18-10-05 A BP-led pipeline being built from Azerbaijan to the Mediterranean Sea is competing with a Chevron-run link between Kazakhstan and the Black Sea to transport crude from the Caspian Sea to European markets.
BP and ten other oil companies are building a $ 3.6 bn pipeline that's scheduled to have its first oil ready for loading at a Turkish port in December.

Chevron is leading nine producers in seeking approval to double capacity on their link as Kazakhstan prepares to triple its output in 2015.
“We are trying to create an attractive climate for producers from Kazakhstan, attractive terms and conditions,'' said Valekh Aleskerov, a foreign investment manager at State Oil Co. of Azerbaijan. “We will try to be competitive'' with Chevron's Caspian Pipeline Consortium and with companies shipping oil by rail.

State Oil Co. of Azerbaijan, or SOCAR, holds 25 % of BP's Baku-Tbilisi-Ceyhan pipeline, known as BTC, and is proposing to expand capacity on the link to be ready for increased output in the Caspian region. The pipeline will account for a quarter of the world's oil-demand growth next year, according to BP's estimates.
The BTC pipeline is designed to pump as much as 1 mm barrels of oil a day. Azerbaijan International Operating Co., also led by London-based BP, Europe's biggest oil company, plans to use most of the capacity in the link as early as 2008 as the company raises production at its Azeri-Chirac-Guneshli fields in the Caspian Sea.

Upside potential
The BTC “upside potential'' is about 2 mm bpd after a possible upgrade, Peter Keith, a business development manager at BTC Pipeline Co., said Oct. 12 in London. The doubling of capacity may require an investment of about $ 1.6 bn, according to his presentation to an oil conference participants.
“We would wait to make large financial commitments until we have volumes to back up'' the expansion, Keith said. “We will continue to do the preliminary engineering, design and feasibility work prior to'' any expansion project. “We will need additional capacity sometime between 2011 and 2013,'' Aleskerov said.

The BP group needs to attract oil supplies to the pipeline between 2006 and 2008 to secure higher revenue from transport services, Keith said.
“I'm in discussions with numerous companies about bringing third-party oil into the BTC in 2006,'' Keith said. “I would be surprised if we didn't capture Kazakh crude.''

Kashagan plans
Some supplies to the BTC may come from an Led-led venture that is investing at least $ 29 bn at Kazakhstan's Kashagan field, the world's second-largest after Saudi Arabia's Ghawar. ConocoPhillips, ENI, Total and Inpex own 49.8 % of the Kashagan venture, which is due to start production in 2008. They also hold 15 % of the Baku-Tbilisi-Ceyhan pipeline.
“Kashagan oil producers will need the BTC in 2008,'' Aleskerov said. “To be able to ship oil from Kashagan to the BTC, they will need at least two years for financing, construction and commissioning. This means that all companies and governments will finish all negotiations in the next three to six months.''

The Chevron project, called the Caspian Pipeline Consortium or CPC, is vying for the same Kashagan oil. In addition, TengizChevrOil, the largest oil exporter from Kazakhstan and a company run by Chevron, plans to hire 50 % more workers to expand operations.
CPC will in November present shareholders with a plan to double its capacity to 1.35 mm bpd by the end of 2008, Igor Kozin, general manager for CPC's expansion projects, said on Oct. 12 in London. That will let the CPC start the $ 1.8 bn expansion works next year and bring the pipeline to full capacity in 2009 rather than in 2012 as originally planned.

CPC shareholders, including Chevron, ExxonMobil, BP, Royal Dutch Shell, ENI and BG Group have already invested $ 2.7 bn in the pipeline, which will ship 640,000 bpd of crude this year.
“We are complying with the schedule,'' Kozin said earlier. “So far, there are no delays.''