Russia not concerned about Baku-Ceyhan pipeline project

Sep 19, 2002 02:00 AM

A senior Russian official said that the Kremlin is not concerned about the Baku-Ceyhan pipeline project, which will bypass Russia in carrying Caspian Sea crude to Western markets -- primarily because there is no guarantee that the project will ever be completed. "It is a long way between the project launching ceremony and completion," Deputy Prime Minister Viktor Khristenko said.
US Energy Secretary Spencer Abraham joined the presidents of Azerbaijan, Georgia and Turkey in launching the construction of the Baku-Ceyhan oil pipeline, which will carry crude from Azerbaijan's Sangachal terminal, 40 km (25 miles) south of the capital Baku, via Georgia to Turkey's Mediterranean port of Ceyhan.

Construction of the $ 3 mm pipeline is to be completed by early 2004. The first oil is expected to flow through it a year later. The United States has hailed the pipeline as a significant development in efforts to find a secure energy source outside the sway of the Middle East.
But Russia, which has pushed for pipelines that flow through its territory, has been critical of the project, and Russian companies refused to participate. Some Western oil companies also have their doubts, saying the proposed route is an expensive alternative to shorter routes through Russia or Iran. "In the end, the choice will be made by economic parameters," Khristenko was quoted as saying. Meanwhile, the Russian government refused to make any new commitments to OPEC to cap its oil exports in line with the cartel.

OPEC, meeting in Osaka, Japan, agreed to stick with their official supply ceiling of 21.7 mm bpd, rejecting calls from the West to put more oil on the market. Russia's Deputy Energy Minister Alexander Voronin said that any future cooperation on oil exports with the cartel would depend on whether it was good for the Russian oil sector, whose output rose over 8 % in the first eight months of 2002.
Russia, which is not a member of OPEC, will coordinate its future decisions on export volumes "with current conditions and growth trends in the global and Russian economies, taking into account our obligations toward consumers in Europe and the investment requirements of the Russian oil sector," Voronin said.
He added that the targeted price for Urals crude is $ 20 to 25 a barrel, which "practically overlaps with the price corridor desired by OPEC." OPEC's targeted price band for its crude is $ 22 to 28 per barrel.

Russia is the world's second-largest oil producer, and its aggressive, young oil companies have been eager to expand their market share and challenge the Persian Gulf.

Source: The Russia Journal Daily
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