AZERBAIJAN - The BTC Pipeline.

A 1,760-km, $2.95 bn pipeline to carry the bulk of AIOC's plateau production to the Turkish Mediterranean terminal of Ceyhan, to pass across Georgia's capital Tbilisi, is to be on stream in April 2005 with a capacity of 1m b/d. The 442-km Azeri section involves a 42-inch pipe. The 248-km Georgian section has a 46-inch pipe and the 1,060-km Turkish section has a 42-inch pipe. The Baku-Tbilisi-Ceyhan (BTC) system is being financed mainly through a $2.6 bn set of loans signed on Feb. 3, 2004, in Baku by the governments of Azerbaijan, Georgia and Turkey, the BP-led BTC consortium which will own and run the pipeline, and the creditor banks. The signatories agreed to name the pipeline after the late Azeri President Heidar Aliyev.

Azerbaijan, Georgia and Turkey signed four agreements with the oil firms involved as BTC shareholders, government agencies and an international banking syndicate to finance the $2.95 bn project. Ilham Aliyev, who succeeded his father Heidar as Azeri president in October 2003, said at the Feb. 3 signing ceremony: "Today we have laid the financing basis for this project. International financial institutions have supported it, which was in effect the final step to realising this project".

The BTC project has been seen as a way for the US to weaken Iranian and Russian influence in the Caspian region. Azeri and Turkish officials said the governments had decided to name the pipeline in honour of Azerbaijan's late President Heidar Aliyev, who died late in 2003 after dominating Azeri politics for three decades. In a Turkish initiative, the terminal at the Ceyhan end will also be named after Heidar Aliyev - the senior Soviet bureaucrat who became the architect of independent Azerbaijan.

The Feb. 3 ceremony formally completed pre-arranged financing agreements under which 30% of construction costs are covered by operating company BTC's shareholders, which under BP's leadership include Agip, Itochu, Unocal, Statoil, ConocoPhillips and Total (see background in Vol. 59, No. 6).

Remaining funds for the pipeline, which is already 70% built, have been provided by creditors including the European Bank for Reconstruction and Development (EBRD) and other banks.