SOCAR to Redirect Export Oil via Baku-Novorossiysk Pipeline

Oil&Gas Materials 4 February 2008 13:49 (UTC +04:00)

Azerbaijan Baku, 4 February / corr Trend V.Sharifov / The State Oil Company of Azerbaijan (SOCAR) is arranging the export of its oil from the Dubendi terminal (located 47km from Baku) to the Georgian Sea port of Batumi by rail, the SOCAR representative said on 4 February. SOCAR produces oil from its onshore and offshore fields.

"At present the technical arrangements for oil transportation by rail to Batumi are underway. We plan to unload the tanker with the deadweight of 80,000 tons from the Georgian port," SOCAR said. The direct transportation of 80,000 tons of oil to Batumi will take approximately 10 days to complete.

SOCAR has unloaded oil from Dubendi since 1999. The platform operated by Dubai-operated Middle East Petrol is used for pouring oil to railway cisterns in the terminal of SOCAR.

SOCAR is obliged to commence export of oil by rail to Batumi from the Dubendi terminal. Russian pipeline monopolist Transneft offered Azerbaijan to annul the existing transportation agreement on oil pumping via the Baku-Novorossiysk pipeline with respect to revise the conditions of the agreement.

The transportation agreement between Transneft and the Azerbaijani International Operating Company (AIOC), which produces light oil from the Azeri-Chirag-Guneshli fields and operates the Baku-Novorossiysk pipeline, was concluded in 1997. The issue of re-signing the agreement was raised by Transneft when in 2007 AIOC, guiding the terms of the agreement, informed Transneft of its rights and obligations in the agreement to SOCAR.

SOCAR, which owns the Baku-Novorossiysk pipeline, said that the AIOC and SOCAR do not see any necessity for re-signing of the existing transportation agreement with Transneft. SOCAR is prepared to pump oil via the Baku-Novorossiysk route based on the agreement reached with the Russian company, allowing the consideration of Transneft's proposals on injecting some changes to the document.

"We have delivered to Transneft the relevant categories on delivery of oil volumes ordered previously, said SOCAR. Unless Transneft confirms its readiness to receive oil on the exiting deal in the scheduled timetable, we will be obliged to cease oil export via the Baku-Novorossiysk pipeline and redirect the oil volumes in other directions.

Annually, the State Oil Company of Azerbaijan Republic (SOCAR) pumps 2-2.5mln tons of Azerbaijani oil produced in the onshore and offshore fields through its own funds, as well as the oil produced in the onshore fields by the joint ventures and operating companies with foreign capital, via the Baku-Novorossiysk pipeline at the price of $15.67 per ton. AIOC transports high-gravity oil which is produced in the Azeri-Chirag-Gunashli field also via the Baku-Novorossiysk, for large consignments of its oil is pumped via the Baku-Tbilisi-Ceyhan (BTC) pipeline.

"SOCAR has all technical opportunities to re-direct its oil from Baku-Novorossiysk to the Ceyhan terminal, as well as to the Black Sea terminals of Batumi and Kulevi," a source at SOCAR said.

The capacity of the BTC constitutes 50mln tons of oil a year. It pumps Azeri Light oil produced in the Azeri-Chirag-Gunashli. The pipeline's pumping capacity may be increased to 65mln tons a year through chemical re-agents and construction of more pumping facilities. Thus, the carrying capacity of the BTC will be enough for pumping of the oil of AIOC, SOCAR, as well as that of Kazakhstan which will be pumped via the pipeline after 2011.

SOCAR can also export oil via its Kulevi terminal in Georgia, which is expected to operate from the first quarter of 2008.