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BP starts work on Baku-Ceyhan oil pipeline The Presidents of Azerbaijan, Georgia and Turkey hailed the United States-backed pipeline, long dismissed as a costly dream, and during the groundbreaking ceremony called on other post-Soviet states to join the project. The pipeline is due for completion in 2005. Full-scale construction work will start only in 2003 but the three presidents on Wednesday buried a capsule with a joint statement calling on future generations to make the Caspian region a new European energy transportation hub. "I was never in doubt that with support of the United States the Baku-Ceyhan pipeline project would materialise," said Azeri veteran leader Haydar Aliyev. "The Baku-Ceyhan project will allow Turkey to become a reliable major energy shipper to Europe," said Turkish President Ahmet Necdet Sezer. DOUBTFUL PROJECT Analysts have long said there was not enough oil to justify the link after oil companies started to pull out of Azerbaijan when they failed to make large offshore finds. Experts have also argued a shorter link to Russia or Georgia was more logical. BP itself was initially very cautious about the plan, but it said this year it had found enough oil on its three huge Azeri oilfields -- the only successful offshore venture in the country -- to feed the one million barrels per day pipeline. On Wednesday, a separate BP-led group working on the three fields - Azeri-Chirag-Guneshli - approved a second phase of development worth $5.2 billion. The three fields contain 730 million tonnes (5.35 billion barrels) of oil. When completed, BP's longest ever pipeline will stretch 1,100 miles from the Azeri capital of Baku through Georgia to the Turkish Mediterranean port of Ceyhan. It is the first major private pipeline from the Caspian to bypass Russia and strengthens the United States' role in one of the world's fastest growing oil regions. Together with a growing supply from Russia, the Caspian region is expected to lessen western reliance on OPEC oil, which comes mostly from the volatile Middle East region. JAPAN'S INPEX JOINS Analysts have said Russia's decision to abandon its original hostility to the project had made it easier for the Baku-Ceyhan pipeline to go ahead. Moscow was for long opposed to the U.S.-masterminded plan, which will break up its oil transportation monopoly in the region, but changed its stance after a political rapprochement with Washington in the wake of the September 11 attacks. Russian oil majors have said they might join the project, but have made no final decision so far. On Wednesday, the three presidents kept mum on Russia's involvement but called on other oil-rich Caspian nations to join the pipeline. "The participation of Kazakhstan, Turkmenistan and Uzbekistan in this project will have great importance for the region's development," said Sezer. In an apparent response to the call, Japanese energy group INPEX said on Wednesday it would join Baku-Ceyhan, acquiring a 2.5 percent stake from BP and Turkey's TPAO. INPEX currently produces the bulk of its crude and natural gas in Indonesia, but is seeking to expand beyond South East Asia. It holds an 8.33 percent stake in an Agip-led giant Kashagan offshore oil project in Kazakhstan. Earlier this year, Kashagan became the world's biggest oil find for 30 years, and analysts believe Baku-Ceyhan will help transport its output to world markets when it starts pumping oil after 2005. French TotalFinaElf, which has no big oil projects in Azerbaijan but holds a stake in Kashagan, also decided to join Baku-Ceyhan earlier this year. After the sale to INPEX, BP will hold 32.6 percent in Baku-Ceyhan, Azeri state oil firm SOCAR 25 percent, U.S. group Unocal 8.9 percent and Norway's Statoil 8.71 percent. TPAO will hold 6.53 percent, ENI 5.0 percent, TotalFinaElf 5.0 percent, Japan's Itochu 3.4 percent, INPEX 2.5 percent and Saudi Arabia's Delta Hess 2.36 percent. |