An aerial photo shows the jetty at the Ceyhan crude oil terminal near Turkey's southern coastal city of Adana, July 5.
CEYHAN, Turkey (AP):
THE PRESIDENTS of Turkey, Azerbaijan and Georgia formally opened a pipeline Thursday designed to bypass Russia and bring Caspian oil to Europe, a route that United States president George Bush said would bolster global energy security.
The U.S. staunchly supported the 1,100-mile, US$3.9 billion pipeline as part of a strategy to tap sources of crude outside of the Middle East and draw the Caspian states away from Russia and closer to the West.
"No one would have thought that when oil reached Ceyhan it would be US$75 a barrel," said Suat Kiniklioglu, director of the German Marshall Fund of the United States' Ankara office. "It's a huge success."
In Brussels, EU spokesman Ferran Tarradellas Espuny said the pipeline "will improve our security of supply and our diversification goals .... Diversification of origin and routes has been identified as a priority in the European energy policy."
Oil began flowing from the Turkish port of Ceyhan last month and some 430,000 barrels of oil are flowing each day, said Norman Rodda, construction manager for the Turkish section of the pipeline.
That might only be a tiny fraction of the 85 million barrels per day that the world consumes, but with global production stretched and prices skyrocketing, "all supplies matter," said David Knapp, senior editor for global oil market analysis at Energy Intelligence group in New York.
"Additional oil coming into the Mediterranean market helps soften the increase in prices." he said. "It hasn't had a major impact yet, but it is possible that prices would have been higher if that oil was not on the market."
Officials at BP, the pipeline consortium's main participant and the largest foreign investor in Azerbaijan's oil sector, said they expected pumping to increase to one million barrels per day by 2008. Kazakhstan recently said it would begin pumping some oil through the pipeline, and Azerbaijani production is expected to be boosted to reach that goal.
NEW PIPELINES
There is also now talk of building new pipelines across Turkey that would bring Russian oil and natural gas to European markets, and of another pipeline across Bulgaria and Greece that would allow Russian oil exports to bypass the crowded Bosporus, the strait that cuts across Istanbul.
With most of the oil destined for European markets, Turks are hopeful that the pipeline will expand their influence in Europe as they press for European Union membership. Oil from Iraq is exported from the same port, but that flow has repeatedly been disrupted by insurgent attacks.
"Turkey is increasingly going to become a more important energy corridor," Kiniklioglu said.
"Together those lines are helping to create a new trade route, which is helping to meet the world's growing need for energy and reduce the growing sense of insecurity which is distorting the world's energy scene," said Lord Browne, the chief executive of BP PLC.
Yesterday, Turkish President Ahmet Necdet Sezer, Georgian President Mikhail Saakashvili and Azerbaijani President Ilham Aliev joined pieces of pipe on a commemorative model of the pipeline to formally open the route.
"There were some destructive forces that opposed the pipeline," Aliev said. "We want this oil to bring peace, development and prosperity."
But building the pipeline was a struggle.
Russia strongly opposed the pipeline and instead pressed for Caspian oil to continue going through its territory. Many oil officials were against building an expensive pipeline that would need to snake through Azerbaijan, the mountains of Georgia and northern Turkey, and favored the cheaper Russian option.
Iran also offered to let the oil pass through its territory - by far the cheapest option, but one that Washington vehemently opposed.
The United States, backed by Turkey and Azeri leaders who wanted to see their country more independent of Russia and more closely tied to the West, strongly pressed for the pipeline. That was despite opposition from oil companies who supported cheaper options.
Turkey was also insistent that the oil not flow through Russia, an option that would mean it would be exported on ships through the already-clogged Bosporus.
"We all felt that independent access to international markets was essential to the future health and security and stability of the newly independent states," U.S. Ambassador Ross Wilson said in Istanbul on Wednesday. He called the pipeline "an economic lifeline to the world that is independent of any of the other players that may want to monopolise ... or cut it off."
