Azeri oil shifts to BTC route
13 February, 2014
Azeri oil shifts to BTC route

Starting from this spring, Azeri oil will reach export markets only through Georgia and Turkey. Azeri national energy company SOCAR recently announced its decision to change the transportation of its 1.55 million tons of oil per year from the Baku- Novorossiysk - or Northern Pipeline, completely regulated by Russia - to the Baku-Tbilisi-Ceyhan pipeline operated by BTC Co., in which SOCAR holds 25%.

The new volume of 1.55 million tons is not satisfactory to Georgia, which had expected 50 million
tons, but it can be a relief for the budget deficit of such a small country, thinks Liana Jervalidze, an energy analyst in transit issues. According to BTC projections, at present the volume was scheduled to increase from 50 to 60 million tons per year - going to 80 million tons ultimately by 2018-2020.
However, the Azeri-Chirag-Guneshli oil field supplying BTC now fell behind expectations, and has diminished production during the last four years from 37 million tons in 2010 to around 32 million and 29 million tons in 2011 and 2012 respectively.
But BTC looks forward to the touted Kazakh oil deposit Kashagan to start operation and supply 20 million tons by 2018-2010, as contracted, though at the moment the BTC pipe is half-empty.
Along with Azeri gas, it transports small amounts of Kazakh and Turkmen oil, leaving plenty of room for more SOCAR exports to shift from the Northern to the Southern direction.
“The BTC is run by SOCAR, and besides it transports oil to the Mediterranean Sea directly into the Ceyhan port that sends oil to Europe immediately – while the Novorossiysk route takes oil to the Black Sea where Azerbaijan cannot control sales,” Jervalidze said. “The Platts [an international provider of energy prices] does not operate in the Black Sea, but in the Mediterranean Sea basin it is easier for Azerbaijan to handle traders and sales.”
In fact, neither Azerbaijan nor Russia felt satisfied with the Baku-Novorossiysk route deal concluded in 1996, which envisaged transportation of 5 million tons of oil yearly from Guneshli oil field - with a tariff of USD 15.67 – to the Russian Black Sea port Novorossiysk.
As production dwindled, SOCAR has pumped less than half of the contracted volumes in the past two years, and planned to further reduce volume to 1.6 million tons this year, Azeri media reported. Russia’s state-run operator of the Northern Pipeline, Transneft, reported about USD 50 million losses per year because the pipeline was operating at half capacity.
In May 2013, Russian Prime Minister Dmitry Medvedev ordered termination of the agreement between Russia and Azerbaijan that expires this February. Azerbaijan agreed, as it also reported losses - Russia mixed Azeri high quality light oil with its heavy sour Urals brand in Novorossiysk, and then sold it at discounts as Brent crude.
Azerbaijan was unhappy that Russia held complete control over its oil export and sales in Novorossiysk. After Azerbaijan developed cheaper Southern route pipelines such as Baku-Supsa and BTC, through Georgia and Turkey - plus railroad transportation of oil from its Caspian port to Black sea ports in Georgia – AMOCO consortium, a partner of SOCAR in Caspian Sea oil exploration, and operator of the Northern Pipeline on Azerbaijani territory, rejected the Northern direction.
To make oil export more diversified, the state-controlled SOCAR decided to retain the direction for its own oil export in spite of unattractive commerciality. It fixed USD 15.67 per tons of oil transit, while Baku-Supsa offered USD 13.14. Amoco gave the pipeline operation to SOCAR in 2007.
However, the deal failed and Azeri oil will be provided to the international market through Georgia and Turkey only. SOCAR intends to control its oil export sales at Novorossiysk port, and require establishment of an oil quality bank as one of the key preconditions for a new supply contract through Russia.
Transneft required “a pump or pay” principle for a new contract that implies Azerbaijan would pay even if it does not use the designated capacity. Azerbaijan declined, saying it does not have enough oil to pump in the Russian direction while it has to fill its own pipelines.


Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
September 2018
Mon Tue Wed Thu Fri Sat Sun
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30