Wednesday, May 25, 2005

New Pipeline Should Increase World Oil Supply

BBC News reports that after ten years of construction, a pipeline connecting the Caspian Sea and the Mediterranean is about to start filling. Link.
Starting in Azerbaijan, the 1,600km (1,000 mile) pipeline will pass through Georgia to the Turkish port of Ceyhan.

The project has taken more than 10 years to finish and will unlock one of the world's biggest energy reserves. [...]

Wednesday's inauguration at the Sangachal oil terminal near Baku was attended by presidents from Azerbaijan, Kazakhstan, Georgia and Turkey.

US Energy Secretary Samuel Bodman also was present at a ceremony where the taps were turned on. [...]

The Caspian area produces a high-quality light crude, but has suffered in the past because of the difficulty of getting its oil to consumers in Europe, the US, China and Japan.

Until now, states in the region sent almost all of their oil via Russian pipelines.

There are several positives here. The most obvious is that soon there will be more oil flowing into the international market. Yet there is also a geo-political angle. Since the breakup of the Soviet Union, Russia has tied to keep the former republics dependent on Russia, giving it leverage to interfere in their affairs. With this pipeline, oil from Azerbaijan and Kazakhstan will flow directly to the West, without passing through Russia. That sounds to me like money well spent.


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