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
Georgia Acquires Up to 400,000 COVID-19 Tests and 50 Ventilators With World Bank Support
With the World Bank's $80 million Emergency COVID-19 Response project financial support and mediation, the government of Georgia was able to procure 147 000 Rapid COVID-19 Antibody and Antigen Test Kits and 250 000 PCR Test, that will triple Georgia's testing capacity to 3000 samples per day by mid-July, - reports World Bank.
Georgian business associations establish Georgian Tourism Industry Alliance
Business associations representing various sector of the hospitality industry in Georgia agreed to establish Georgian Tourism Industry Alliance (GTIA).
IMF approves $200 million for Georgia
The Executive Board of the International Monetary Fund has approved US$200 million financing to Georgia to address the effects of the COVID19 pandemic.
Georgia will be one of the first to open tourist corridors, Economy minister vows
Georgia’s Minister of Economy and Sustainable Development Natia Turnava pledged that Georgia would be one of the first countries to open safe tourist corridors with other countries.
Georgia’s GDP may contract 4%, the worst in the region amid pandemic
International Monetary Fund forecasts a 4% contraction of Georgia’s economy, which very much depends on tourism and money transfers.
Georgian retailers fight for survival as coronavirus pandemic continues
Pandemic has affected everyone worldwide, but one of the most vulnerable are retailers, those who depend on consumers and their spending.
Georgia remains the fifth in terms of budget transparency
According to the 2019 Open Budget Survey (OBS), conducted by the International Budget Partnership (IBP), Georgia got 81 points out of 100 in state budget transparency, the Transparency International Georgia said on Wednesday.
Georgia to receive €1.16 million for agriculture development
Within the GRETA project, the EU, Sweden and Austria launched the Local Development Initiative (LDI), to create great economic opportunities in the organic agriculture sector for farmers, farmer groups, cooperatives, processing units as well as other actors along various organic value chains.
Products rotten amid nationwide lockdown in Georgia
Food chain security is becoming more and more important as lockdown stays in place and farmers cannot transport their products from one place to another.
Georgian government to spend GEL 3.5 billion within crisis management plan
Georgian government has introduced a crisis management plan that consists of different stages. GEL 3.5 billion will be spent to cushion economy but this amount does not cover the post-crisis recovery period.
Georgia to receive €183 million from EU to fight Coronavirus
Due to the economic crisis caused by the pandemic of the coronavirus disease COVID-19, the EU has proposed a new package of macro-financial assistance.
Air traffic to be halted until May 22, GCAA says
Air traffic in Georgia will stay halted until May 22, 2020, Georgian Civil Aviation Agency says in a statement.
Georgian PM discusses support packages from ADB, EBRD
Prime Minister of Georgia Giorgi Gakharia held a video conference with the presidents of the EBRD and ADB regarding the possible assistance and financial resources to be allocated to Georgia due to the challenges associated with the global pandemic.
EBRD to provide €1 billion to Georgia, other countries
The EBRD and Georgia are stepping up cooperation as the country's economy faces the challenge of the coronavirus outbreak – says an official statement published on
Government closes ski resorts in Georgia over COVID-19
The season at the ski resorts of Georgia closes ahead of schedule, the Prime Minister’s spokesman, Irakli Chikovani, said at a briefing.
Georgia will export armored vehicle Didgori Warrior
A new Georgian armored vehicle Didgori, equipped with a 120mm mobile mortar module, will be exported under the agreement signed between the Military Scientific-Technical Center Delta and one of the countries of the Middle East, the Ministry of Defence said.
Korter: Reliable housing property data in Georgia
It's not a simple job to find fresh homes. But when you use the estate choice service Korter, everything becomes distinct.
Rent a car in Tbilisi –
Are you thinking of booking the best vehicles for your next trip at a very reasonable price? If yes, then this is one of the best decisions you can ever make for yourself.
Pleasant Sunday for the whole family – Renewed Sunday’s brunch at The Biltmore Tbilisi Hotel
Summer, the season of endless fun and vacations, has ended and Tbilisi has become a usually crowded city.
GEL devalues, officials show optimism though
Devaluation of the national currency has sent shockwaves among citizens in Georgia. Officials think that the trend will return to its normal frame, though.
ProCredit Bank’s 20 years of challenges and successes in Georgia and what it means to be a responsible bank
“The bank’s 20-year long presence in Georgia was marked by many challenges and success stories.
Comments on alarming GEL devaluation
The National Bank of Georgia set a new exchange rate, according to which, dollar price became GEL 2.9507 on Tuesday.
Euronews and Silknet sign an MOU to launch “Euronews Georgia”
Euronews and Silknet, Georgia’s leading telecommunications company, are announcing the signing of an MOU in view of launching Euronews Georgia, a news channel and digital platform aimed at a Georgian-speaking audience.
Green Diamond starts to hand over flats to owners as second stage of construction finishes
Second stage of construction of Green Diamond living apartments by MAQRO Construction has finished and process of hand over of flats to owners has started.
Georgian wine tasting in the US came off excellently
Georgian wine tasting in the main cities of the US, New York, Chicago, and Boston went off excellently.
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
August 2020
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