Identifier
Created
Classification
Origin
07ANKARA2696
2007-11-01 11:49:00
CONFIDENTIAL
Embassy Ankara
Cable title:
EXPANSION OF BTC PIPELINE CONTINGENT ON NEW OIL
how-toVZCZCXRO5317 RR RUEHBC RUEHDBU RUEHDE RUEHDIR RUEHFL RUEHKUK RUEHKW RUEHLA RUEHROV RUEHSR DE RUEHAK #2696 3051149 ZNY CCCCC ZZH R 011149Z NOV 07 FM AMEMBASSY ANKARA TO RUEHC/SECSTATE WASHDC 4238 INFO RUCNCIS/CIS COLLECTIVE RUEHZL/EUROPEAN POLITICAL COLLECTIVE RUCNIRA/IRAN COLLECTIVE RUEHIT/AMCONSUL ISTANBUL 3491 RUEAIIA/CIA WASHDC RHEHAAA/NSC WASHDC RUEUITH/ODC ANKARA TU RHEBAAA/DEPT OF ENERGY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L ANKARA 002696
SIPDIS
SIPDIS
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
EEB FOR A/S SULLIVAN
EUR FOR DAS BRYZA
SCA FOR MANN
DOE FOR HEGBURG
USTDA FOR DAN STEIN
E.O. 12958: DECL: 11/01/2017
TAGS: AJ ENRG EPET IR IZ KZ RS TU
SUBJECT: EXPANSION OF BTC PIPELINE CONTINGENT ON NEW OIL
VOLUMES AND SECURITY
Classified By: Economic Counselor Dale Eppler for reasons 1.4 (b) and (
d)
C O N F I D E N T I A L ANKARA 002696
SIPDIS
SIPDIS
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
EEB FOR A/S SULLIVAN
EUR FOR DAS BRYZA
SCA FOR MANN
DOE FOR HEGBURG
USTDA FOR DAN STEIN
E.O. 12958: DECL: 11/01/2017
TAGS: AJ ENRG EPET IR IZ KZ RS TU
SUBJECT: EXPANSION OF BTC PIPELINE CONTINGENT ON NEW OIL
VOLUMES AND SECURITY
Classified By: Economic Counselor Dale Eppler for reasons 1.4 (b) and (
d)
1. (SBU) Summary and comment: On October 5, we met with
local BP representatives Djan Suphi, Director for Exploration
and Production in Turkey and Norman Rodda, Project Manager
for Baku-Tbilisi-Ceyhan (BTC) pipeline company to discuss two
projects to increase the capacity of the line to 1.2 and 1.6
million barrels of oil throughput a day. The latter increase
is contingent on BP striking a deal to attract additional oil
volumes to BTC. Security concerns could put both projects on
hold. The meeting reminded us of the complexity and length
of time it takes to negotiate major oil production and
transportation deals. A quick review of the BTC project
milestones reveals a 12 year process from the signing of a
production sharing agreement in September 1994 to an a BTC
Inter-governmental and host country agreement in November
1999 to first oil delivery in June 2006. End summary and
comment.
2. (U) BTC current crude oil production is 900 thousand
barrels per day. BTC,s designed capacity is 1 million
barrels per day (mbpd) and they are planning two phases of
capacity increases. They expect Azeri-Chirag-Gunesli (ACG)
oil field to reach peak production in 2010 with 1.12 million
barrels per day. A capacity increase to 1.2 mbpd is
scheduled to be completed by mid-2008. This phase is not
difficult technically and doesn't require infrastructure
spending. The capacity increase is achieved by injecting
'drag-reducing lubricants' into the pipeline thereby reducing
friction and allowing for greater flows of oil. Financially,
this increase is justified by volumes from ACG field operated
by BP.
3. (U) The second phase of capacity increases are more
costly and BTC has not made a final decision on whether to
pursue. To increase BTC capacity to 1.6 mbpd, additional
pump stations are needed as well as another pier in Ceyhan to
off-load crude to tankers. The financial case for this
expansion has not yet been made. BP needs to lock in an
additional 400 thousand bpd of oil supply in order to justify
the expansion.
4. (C) BP also will have to consider pipeline security as it
moves forward with these projects. Security concerns could
scuttle both of these planned phases. With the October 17
passage of a parliamentary resolution authorizing the Prime
Minister to conduct cross border operations against PKK
terrorists in Northern Iraq, the PKK has again threatened to
attack the BTC pipeline. Security of the pipeline is a
shared responsibility between the Turkish National Police
(TNP) and private security contractors hired by BOTAS
(state-owned pipeline company). The TNP told BP that the
line was too long (1,075 km) and the pumping stations too
remote to realistically secure against attack. According to
Suphi, an attack on one of the four pumping stations located
in Turkey could put the pipeline out of service for a month
or more.
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON
SIPDIS
SIPDIS
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
EEB FOR A/S SULLIVAN
EUR FOR DAS BRYZA
SCA FOR MANN
DOE FOR HEGBURG
USTDA FOR DAN STEIN
E.O. 12958: DECL: 11/01/2017
TAGS: AJ ENRG EPET IR IZ KZ RS TU
SUBJECT: EXPANSION OF BTC PIPELINE CONTINGENT ON NEW OIL
VOLUMES AND SECURITY
Classified By: Economic Counselor Dale Eppler for reasons 1.4 (b) and (
d)
1. (SBU) Summary and comment: On October 5, we met with
local BP representatives Djan Suphi, Director for Exploration
and Production in Turkey and Norman Rodda, Project Manager
for Baku-Tbilisi-Ceyhan (BTC) pipeline company to discuss two
projects to increase the capacity of the line to 1.2 and 1.6
million barrels of oil throughput a day. The latter increase
is contingent on BP striking a deal to attract additional oil
volumes to BTC. Security concerns could put both projects on
hold. The meeting reminded us of the complexity and length
of time it takes to negotiate major oil production and
transportation deals. A quick review of the BTC project
milestones reveals a 12 year process from the signing of a
production sharing agreement in September 1994 to an a BTC
Inter-governmental and host country agreement in November
1999 to first oil delivery in June 2006. End summary and
comment.
2. (U) BTC current crude oil production is 900 thousand
barrels per day. BTC,s designed capacity is 1 million
barrels per day (mbpd) and they are planning two phases of
capacity increases. They expect Azeri-Chirag-Gunesli (ACG)
oil field to reach peak production in 2010 with 1.12 million
barrels per day. A capacity increase to 1.2 mbpd is
scheduled to be completed by mid-2008. This phase is not
difficult technically and doesn't require infrastructure
spending. The capacity increase is achieved by injecting
'drag-reducing lubricants' into the pipeline thereby reducing
friction and allowing for greater flows of oil. Financially,
this increase is justified by volumes from ACG field operated
by BP.
3. (U) The second phase of capacity increases are more
costly and BTC has not made a final decision on whether to
pursue. To increase BTC capacity to 1.6 mbpd, additional
pump stations are needed as well as another pier in Ceyhan to
off-load crude to tankers. The financial case for this
expansion has not yet been made. BP needs to lock in an
additional 400 thousand bpd of oil supply in order to justify
the expansion.
4. (C) BP also will have to consider pipeline security as it
moves forward with these projects. Security concerns could
scuttle both of these planned phases. With the October 17
passage of a parliamentary resolution authorizing the Prime
Minister to conduct cross border operations against PKK
terrorists in Northern Iraq, the PKK has again threatened to
attack the BTC pipeline. Security of the pipeline is a
shared responsibility between the Turkish National Police
(TNP) and private security contractors hired by BOTAS
(state-owned pipeline company). The TNP told BP that the
line was too long (1,075 km) and the pumping stations too
remote to realistically secure against attack. According to
Suphi, an attack on one of the four pumping stations located
in Turkey could put the pipeline out of service for a month
or more.
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON