UpdateBP shuts pipelines in Georgia conflict

12 August 2008 16:10 [Source: ICIS news]

(Releads and updates throughout, adds map)

By Hilde Ovrebekk

LONDON (ICIS news)--BP has closed the 90,000 bbl/day oil pipeline between the Azerbaijan capital Baku to the Georgian Black Sea port of Supsa as Russia signalled an end to military operations in the region, it said on Tuesday.

“We haven’t seen any damage so this is simply a precautionary suspension,” said BP spokesman Robert Wine.

BP said oil was still being exported from Baku through a rail link to Batumi, Georgia, and a pipeline to Novorossiisk on Russia’s Black Sea coast. The combined capacity is around 150,000 bbl/day.

BP also shut its South Caucasus natural gas pipeline as a result of the conflict, according to news reports.

Crude rose by more than a dollar to take Brent crude on ICE Futures above $114/bbl on the back of supply concerns related to the Russia-Georgia conflict.

Chemical shipping players said that they were still to see any impact of the temporary suspension of the oil pipeline.

One shipowner which has tankers stationed in the Black Sea region had not heard of or seen any increased demand but was glad that neither of his vessels were near to Georgia.

He would be avoiding the Caspian Sea at all costs, he said.

The Georgian port of Poti was reported to be partially operating again after it was closed on Monday amid security fears.

Russia's President Dmitry Medvedev said that military operations in Georgia had been halted.

Georgian claims that the Baku-Supsa pipeline had suffered minor damage after being targeted by warplanes were earlier denied by Russian military officials.

"We do not strike oil pipelines as such strikes could entail serious environmental repercussions," Russia's deputy chief of general staff Anatoly Nogovitsyn was quoted as saying by Reuters news agency.

A Turkish Energy and Natural Resources Ministry official told ICIS news the oil flow on the 1m bbl/day Baku-Tblisi-Ceyhan (BTC) pipeline, part of which also runs through Georgia, was expected to resume within a week after a fire on the Turkish section was extinguished on Monday, six days after being hit by an explosion unrelated to the current conflict.

He added that any possible continuation of the conflict, which began last Thursday when Georgia launched an assault on South Ossetia, was not expected to affect supplies on the pipeline.

Another Turkish industry source said the number of international companies involved in the pipeline would possibly stop the Russian government from attacking it.

Russia has increased oil exports from Azerbaijan from 83,000 tonnes/month to 166,000 tonnes/month in anticipation of any supply disruptions in Georgia.

Georgia’s prime minister said Russian fighter jets had continued to bomb villages in the country despite Medvedev saying earlier that he had ordered an end to military operations.

Russia has denied attacking the town of Gori, outside the disputed South Ossetia region of Georgia, as well as other villages in the country.

Russian peacekeepers said Georgian forces were periodically shooting at opposition forces in South Ossetia while Georgia said it had pulled its forces back towards Tbilisi to defend the capital.

Azerbaijan's state-run oil company Socar and Kazakhstan's KazMunaiGaz had announced plans to reroute some crude oil and oil products previously exported via Georgia's port of Batumi which was only partially operating.

About 249km of the BTC pipeline passes through Georgia, parts of it very close to South Ossetia.

Dan Horlock, Mark Watts, Sergei Blagov and Brian Ford contributed to this article

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By: Hilde Ovrebekk
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