On July 13, regional leaders gathered in the southern Turkish port city of Ceyhan to celebrate the official opening of the Baku-Tbilisi-Ceyhan (BTC) pipeline. Presidents Ilham Aliyev of Azerbaijan, Mikhail Saakashvili of Georgia and Ahmet Necdet Sezer of Turkey were all in attendance, in addition to a host of ministers and deputy ministers from around the world.
The $3.9bn, 1768-km pipeline, which runs from the Azeri capital of Baku through the Georgian capital of Tbilisi before terminating at the Turkish port of Ceyhan, will carry oil from the Caspian Sea region - estimated to hold the world's third-largest reserves - to Western markets, by-passing Russia and helping to reduce dependency on Middle Eastern suppliers.
The BTC pipeline has the capacity to transport as much as 50m tonnes of crude oil per year, or roughly 1m barrels per day (bpd), although it is not likely to reach that level for some time. Last month, Kazakhstan threw its hat into the ring and joined the consortium, pledging an initial 7.5m tonnes annually, with plans to eventually raise that to some 20m tonnes.
The BTC pipeline was built by an international consortium headed by UK giant BP, which holds a 30.1% stake in the project, followed by Azerbaijan state oil firm Socar (25%), US firm Unocal (8.9%), Norway's Statoil (8.7%), Turkey's TPAO (6.53%,) Italy's ENI (5.0%), France's Total (5.0%), Japan's Itochu (3.4%) and Inpex (2.5%), and US companies ConocoPhillips (2.5%) and Amerada Hess (2.36%).
The BTC project has been in the works for some time now - a framework agreement was first reached back in March 1993, and construction on the project began in September 2002. The project was seen as a way by which the West could cement its burgeoning influence in the Caspian region following the collapse of the Soviet Union.
Though the project was initially derided by critics as impractical, difficult to build and costly, with oil prices now reaching record levels and concern mounting over existing suppliers, the BTC is becoming attractive. Despite the doubts, the West threw its weight behind the project early on due to its strategic significance - the BTC will help to curb Russia's monopoly on oil exports from the Caspian and bypass Iran, a rising power in the region increasingly at odds with Europe and the US. In fact, US involvement in the consortium was contingent on the exclusion of Iran, whose participation would otherwise have made the pipeline both shorter and more profitable.
European countries have become increasingly uneasy with their dependency on Russian hydrocarbons, particularly in light of the country's heated battle with Ukraine over gas prices in January 2006, which resulted in gas cuts. Kremlin efforts to remake Russia as an energy superpower, harnessing the country's vast oil and gas reserves to further foreign policy aims, have unsettled many European leaders, as has the country's steady slide towards autocracy under President Vladimir Putin. At present, western Europe relies on Russia for around one-quarter of its gas supplies.
Commenting on the opening of the BTC, Georgian Ambassador to Turkey Grigol Mgaloblishvili alluded to the project's political effects. "The BTC is an extremely important project, not just for Georgia and the participating countries, but for the whole of Europe," he said. "This project marks the beginning of a new era in the region that precludes the possibility of anyone monopolising transit routes for Caspian energy resources."
In addition to a steady supply of Azeri oil, the BTC will also help reduce the flow of oil tankers through the clogged arteries of the Bosphorus. Shipping oil directly to Ceyhan, on Turkey's southern Mediterranean coast, eliminates the need for tankers to pass from the Black Sea through to the Aegean by way of the Bosphorus, saving time and money. At present, some 2m bpd pass through the Bosphorus, the world's fourth-busiest waterway, on a daily basis, with industry estimates suggesting this could rise to 3m bpd by 2010 or 2015. The waterway is already clogged with traffic - during peak periods, waiting times can stretch to three weeks, with tankers idling at a cost of up to $30,000 a day.
The Bosphorus, which is only 700 metres across at its narrowest point, presents a unique challenge - nowhere else on earth does such a large volume of ship traffic pass directly through the middle of a city. Istanbul, with an estimated 12m-14m inhabitants, is a teeming megalopolis, whose shores are lined with beautiful Ottoman yalis (waterside villas), posh restaurants and clubs, apartments, and countless historical buildings.
With such heavy tanker traffic passing through the Bosphorus every year, the risk of accidents is on the rise. Most recently, in February 2006, a kerosene tanker nearly collided with Dolmabahce Palace, the final residence of both the last of the Ottoman sultans and Mustafa Kemal Ataturk, founder of the Turkish Republic. Previous serious tanker accidents in 1979 and 1994 claimed 41 and 28 lives, respectively.
As Mithat Rende, a senior Turkish diplomat who specialises in energy issues, noted, "Ten thousand tankers pass annually through the straits, with a potential threat for the environment and residents. The BTC means that this threat has diminished."
As for Ceyhan, the Turkish government has big plans. It aims to transform the port city into a regional "energy bridge", serving as a centre for the transport, consolidation and trade of energy resources along both north-south and east-west axes. Turkey has operated the Kirkuk-Yumurtalik oil pipeline, with the capacity to handle 1.42m bpd of Iraqi oil, for some 28 years now. Several other pipelines are in the works. The Baku-Tbilisi-Erzurum natural gas pipeline is currently close to completion, and should be operational by the end of 2006, with an annual capacity of 7.4bn cu metres. The Bursa-Komotini pipeline, with the capacity to carry 500m cu metres of natural gas, should also be operational in 2006 and will link Turkey to the Greek gas grid and, perhaps later, on to Italy as well.
While it is unclear if Turkey will be able to successfully use its geo-strategic position to establish itself as a regional "energy bridge", the opening of the BTC at least represents a strong move in that direction.
