Azerbaijan defines route for pumping additional oil volumes

Azerbaijan's state energy company SOCAR decided to transport oil through the Baku-Tbilisi-Ceyhan oil pipeline instead of the Baku-Novorossiysk pipeline.

The issue of pumping oil via the Baku-Tbilisi-Ceyhan pipeline has almost been decided, an unnamed official at SOCAR told Trend Agency.

SOCAR and Russian state-owned oil company Rosneft have not yet found a mutually acceptable solution on the work of the pipeline, he added.

Talks are still underway.

The source said around two million tons of oil, which SOCAR previously planned to pump via the Baku-Novorossiysk oil pipeline, will be pumped via the Baku-Tbilisi-Ceyhan pipeline every year.

The contract for transiting Azerbaijan's oil via the Baku-Novorossiysk pipeline through the territory of its giant northern neighbor, in effect for 17 years, was revoked in early May.

If the sides fail to come to an agreement, pumping Azerbaijan's oil through the pipeline will be suspended in mid-February 2014 in accordance with the agreement.

The pipeline has been operating for many years, and, therefore, necessary technical procedures should be carried out after the completion of the pumping process. Each of the parties may conduct certain works on their sections.

SOCAR also has the opportunity to transport up to five million tons of additional oil via the BTC, the source added.

"All the issues related to pumping additional oil via the BTC by SOCAR (as well as jointly with BP) have almost been decided on. Following the suspension of oil pumping via Baku-Novorossiysk, it will be transported through BTC," the source said.

Besides Novorossiysk, oil from Azerbaijan is delivered to the Georgian Black Sea port of Supsa, and from there to the Mediterranean coast of Turkey via the BTC pipeline. Both routes can fully meet the needs for pumping Azerbaijani oil.

The Baku-Novorossiysk pipeline transports the oil produced by SOCAR independently, as well as from onshore fields developed within joint enterprises. Azerbaijan's oil is being shipped from the Novorossiysk port under the name of the Russian export blend, URALS.

Urals -a mix of heavy and high-grade oil of the Urals with the light oil of western Siberia supplied through the Baku-Novorossiysk pipeline and the Druzhba pipeline system- is traded on world exchanges at a price of $4 or $5 per barrel lower than the Azerbaijani crude.

SOCAR said earlier that Baku will continue to transit oil through the pipeline if it is economically feasible. Otherwise, the supply will come to a halt.

The company exported about 1.75 million tons of oil via the northern Baku-Novorossiysk pipeline in 2013 compared to 2.06 million tons in 2012. Around 169,360 tons of oil was exported via the northern pipeline Baku-Novorossiysk in December 2013 compared to 167,000 tons in December 2012.

The Baku-Novorossiysk pipeline (also known as the Northern Route Export Pipeline) is a 1,330-kilometer oil pipeline, which runs from the Sangachal Terminal near the Azerbaijani capital Baku to the Novorossiysk terminal at the Black Sea coast in Russia.

Adapted from