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BP says Baku-Ceyhan pipe will be open to Kazakh oil

A partner in the consortium developing a U.S.-backed trans-Caspian pipeline...

A partner in the consortium developing a U.S.-backed trans-Caspian pipeline, on Wednesday denied reports that the route would exclude Kazakh oil and said the link would be open to all regional energy producers.
BP's (quote from Yahoo! UK & Ireland: BP.L) Vice-President of Export Development Wref Digings told an oil conference the Baku-Ceyhan project, once seen as economically unviable, was moving steadily towards reality and was already 14 days into its second phase.

Digings denied recent media reports that have quoted BP executives as saying there would be no room in the pipeline for oil from Kazakhstan.

``There will be space available in the Baku-Tbilisi-Ceyhan pipeline for Kazakh volumes,'' Digings said. ``While oil from the Azeri-Chirag-Guneshli fields will be suffficient to make the line work, it is not true that this is the only oil we want.''

``It will be attractive for us to get (oil) from Kazakhstan or elsewhere,'' he added.

Digings said total project costs would ultimately hit $3.3 billion, a third of which will come from equity holders and the rest from export credit agencies and institutional lenders.

Baku-Ceyhan gained a boost when Eni , the operator of the Kashagan project off the Kazakh Caspian shore, decided to join the $150 million engineering study, though TotalFinaElf , another Kashagan partner, favours a route through Iran.

Kashagan, possibly one of the largest oil discoveries in the past three decades, has sparked a three-way race between the United States, Iran and Russia to control export routes from the crude and boost influence over the energy-rich Caspian.

While the one million barrel-per-day Baku-Tbilisi-Ceyhan, costlier than the other two options, was earlier believed unfeasible without Kazakh crude, Digings said it would derive its main feedstock from four billion barrels in Azeri reserves.

BP recently bailed out of Kashagan, preferring to concentrate on Azerbaijan where it has larger stakes. BTC also includes Unocal Itochu and Statoil [STAT.UL].

Russia says it natural route for Kazakh crude

But the first pipeline to come on line will be the Caspian Pipeline Consortium's 1,500-km (930-mile) link which will take Tengiz crude to the Russian Black Sea port of Novorossiisk. Russia is the largest shareholder in the CPC with 24 percent.

Semyon Vainshtok, head of Russia's pipeline monopoly Transneft told the same conference that Russia provided the natural and most economical outlet for Kazakh crude.

``When I am asked about Baku-Ceyhan, I say: 'Go ahead, spend $3 billion and build it, then let oil men choose,''' he said, adding no other route could compete with Transneft's pipeline tariff of 30 cents per 100 tonnes of crude per 100 kilometres.

``But exporting through Russian ports Novorossiisk and Primorsk will be the best option for Caspian crude as it stems not from political but economic considerations.''

``Transneft and CPC can co-exist. Meanwhile we are discussing alternatives...For instance when our Baltic Pipeline System is commissioned at year-end, Kazakhstan will be able to export five million tonnes a year through Primorsk port to northern Europe.''

Vainshtok also said Transneft and Kazakh pipeline monopoly KazTransOil had started a feasibility study to develop an existing pipeline route to Iran. The study is seperate from the one being commissioned by TotalFinaElf, he said.

The pipeline, passing through Kazakhstan and Turkmenistan, would link Omsk in Siberia with Iranian port Neka and will allow Russian, Kazakh and Turkmen crude to be swapped for Iranian crude in the Persian Gulf, he said, but gave no other details.

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