Business

Baku-Ceyhan construction to start

The ceremony to lay the foundation of the Baku-Tbilisi-Ceyhan main export pipeline designed to take Caspian hydrocarbons to international markets is due on 18 September at the onshore Sangachal terminal 42km south of Baku. Attending the ceremony will be Azeri, Georgian and Turkish Presidents, as well as US special negotiator for Caspian diplomacy Steven Mann.

Also participating will be executives of the BTC shareholders, Turkish Botas and Georgian GIOC.

The Baku-Ceyhan will export crude 1,746km from Azerbaijan via Georgia to Ceyhan on the Turkish Mediterranean coast, mostly from Azeri-Chirag-Gunashli fields contracted with world oil giants in 1994.

The pipeline costs 2.95bn US dollars with a through-put capacity being 50 million tons a year. Its construction is scheduled to commence in the first quarter of 2003 and complete in the fourth quarter of 2004.

The BTC Co Shareholders are currently bp (38.21%), SOCAR (25.00%), Statoil (9.58%), Unocal (8.90%), TPAO (7.55%), Eni (5%), Itochu (3.40%), and Amerada Hess (2.36%). In addition, TotalFinaElf has acquired the right to purchase a 5% interest in BTC Co and this transaction will be finalized soon.

History

The agreement on laying Baku-Ceyhan was signed in Istanbul in 1999. Besides the hosting nations, Azerbaijan, Georgia and Turkey, the Istanbul declaration was also inked by the US and Kazakhstan.

The final steps for the BTC were clinched in early August with establishment of pipeline and investment companies in London and Azeri President’s decree to finance SOCAR’s share in the project.

The BTC implementation has taken quite a long time since the signing of oil contracts in 1994 due to some political factors and instability in the region.

Among key factors hampering the pipeline construction has been Armenian occupation of a fifth of Azeri lands and the looming threat of the aggression to the pipeline.

Also a major hinderance was Russia’s intention to host the main oil export pipeline, sidelining Turkey in this business, while Iran’s plans to see the pipeline stretching to the Persian Gulf played a certain role in the delay of the BTC.

WB looks to help Azerenergy

By Azernews Staff

A World Bank mission visited Baku last week to study the country’s power needs and consider financial assistance.

The mission led by head of the Europe and Central Asia Energy and Infrastructure Department Peter Thomson met with President of Azerenergy joint stock company Etibar Pirverdiyev to center on allocations to restore and develop electricity transmission lines.

To date, international financial institutions and foreign companies have helped reconstruction of electricity transmission lines, especially on Abseron Peninsula, and substations in Azerbaijan. Recent power breakdowns have proved that much is still to be done.

The Azeri company's long term development conception envisions restoration of lost capacities and upgrade of power stations, substations and high voltage electricity lines. The construction of the 400 megawatt Simal power plant is nearly ready.

Currently in focus is construction of 400-500 megawatt steam power stations in Sumgayit and the 8th block of the Ali Bayramli power station.

During the visit, head of the World Bank energy mission met with first Vice-President of SOCAR Ilham Aliyev, Ministers for Fuel and Energy Macid Karimov and Economic Development Farhad Aliyev to evaluate the country's energy system and get familiarized with the reforms in this sector.

Devon selling Argentine operations for $90mln

(AssA-Irada, 16 August) - Devon Energy Corporation announced earlier this week that it has entered into an agreement to sell its operations in Argentina to Petroleo Brasileiro S.A. - Petrobras. The purchase price is approximately $90 million. The transaction, which is subject to Argentine regulatory approvals, is expected to close by December 31, 2002, Devon's Baku Office reported Friday.

As of December 31, 2001, Devon's Argentine oil and gas properties had estimated proved reserves of approximately 22 million barrels of oil and 267 billion cubic feet of natural gas. Approximately 75 percent of the reserves were classified as proved undeveloped. The properties produced approximately 6,100 barrels of oil and 17 million cubic feet of gas per day net to Devon's interest during the first six months of 2002.

"This agreement to sell our Argentine assets follows the $262 million sale of our Indonesian business in April," said J. Larry Nichols, Devon's chairman, president and chief executive officer. "After the sale of Argentina is completed, Devon's international operations will be focused on our oil development projects in China and Azerbaijan and on high impact exploration projects offshore West Africa and Brazil."

Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and gas exploration, production and property acquisitions. Devon ranks among the top five U.S.-based independent oil and gas producers and is included in the S&P 500 Index.

Statoil wins int'l technology prize

(AssA-Irada, 16 August) - Norway's Statoil has won the World Petroleum Congress's technology prize for 2002 for the group's underground injection of carbon dioxide at the Sleipner West field in the North Sea, the company's Baku office reported Friday.

The Statoil project came first of 78 nominees in the technology development category. The prize will be awarded during the 17th World Petroleum Congress, to be held in Rio de Janeiro in September.

Stig Bergseth, senior vice president for health, safety and the environment in Statoil sees the award as recognition of the group's work to develop technology, which makes it possible to carry out operations without causing harm to the environment.

"We are facing major environmental challenges in many of the areas we operate," says Mr Bergseth. "This prize confirms that our efforts to meet these challenges are attracting attention internationally."

Through the removal and injection of carbon dioxide from the gas produced on the Sleipner West field, emissions of that greenhouse gas to the air are reduced by about one million tonnes per year.

Statoil's project began with preliminary studies in 1990 and it was put into operation in 1996. Studies are now underway to find out how injected carbon dioxide moves in the underground formation, 1,000 metres below the seabed.

Plans call for this technology to be used later in the Snohvit field in the Barents Sea. The wellstream from the gas field will be piped to shore where carbon dioxide will be separated out and piped back to the field for injection into a sub-surface reservoir.

Background

Statoil ASA of Norway is an integrated oil and gas company with 17,000 employees and with business operations in 25 countries worldwide. The company is one of the largest suppliers of natural gas to Europe, responsible for marketing approximately 50 billion cubic meters of gas per year. Statoil is the world's third largest net sellers of crude oil, and the biggest operator on the Norwegian Continental Shelf. Average daily production for the Statoil Group in 2001 was 1 007 000 boe. The Group is also a leading Scandinavian retailer of petrol and other oil products.

In Azerbaijan, Statoil was among the first foreign companies to establish operations in 1992. Today, Azerbaijan is one of Statoil’s international core areas, and the company is one of the largest investors in the country. The company's current interests include Azeri-Chirag-Gunashli (8.6 per cent), Shah Deniz (25.5 per cent), and Alov-Araz-Sharg (15.0 per cent). STATOIL holds a 9.58 per cent share in the BTC pipeline for export of Azerbaijani and Caspian oil through Georgia to Turkey. Statoil also participates in the South Caucasus Gas Pipeline project transporting gas from Azerbaijan via Georgia to Turkey.

Economic Ministry downturns Comm offer

The Ministry of Economic Development has turned down the Communications Ministry's offer to introduce limits for telephone conversations and pay for extra phone talks, Minister Farhad Aliyev has told AssA-Irada, explaining the refusal with technically imperfect automatic telephone exchanges and lack of funds. The Ministry of Communications had proposed to impose restrictions of 800 minutes of free phone time on physical and 1600 minutes on legal entities and charge them 25 manat for every minute talked extra.

EBRD mission expected in Sept

A mission of the European Bank for Reconstruction and Development led by Lynn O’Grady is expected in Baku in September to become familiar with the implementation of railway projects, which have drawn 20.2mln US dollars from the bank. A second loan to the projects is presumed to be 30mln dollars for purchase of passenger carriages, tanks and spare parts.

The allocations are part of the EBRD project to improve the South Caucasus railway network. Loans are allotted for fifteen years with three years of grace period under the terms of Libor+1.

Azerbaijan, Pakistan to eye economic ties

An Azeri governmental delegation led by co-chairman of the Azeri-Pakistani intergovernmental commission on economic cooperation, Deputy Premier Yaqub Ayyubov is expected to leave for Islamabad, Pakistan to take part in a meeting of the commission in 2-3 September, according to the Cabinet of Ministers. The gathering will center on the expansion of bilateral economic and commercial relations and investments into the Azeri economy. New agreements on the development of bilateral relations in trade, agriculture, customs, culture, science, and finance will be signed during the meeting.

New trade center opens

Azerbaijan's and the South Caucasus's largest trade and entertainment center, Elite was inaugurated in the territory of Baku's former taxi park #5 Saturday, with Turkish pop star Ibrahim Tatlises performing in the inaugural ceremony. The center incorporates some 800 shops, a 4-star hotel, a restaurant, a cafe, furniture saloons, as well as the largest supermarket in the country with a space of 3400 square meters, with most of 5000 employees being Azeris. Turkish State Minister Rasad Dogru was among the performers of the ceremony.

First sleeper works launched

Baku's first works producing sleepers was launched in a solemn ceremony Wednesday after it was built by Turkish-German Valter van Tepe Insaat. Attending the ceremony was German ambassador to Azerbaijan Clause Grivlich. The new plant is estimated to manufacture 750,000 sleepers a year. The European Bank for Reconstruction and Development has allocated a loan under a state guarantee for the construction of the 2.4mln dollar worth of the works.

Earlier, the State Railway Office used to spend 2mln dollars to import sleepers.

Bakcell trains journalists in business

Bakcell, a mobile communications joint venture, held a seminar for journalists for the first time to focus on business-media relations at the ISAR Plaza Business Center of Baku Friday. The seminar "Interaction of local and foreign businesses with mass media and foreign experience" aimed to increase the qualification of local journalists and to study more about the activity of both local and foreign media in Azerbaijan.

The lecturer at the seminar, Professor of Baku State University Zeynal Mammadli spoke of business-media relations and the importance of advertisements in this regard. Bakcell is planning to hold a series of such seminars.

Iran to build Azeri border bridge

Iran is preparing to build a bridge over the river Araz, getting connected with Azerbaijan’s Naxcivan region, and reconstruct some highways in the autonomous republic. The Naxcivan automobile state concern has signed a protocol with the Iranian Transport Ministry for this purpose.