Pipeline deal signed

October 17, 2000, 14:30 CEST

Eight oil companies, including Statoil, are due to sign a deal today – 17 October – on a new oil pipeline from Azerbaijan to Turkey.

This frame agreement covers a route from the Azerbaijan capital, Baku, through Georgia to Ceyhan on the Mediterranean coast.

Also signed by BP, Unocal, TPAO, Delta Hess, Itochu, Ramco and Azerbaijan state oil company Socar, it covers financing and preliminary design.

The 42-inch line will be roughly 1,800 kilometres long and able to carry about one million barrels per day – making it the most important oil export route from the Caspian country.

With the cost put at some NOK 25 billion, a final decision to build this system will not be taken until 18 months from now.

The signatory companies become parties to earlier-ratified agreements covering transit across Azerbaijan as well as treaties regulating the line's route through Georgia and Turkey.

Similar deals are due to be signed by the eight partners with these last two countries within the next few days.

The agreement is described by Rolf Magne Larsen, Statoil's regional vice president for the Caspian, as a very important milestone for the group and for Azerbaijan's economic development.

"Its most important aspect is that it allows planning for the first development phase on Azeri-Chirag to continue at full tempo."

He adds that this Caspian oil field will have an initial daily production capacity of up to 400,000 barrels, corresponding to peak output from Norway's Statfjord A platform.

Azeri-Chirag is scheduled to come on stream in late 2004 or early 2005, Mr Larsen adds. "Without the assurance of a transport solution, these plans could not have been sustained."

Statoil has 6.37 per cent in the pipeline project, while operator BP has 25.41 per cent, Socar 50 per cent, Unocal 7.48 per cent, TPAO 5.02 per cent, Itochu 2.92 per cent, Ramco 1.55 per cent and Delta Hess 1.25 per cent.