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Risks for Transit of Energy Resources via Georgia as a Result of Conflict in South Ossetia: Expert Opinions

Oil&Gas Materials 12 August 2008 20:26 (UTC +04:00)

Azerbaijan, Baku, 12 August /corr. Trend A.Badalova / The fighting comes in South Ossetia when BTC pipeline is not operational and therefore Azerbaijan's alternative export routes are desperately needed, expert of the American Energy Security Analysis (ESAI), Andrew Reed said.

"Of course the fighting adds to market jitters that always result from geopolitical tensions. The conflict coincided with the time when the Baku-Tbilisi-Ceyhan pipeline was out of operation," Reed told Trend via e-mail on 12 August.   

As a result of fire, which occurred last week on the Baku-Tbilisi-Ceyhan pipeline, the export via the pipeline was ceased. Currently fire on the pipeline has been extinguished. Furthermore, as a result of Georgian-Ossetian conflict, the Georgian Black Sea Port of Poti temporarily stopped receiving cargos, sent to the port on transit through the territory of Azerbaijan. The work of Poti as re-established this morning.

"Since the fighting disrupts the flow of oil through these routes, it is possible that they will necessitate additional reductions in Azerbaijan's crude output," Reed said.    

As a result of fire on the BTC, the production in the block of Azeri-Chirag-Guneshli fields in the Azerbaijani section of Caspian was reduced. In July, the production averaged more than 870,000 barrels per day. 

The Analyst of UniCreditAton, part of international UniCredit Group, Pavel Sorokin, considers that the risks for transit of energy resources via the territory of Georgia due to the situation in South Ossetia are minimum.

"Today Russian army does not bomb international infrastructure facilities, and the fire on BTC on the territory of Turkey broke down before the conflict," Sorokin told Trend .

According to Sorokin, the similar situation is referred to the railway transport being used to cargo transshipment. 

"Currently the ports are partially closed due to the military condition," he said.

According to Sorokin, if necessary, large part of cargos may be diversified via Russia.

With regards to the impact of the situation in South Ossetia on the global oil prices, the analysts also express various views.

"I do not think that currently the conflict will strongly affect the prices because the key factor of impact - termination of the pipeline - took place before the beginning of the military actions," Sorokin said.

According to him, due to slowdown in the macroeconomic indicators in the EU and USA, as well as due to rise in the USD, the oil will remain in the diapason of $110-120 for certain period.

Since you can put a number on reductions in crude exports or production, the fighting has a bullish affect on world prices, Reed said.

Currently the September futures for WTI oil totals $114.45 per barrel and for Brent oil - $112.67 per barrel.   

The correspondent can be contacted at: [email protected]  

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