Experts Say Azerbaijan in Competition with Georgia in Hydrocarbon Transportation Market

Business Materials 2 April 2007 21:00 (UTC +04:00)
Experts Say  Azerbaijan in Competition with   Georgia in Hydrocarbon Transportation Market

Azerbaijan, Baku / Trend , corr. S. Aliyev / Azerbaijani experts in the field of transportation has stated that the recent statements made by the head of the Georgia's Batumi Black Sea Oil Terminal (the operator is Greenoak) concerning the monopolization of the Azerbaijan railway carriages have emerged from the expected competition with the Georgian Oil Terminal of Kulevi, bought by SOCAR (State Oil Company of Azerbaijan).

The oil and oil product re-shipment in Georgia is currently engaged in the Black Sea Port of Batumi. The Georgian Black Sea of Poti is engaged only in the reshipment of light oil products. In addition, the Azerbaijani oil is presently being exported via Georgian Black Sea Port of Supsa, which is operated by BP. SOCAR's owned Kulevi Port is expected to join hydrocarbons re-shipment in the near future, which will result in a genuine competition for the other Georgian Sea Ports which are engaged in the re-shipment of oil. Representatives of Baku Oil Terminal claimed that their reduction may be in the oil volumes carried via the railway transit corridor, Azerbaijan-Georgia in 2007.

The experts indicate that the Azerbaijani State Railway Company annually increases its volume of carriages in this direction. About 75% of the total volume of carriages makes up oil and oil products. "For example, in January-February, 2007, Azerbaijani Railways carried 4.6 mln. tons of different types of loads by 1.8% more against the figure registered in the corresponding period of 2006," say the experts. On the whole, in 2006, Azerbaijani Railways carried about 30 mln. tons of different loads, which exceeded the figure registered in 2005 by almost 12%.

According to the experts, the volume of hydrocarbons carriages in respect of Batumi Port in 2007 actually may be reduced. However this will not occur due to the general reduction in carrying oil via the transport corridor, but because of the redirection of some oil loads to the oil terminal in Kulevi. "Some companies, which had their oil transport via the route interrupted are expected to resume. Oil volumes may also be carried via the new SOCAR oil terminal in Kulevi," the experts indicate. Touching upon the issue of tariffs via the route, the State railway Company of Azerbaijan states that including different terminal duties in Baku ports, the price on carrying one ton of oil until the Georgian border is $11. This tariff is equivalent to the one, on which oil is carried from the Azerbaijani-Georgian Border to the Batumi Oil Terminal, including re-shipment.

"Azerbaijani Railways has not increased the tariffs, as the head of the Batumi Sea Port said. Last year, some privileges which were attached were cancelled, depending on oil volumes, which had been introduced as far back as in 1990s to involve consignor of goods due to the low prices on international markets," said the source in the Azerbaijan State Railway Company. With all this going on and despite the increase in the price on diesel fuel last year, the tariffs have remained unchanged. The next (recent) rise in the price of diesel fuel in Azerbaijan in January, 2007, has not led to the increase in the tariffs on carrying loads yet.

The experts recall that prior to the resolution of political troubles in Adjaria (the territory on the south-east of Georgia, which was washed out by the Black Sea from the west), where the Batumi Oil Terminal (managed by Greenoak), the tariffs on re-shipment of loads there was $14 per one ton, whilst corresponding tariffs in Baku ports were equal to $4-$5 per one ton.

The Head of Azersun Holding (attended by Middle East Petroleum), Abdulbari Gezel, said that presently a new terminal close to is projected. Nearly $90 mln have been allocated for the construction of the terminal. The terminal will be constructed in three stages: in the first state its trans-shipment capacity will equal 15 mln tons, in the second stage - 25 mln tons and in the third stage - 35-40 mln tons. The negotiations are being completed amongst the stakeholders of the terminal and consortium TSO and begin with French TOTAL. In addition, as it was clear to Trend , the terminal will transfer oil not only for BTC. Platforms will be constructed and railways will be built to transport the oil via railway in the direction of . Generally platforms for 80 train-cisterns are expected to be constructed in the first stag. The statement of Greenoak says that for many years the expeditors of continuously provide full service for its clients via , but the Azerbaijani monopoly refuses 's right for it. According to the experts questioned by Trend , the situation does not depend on the expeditors and clients, but on owners of the cargo. Greenoak states that the Azerbaijani monopoly should stop this action, especially taking into consideration that it has been given an opportunity to purchase a terminal in Kulevi. Presently such monopoly has increased and the Georgian railway corridor has also affected by it. This issue should be settled by the Georgian power. The transport experts of express perplexity how the Georgian power should settle this issue. A contract corresponding with all international legal standards has been concluded during acquisition of the terminal. "Until now, the issue with the railways has not been resolved. Many sections of the railways are single-track and it delays the movement of the trains," said by the State Railway Department of Azerbaijan. In protocol was signed with the Georgian side, according to which the Country had to receive, process and return 850 trains from to , 50 trains to Poti and 70 trains to Georgian oil bases per day. As a result, the trains were not returned to the republic and an interruption began with cargo delivery. oil terminal has a capacity to transfer up to 15 mln tons of oil cargos per day. The terminal serves the tankers with a capacity of 30-90.000 tons. Presently the capacity of the tank farm of the terminal equals nearly 530.000 tons. The transferring capacity of Kulevi terminal equals 10 mln tons. The gross capacity of the tank farm of the terminal is 320.000 cu.m. Its capacity is planned to be increased up to 20 mln tons and tank farm up to 380.000 tons. 168 cisterns are possible to be delivered to the terminal via four railways. The construction of the access duct and 3 berths are being completed. The new terminal may receive tankers with capacity of 100.000 tons. The cost of the first stage of the project totals nearly $150 mln. Presently work is being carried out to construct railways owned by SOCAR and special platforms to load the gas. Launching the terminal is expected for the second half year of 2007.