BP Waits for BTC Link to Cool, Stops More Azeri Oil

By Eduard Gismatullin

Aug. 12 (Bloomberg) -- BP Plc is waiting for an oil pipeline in eastern Turkey to cool before it can assess the damage after an explosion last week and has shut oil and gas pipelines across Georgia on security concerns.

BP, partners and Botas International Ltd., a Turkish operating company, can't assess how long repairs will take before examining the BTC pipeline. BP shut down other oil and gas links through Georgia because of precautionary measures and is investigating reports of possible bombings and damage.

Damage assessments in Turkey ``will probably start over the next day or two,'' Murat Lecompte, external affairs director for pipeline operator BTC Co., said in a telephone interview. ``How long the assessment will take we don't know yet.''

The fire was put out yesterday on the pipe, which links Azerbaijan through Georgia with the Turkish port of Ceyhan. The fire broke out on Aug. 5 after a blast in the Erzincan province for which the Kurdistan Workers' Party, or PKK, has claimed responsibility. The 1,768-kilometer (1,100-mile) link contains 10 million barrels of oil at any one time and cost $3.9 billion.

Russian President Dmitry Medvedev today ordered a halt to Russia's offensive in Georgia after six days of fighting in the region of South Ossetia and Abkhazia.

Halted Pipelines

BP and partners stopped pumping crude into the Baku-Supsa pipeline from Azerbaijan to the Georgian Black Sea coast because of ``precautionary measures,'' in the Caucasus, BP spokesman Robert Wine said today.

The Baku-Supsa pipeline was restarted last week after 19 months of repairs. The companies had been filling the link with crude. No tankers have been loaded in the port of Supsa, according to Garsevan Jorbenadze, a Batumi-based ship agent at TeRo Co. Ltd., who arranges for vessels to dock and load.

BP and StatoilHydro ASA also halted natural gas exports from Azerbaijan through the South Caucasus pipeline because of security concern, Toby Odone, a BP spokesman, said today.

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

Attack Report

Russian warplanes attacked a section of the BTC pipeline in Georgia today, according to Kakha Lomaia, head of Georgia's National Security Council. The damage on the link near the town of Rustavi is unknown, he said by telephone from Tbilisi.

Anatoly Nogovitsyn, deputy chief of the Russian General Staff, told reporters in Moscow that it hadn't been targeted.

``We can't verify'' the bombing of the BTC pipeline, Hugh McDowell, BP's general manager for Georgia, said by phone today. ``It's being investigated, but there are many different reports and we take each one seriously.''

Georgia shut its Poti port on the Black Sea coast, Jorbenadze said by phone today. Oil is arriving at the Batumi and Supsa terminals by rail from Azerbaijan. The port of Kulevi is operating with disruptions, he said.

``A recent escalation in military engagement between Russia and Georgia poses a threat to certain key oil and gas pipelines which transit Georgia,'' the International Energy Agency said today in a monthly report. ``Georgia's significance to global oil and gas markets is as a transit corridor.''

The Paris-based agency cut its forecast for Azerbaijan's oil production because of an explosion on the BTC pipeline.

The agency lowered its estimate for Azeri crude oil and natural gas liquid extraction by 255,000 barrels to 860,000 barrels a day in the third quarter, David Fyfe, the IEA's supply analyst, said in a telephone interview. The nation's 2008 output was cut by 55,000 barrels a day to 1.02 million barrels.

BP, StatoilHydro and other producers have cut crude production at the Azeri-Chirag-Gunashli and Shah Deniz fields in the Azeri part of the Caspian Sea.

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