Russian blast blocks oil line

June 23, 1999, 10:00 CEST

The northern pipeline route for oil from the Azeri-Chirag field in the Caspian has been blocked by an explosion in Russia last week.

As a result, crude transport from the field off Azerbaijan is confined to the western route running from the Sangachal terminal near Baku to the Black Sea port of Supsa in Georgia.

The blast occurred in the Novo-Lak province on the border between the Russian republic of Dagestan and politically unstable Chechenia.

No cause has been established, although the Russian authorities claim that a bomb was responsible and that the oil caught fire.

An alternative theory is that an attempt to tap the line illegally - not uncommon in the region - resulted in the explosion.

The pipeline is operated by Russia's Transneft, and the Azerbaijan International Operating Company (AIOC) - owned 8.56 per cent by Statoil - has the right to transport 100,000 barrels per day through it.

How long the line will remain blocked is unclear. The shutdown is unlikely to disrupt production from Azeri-Chirag, which currently produces about 110,000 barrels per day.

All crude from the Chirag platform is now being routed via the western pipeline, reports Harald Finnvik, Statoil's manager for government relations in Azerbaijan.

"The current conditions make us more vulnerable than before because we now depend on the western route working flat out with no disruptions."

So far this year, the northern pipeline has been out of operation for roughly 70 days. These breakdowns have not caused major operational problems on Azeri-Chirag, Mr Finnvik says.

Opened in October 1997, the northern route runs from Sangachal to the Black Sea port of Novorossiysk. This line is also used to transport Azeri crude belonging to the Socar state oil company, and the shutdown has accordingly cut overall Azeri oil exports.