Oil and Gas Pipeline Watch

Caucasus conflict thwarts regional energy plans

Disruptions to the Baku-Tbilisi-Ceyhan oil pipeline due to dual regional conflicts are thwarting U.S. ambitions to ease dependency on Russian and Middle Eastern energy.

Last week the separatist Kurdistan Workers' Party claimed responsibility for an explosion on a portion of the BTC oil pipeline in eastern Turkey, halting the flow of about 1 percent of the world's oil.

Turkish officials countered the PKK claims, saying a faulty pump station was to blame for the fire that consumed 10,000 barrels of crude.

Meanwhile, Russian fighter planes came within miles of the Georgian portion of the pipeline during the ongoing conflict with the separatist South Ossetia region. Fighters in the breakaway republic threatened to bomb the pipeline should a military conflict ensue.

The 1,099-mile pipeline carries oil from the Azeri-Chirag-Guneshli field in the Caspian Sea through Azeri ports on the Caspian to Turkish ports in the Mediterranean Sea and onto European markets. The pipeline was shut down last week because of the PKK attack, and officials expect the route to remain closed for at least two more weeks.

Western officials see the pipeline as a means to diversify the regional energy market.

Though BP officials said they were forced to cut oil production from Azerbaijan by as much as 400,000 barrels per day, the Turkish and Georgian events should not threaten the BTC pipeline.

A spokesman for BP, the majority shareholder in the BTC consortium, said the conflict in South Ossetia should not have a major impact on supplies as alternate routes from Turkey have been explored, The Times of London said.

Russia may boost Azeri oil flow

Russian oil pipeline firm Transneft said it would move to increase the flow of Azeri oil through a Baku-Novorossiisk pipeline by 640,000 barrels per month.

Transneft Vice President Mikhail Barkov told the Interfax news agency the State Oil Co. of Azerbaijan Republic requested the move.

Transneft officials cautioned maintenance work on the Black Sea Baku-Novorossiisk pipeline scheduled for August would delay the increase, saying the capacity boost would proceed following necessary repairs.

SOCAR in 2007 moved away from the Black Sea route once the Baku-Tbilisi-Ceyhan pipeline came online in April 2007, but conflict in the breakaway Georgian republic of South Ossetia and threats from the separatist Kurdistan Workers' Party prompted energy officials to look to alternate routes.

Azerbaijan said it would look at a Baku-Supsa pipeline and rail transport routes as well.

Nuclear deal delays IPI

New Delhi is holding back on any deal regarding the Iran-Pakistan-India gas pipeline until the U.S. Congress approves a civilian nuclear deal for India.

Congress meets in September to consider a civilian nuclear energy program for India following approval from the 45-member Nuclear Suppliers Group. India plans to boost its nuclear energy production from 30,000 MW to 60,000 MW over the next two decades, using at least $100 billion in foreign investments.

Iran invited top energy ministers from India and Pakistan to Tehran in August to move on the delayed 1,724-mile natural gas pipeline, but New Delhi said it would wait for the U.S. Congress, the Press Trust of India said.

New Delhi is apprehensive to sign onto a business deal with Tehran while the nuclear matter is under congressional review. Washington seeks to limit any economic incentives for the Islamic Republic while it pursues its own nuclear program.

Washington wants to stall the IPI pipeline because of the dispute with Tehran, but Iran accuses the United States of duplicity for dealing with a nuclear India.

Iran issued requests to India and Pakistan to convene in August over the proposed $7.4 billion project to deliver gas from the Iranian South Pars field, but it is unlikely any action will proceed before Congress returns from summer recess, officials said.

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(e-mail: energy@upi.com)