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The BBC's Chris Morris in Istabul
"Caspian oil and gas is a huge geopolitical issue"
 real 28k

Thursday, 18 November, 1999, 22:39 GMT
Trans-Turkish pipeline deal signed

Accords for the construction of oil and gas pipelines from the Caspian Sea through Turkey to the Mediterranean have been signed at the European security summit in Istanbul.

In a policy victory for the Clinton administration, the pipeline will enable oil and gas from newly-developing fields in the Caspian Sea to reach international markets without going through Russia or Iran - the two other rival routes which had been under consideration for exports to the West.

Georgian President Eduard Shevardnadze Georgian President Eduard Shevardnadze welcomed the accord
US President Bill Clinton looked on as the presidents of Turkey, Azerbaijan, Georgia and Turkmenistan signed a series of accords to build a pipeline from Azerbaijan across Georgia and Turkey to the Mediterranean port of Ceyhan.

The 1,730km (1,080 mile) line, will benefit Turkey, a key US ally that has suffered since UN sanctions closed a lucrative pipeline that brought Iraqi oil through the country.

Georgian President Eduard Shevardnadze said the accord heralded new co-operation between "reliable partners" in the Caspian region.

Turkish President Suleyman Demirel said it marked "a new history... at the heart of Istanbul, in which Asia and Europe embrace each other".

Iran had tried to counter the Ceyhan proposal, by offering an oil swap deal in which Azeri oil would be sold in northern Iran, and oil from fields in southern Iran would be sold and exported via the Gulf on Azerbaijan's behalf.

That deal would have saved transportation costs for both countries.

Economic questions

Questions still remain as to whether the pipeline - which will cost an estimated $2.4bn to build and should be completed in 2004 - will be economically viable.

It will need one million barrels per day (bpd) of oil, equivalent to 50 million tonnes a year, to break even.

Officials at BP-Amoco, the main Western oil company working in Caspian oil fields, have said early estimates of massive oil reserves in the region may have been overstated.

But Israfil Mamedova, an official with Azerbaijan's state-run oil company, said he was optimistic that "as soon as investments are made, production will increase".

The gas pipeline project, for which a framework agreement was also signed, plans a 2,000-km (1,250-mile) pipeline running from Turkmenistan to Turkey, carrying 16 billion cubic metres (bcm) annually from late 2002.

Turkmen President Saparmyrat Niyazov said Turkmenistan had agreed on the prices with Turkey and Azerbaijan and would eventually pump 30 bcm a year, 14 bcm of it for European markets.

He said the deal would "strengthen the national independence of Turkmenistan" and bring "great economic benefits".

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See also:
18 Nov 99 |  Europe
Analysis: Economic uncertainty over pipeline
30 Oct 98 |  Europe
Political backing grows for Turkey pipeline
08 Jul 98 |  Asia-Pacific
Iran attacks Caspian oil deal

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