
    would help ensure the West's "energy security".

    "The project will export around one per cent of world oil production
    so in that respect it is fairly small," he said. "But where it becomes
    important is that it is a new source of energy from a non-Opec source
    and that means diversification.

    "And that one per cent is 25 per cent of the expected increase in
    the demand for oil over the next four years."

    A gas pipeline following an almost identical route is scheduled
    to be completed by the end of this year. That will make it harder
    for Russia to use its gas reserves for political leverage with its
    neighbours and Europe as it did last year when it temporarily shut
    off supplies to Ukraine over a pricing dispute.
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