Baku News

11 March 2008 - Upstream OnLine - Azerbaijan is reluctant to start discussing expansion of the BP-led Baku-Tbilisi-Ceyhan (BTC) pipeline until the UK supermajor proves the development is profitable for the country, a Socar official said today. Azeri state-run producer Socar said expansion of the BTC link could lead to changing owners' shares in the project after the investment for its building is compensated. "Azerbaijan has offered to expand the pipeline's capacity beyond 1 million barrels per day ... We should calculate if it is profitable for us," the official told Reuters. BP, which is using the pipeline to pump oil from the Azeri-Chirag-Guneshli (ACG) development in the Caspian Sea to the Turkish Mediterranean port via Georgia, has said it hopes to expand the pipeline's capacity to 1.2 million bpd this year to accommodate raising output. It has said the pipeline, which opened in June 2006, could start pumping 1.6 million bpd within a few years. Under the agreement with BTC partners, Azerbaijan will become the pipeline's owner in 20 years, after the more than $4 billion investment into its building is repaid. BP holds 30.1% of BTC, while Socar holds 25%. Other stakeholder include US supermajors Chevron and ConocoPhillips, Norway's StatoilHydro, Italy's Eni and French giant Total. The BP-led ACG development is currently producing 770,000 bpd, with output is expected to hit its peak of 1 million bpd next year. The BTC is seen by BP as an alternative to the Baku-Novorossiisk pipeline that takes Azeri oil to Russia, from where it is sold on to Europe.