BP Starts BTC Assessment After Pipeline Cools Down

By Eduard Gismatullin

Aug. 13 (Bloomberg) -- BP Plc and Botas International Ltd., a Turkish operating company, started damage assessment at an oil pipeline in eastern Turkey following a fire.

BP, Europe's second-biggest oil company, is now able to access the Baku-Tbilisi-Ceyhan, or BTC, pipeline after it cooled down, company spokesman Toby Odone said today. The assessment will take ``a week or so,'' he said. BP's venture declared force majeure on exports from the Baku-Supsa oil link, which runs to the Georgian Black Sea coast, he said.

``It'll take quite a while to work out what has happened,'' Odone said by phone from London. Turkish authorities are also investigating the cause of the explosion, he said.

The fire on the link, which has a 1 million barrel-a-day capacity, broke out on Aug. 5 following an explosion in the Erzincan province. The Kurdistan Workers' Party, or PKK, claimed responsibility for the attack.

The fire on the 1,768-kilometer (1,100-mile) pipeline, which links Azerbaijan through Georgia with the Turkish port of Ceyhan, was extinguished on Aug. 11.

BP, StatoilHydro ASA and partners had to cut production at the Shah Deniz gas and Azeri-Chirag-Gunashli oil fields in the Azeri part of the Caspian Sea because of the disruption.

Azerbaijan International Operating Co., which operates the Azeri-Chirag-Gunashli project and the Baku-Supsa pipeline, announced force majeure on cargo loading at the port of Supsa in Georgia until further notice, Odone said.

Force Majeure

Last week, force majeure was also declared on shipping oil through the BTC. Force majeure is a legal clause allowing suppliers to suspend contractual obligations because of events beyond their control.

Shipments of natural gas from Shah Deniz through the South Caucasus pipeline are also suspended on security concerns in Georgia, said Tamam Bayatly, a BP spokeswoman in Baku, today by phone. ``Shah Deniz production continues at a lower rate,'' she said, adding that supplies are only being delivered to the Azeri domestic market.

Georgia and Turkey are still being supplied with gas that had accumulated in the South Caucasus pipeline before the link was shut, BP said.

Russian President Dmitry Medvedev yesterday ordered a halt to Russia's offensive in Georgia after six days of fighting.

The Baku-Supsa oil pipeline from Azerbaijan through Georgia to the Black Sea was closed for a second day as a precaution.

No Damage

BP hasn't verified any damage to pipelines in Georgia to date, Bayatly said. ``We continue to assess the situation to see when we can restart'' the Baku-Supsa link, she said.

The Baku-Supsa pipeline, with a capacity of more than 100,000 barrels a day, was started last week after 19 months of repairs. As of yesterday, no tankers have been loaded from the pipeline at Supsa, according to Garsevan Jorbenadze, a Batumi- based ship agent at TeRo Co. Ltd., who arranges for vessels to dock and load.

The Baku-Supsa line ``shutdown adds to already lower supplies in the Black Sea and Mediterranean due to lower Russian exports and the outage on the BTC pipeline,'' Vienna-based consultants at JBC Energy GmbH said today in an e-mailed report.

Georgia's Black Sea ports resumed ``normal operations'' after the conflict with Russia halted, Zviad Jakeli, a chief agent at TeRo, said today by phone. Ships have been instructed to return to the Batumi, Kulevi, Supsa and other facilities from nearby anchorage areas.

The Port of Poti, which was shut because of bombings, has also resumed operations, Jakeli said.

Oil is now only being transported from Azerbaijan through the Baku-Novorossiysk link to the Russian Black Sea coast and in rail cars across Georgia to the Black Sea ports.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net