Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

EBRD Approves $250 Mln Loan To Baku-Ceyhan Oil Pipeline
Dow Jones ^ | 11/11/2003 | N/A

Posted on 11/11/2003 5:46:36 AM PST by a_Turk

LONDON -(Dow Jones)- The European Bank for Reconstruction and Development has approved a total loan of $250 million for a multibillion dollar Caspian oil export pipeline, the bank said in a statement Tuesday.

The EBRD's loan comes in addition to a $250 million financing package from the World Bank (news - web sites)'s International Finance Corp., which was approved Nov. 4.

The $3.6-billion oil pipeline will travel some 1,700 kilometers from giant offshore Caspian oil fields near Baku in Azerbaijan across the Azeri desert, through Georgia and eastern Turkey before it terminates at the Turkish Mediterranean terminal of Ceyhan where a pipeline from Iraq (news - web sites) also ends.

The Caspian is a key source of oil supply growth outside the Middle East. At its peak by the end of the decade, the pipeline will supply international markets with 1 million barrels a day of Azeri crude.

The U.S. administration, which is eager to reduce U.S. dependence on Middle East oil and reliance on Russia for export outlets, has been a staunch supporter of the project, which involves oil majors BP PLC , Statoil ASA (NYSE:STO - News) , Unocal Corp. (NYSE:UCL - News) and ConocoPhillips (NYSE:COP - News) .

The EBRD's board has also approved $60 million in financing for the Azeri, Chirag and Gunesli offshore oil fields in Azerbaijan's sector of the Caspian Sea and which are being developed by a BP-led consortium that will be using the Baku-Ceyhan pipeline for exports.

Once the multilateral lending institutions are on board, export-import banks and other commercial lenders are likely to jump in. Debt will make up 70% of the project's funding with the other 30% coming from the oil companies involved in the Baku-Ceyhan pipeline company.

The companies involved in both the oil-development and export-pipeline projects needed the multilateral lenders' stamp of approval to mitigate some of the enormous political risks faced in what is an extremely unstable region, analysts have said.

Construction of the pipeline began earlier this year thanks to a bridging loan. The pipeline is intended to be ready in 2005 to handle early exports of 400,000 barrels a day from the Azeri, Chirag and Gunesli offshore oil fields being developed by the BP-led Azerbaijan International Operating Company.

Azerbaijan is expected to earn revenues of $31 billion to $42 billion over the life of the pipeline and the development of the ACG fields, depending on the oil price, the EBRD said in the statement.

Georgia is to make some $508 million from transit tariffs over 20 years, or 15% of its annual GDP (news - web sites) when the pipeline is at full capacity, the EBRD estimates.

Turkey is to earn around $1.5 billion from pipeline and terminal operations, transit fees, and upstream investments, the World Bank has said.

Azerbaijan isn't the only country with large oil reserves in the Caspian. Former Soviet Kazakhstan across the sea also has significant hydrocarbon reserves, and both countries are emerging as potential new suppliers in the coming decade.

In its annual World Energy Investment Outlook released last week, the International Energy Agency forecast that output from the Caspian region could reach 4 million barrels a day by 2010 as long as new export outlets are forthcoming.

But further investment in the Caspian region is highly dependent on oil prices thanks to the larger than usual development costs for the technologically tricky offshore oil fields, as well as the uncertain investment climate and legal issues surrounding the still unresolved status of the Caspian.

-By Selina Williams, Dow Jones Newswires; +44 207 842 9262; selina.williamsdowjones.com


TOPICS: Foreign Affairs; Front Page News
KEYWORDS: btc; caspianoil; turkey
First the World Bank, now the EBRD, we're well on our way to seeing this happen.
1 posted on 11/11/2003 5:46:37 AM PST by a_Turk
[ Post Reply | Private Reply | View Replies]

To: Shermy; marron
ping.
2 posted on 11/11/2003 5:46:54 AM PST by a_Turk (Threatened by shadows at night, and exposed in the light....)
[ Post Reply | Private Reply | To 1 | View Replies]

To: a_Turk
Expect to see articles decrying our relations with the evil Azeris.

And expect to see PKK and Chechens and other Al Qaeda wannabes causing trouble along the route.

I wonder if the Georgian coup could lead to trouble for the line?

But its too important to back down regardless of any trouble. I can't wait to see this kick off.
3 posted on 11/11/2003 10:17:49 PM PST by marron
[ Post Reply | Private Reply | To 1 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson