TURKMENISTAN - Trans-Caspian Pipeline

The US government has provided $750,000 towards a study of crude oil and gas pipelines to be built under the Caspian Sea to link Kazakhstan, Turkmenistan and Uzbekistan with Baku. From the Azeri capital, the pipelines would run overland to Turkey. The crude oil pipeline would end at Turkey's east Mediterranean terminal of Ceyhan. The gas pipeline would run overland from Turkey on to the European markets.

Amoco, now a key player in the Caspian region, has funded a crude oil pipeline from western Kazakhstan to west Turkmenistan and then on to Baku through a marine section. From Baku the pipeline would run to Ceyhan. The study has included the option of building an undersea pipeline direct from west Kazakhstan to Baku, excluding Turkmen exports.

Amoco, to be taken over by BP before end-1998 according to a deal signed in August, leads a consortium for oil exploration and development of four offshore blocks in the Kazakh sector of the Caspian Sea. Amoco holds 50% and its partners are LUKoil of Russia (25%) and state-owned KazakhCaspi-Shelf (25%). Amoco is a leading partner in the AIOC consortium producing oil and developing huge offshore fields in Azerbaijan.

(If the BP takeover materialises as planned, the resultant $100 billion entity would be called BP/Amoco and would become the third biggest multinational in the world next to Shell and Exxon).

In June 1998, Amoco Eurasia formed a consortium with a new pipeline JV of Bechtel Enterprises and General Electric Capital, to build a 1,200 km gas pipeline from Turkmenistan to Turkey, with the Caspian marine section from the west Turkmen coast to end at Baku. The pipeline would be extended from Turkey to the European markets at a later phase.

Amoco Eurasia has estimated that the 1,200 km gas pipeline would cost about $2.4 billion. Its construction would take three years, it says. Called TransCaspian Gas Pipeline System, the project would begin from a point near Turkmenbashi and would run under the Caspian waters to a land-ing point near Baku. Work to be contracted would involve engineering, design, procurement and construction. The overland route would continue across Azerbaijan and Georgia to Ersurum in eastern Turkey, where it would link up with Turkey's main network of gas pipelines.

Companies from Turkmenistan, Azerbaijan, Georgia and Turkey, as well as global investors, would be invited to join the TransCaspian consortium. According to an Amoco statement, in the first phase the gas will come from eastern Turkmenistan.

Bateman, a Dutch/South African company controlled by a South African/ Israeli family, is to upgrade the pipeline system from eastern Turkmenistan and will extend it to Turkmenbashi - among projects in which this company is involved in the country (see Downstream Trends).

Ultimately, other gas exporters such as Uzbekistan and Kazakhstan would join in and the pipeline's capacity would rise to 1,225 BCF/year for delivery to markets in Turkey and Europe.

A briefing on this project was done by the consortium members for Turkey's ministry of energy and natural resources. The consortium believes Turkish approval is crucial for this project, with the US pushing behind the scenes.