Georgia Says Russian Missiles Struck BP Pipeline

By Steve Bryant and Lucian Kim

Aug. 14 (Bloomberg) -- A BP Plc-operated oil pipeline that passes through Georgia to the Black Sea port of Supsa was struck by Russian missiles yesterday, the Georgian government said.

A second link that carries oil from Azerbaijan to the Mediterranean port of Ceyhan, known as the Baku-Tbilisi-Ceyhan or BTC pipeline, will reopen in a week after a fire earlier this month, according to Turkey's Energy Ministry.

Two Russian Iskander missiles hit the Baku-Supsa pipeline southeast of the Georgian capital of Tbilisi yesterday, Economy Minister Eka Sharashidze said by phone. BP, which runs the 100,000 barrel-a-day pipeline, stopped shipments after pressure fell, she said. Russia denied bombing the pipeline.

``All transit oil shipments have been stopped via Georgia,'' Sharashidze said. ``Russia is trying to annihilate alternative sources of energy. It couldn't have happened by chance.''

Russian President Dmitry Medvedev Aug. 12 ordered a halt to Russia's offensive in Georgia after six days of fighting. The military conflict in the Caucasus disrupted oil and gas flows in the region, and called into question Georgia's reliability as an energy transit hub.

Rail shipments across Georgia to Black Sea oil terminals were halted after Russian forces seized the central Georgian transport city of Gori, Sharashidze said.

The targeted section of the Baku-Supsa pipeline is located near the town of Rustavi near the Azeri border, according to the Economy Minister. Rustavi is about 150 kilometers (93 miles) from the South Ossetian capital of Tskhinvali.

Russian Denial

Anatoly Nogovitsyn, the deputy head of Russia's General Staff, denied bombing or targeting pipelines in Georgia. ``They are not a target,'' he told a press briefing in Moscow today.

Tamam Bayatly, a spokeswoman for BP in Baku, Azerbaijan, said pipeline flows were halted as a ``precautionary measure'' and that all the company's assets in Georgia are safe.

Inspections of fire damage at the second pipeline, the 1 million barrel-a-day BTC link, show no sign the Aug. 5 fire was caused by a bomb, Turkish Energy Ministry spokesman Akif Sam said in a phone interview.

`Malfunction'

In Turkey, engineers are inspecting the fire damage to the Turkish section of the BTC oil pipeline and will ``be able to give guidance in a few days as to how long repairs may take,'' Murat Lecompte, external affairs director for pipeline operator BTC Co., said in a telephone interview.

The Kurdistan Workers' Party, or PKK, had claimed responsibility for the pipeline explosion. Turkish security officials had examined the damaged section and ``we think it was probably a malfunction,'' Sam said.

BP Plc and StatoilHydro ASA today raised production at their offshore natural gas field in Azerbaijan after resuming fuel exports through the South Caucasus pipeline to Georgia and Turkey.

Natural gas exports were halted from Azerbaijan's Shah Deniz field through the South Caucasus pipeline because of security concerns in Georgia on Aug. 12. The gas pipeline runs parallel to the BTC oil link.

``We are now exporting through'' the pipeline, BP spokesman Robert Wine said by phone today from London. ``The pumping into the pipeline was suspended for about two days.''

Turkey increased imports of gas from Iran and from Russia to compensate for the shortfall from the South Caucasus pipeline, the Turkish Energy Minister spokesman said.

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.