HazardEx rough guide to Central Asian pipelines

01 September 2008

Current issues regarding fuel supply and rising costs are making pipelines significant targets for bombings or sabotage by terrorists. This fact has been highlighted in Georgia recently with numerous attacks on the Baku-Tbilisi-Ceyhan (BTC) pipeline, raising issues regarding the safety of pipelines, not only in Georgia, but worldwide.

Pipelines in Central Asia

Georgia has no significant oil or gas reserves of its own but it is a key transit point for oil from the Caspian and central Asia destined for Europe and the US. Crucially, it is the only practical route from this increasingly important producer region that avoids both Russia and Iran.

The BTC is key in US foreign policy because it reduces Western reliance on oil from both the Middle East and Russia. BP owns 30.1% of BTC, while Azeri state oil company Socar holds 25%. Other shareholders include US company Chevron and ConocoPhilips, Norway’s StatoilHydro, Italy’s Eni and France’s Total.

The $2.95 billion BTC pipeline, 30 miles south Tbilisia, Georgia, is a major supplier of crude oil to the western world, pumping up to one million barrels of oil per day, supplying more than 1% of the world’s daily crude output. BP sees the BTC as an alternative to the Baku-Novorossiisk pipeline that takes Azeri oil to Russia, from where it is sold on to Europe.

The security of the pipeline has been a major concern since before its construction. The first significant attack occurred on August 5th 2008 when a fire caused disruption to fuel supplies, and resulted in a raise in international fuel prices. The fire was in the Turkish section of the pipeline and caused workers to shut down two valves halting the flow of oil, although the production of oil has continued as normal.

The pipeline was expected to close for 15 days and BP looked for alternative methods of delivering oil to the West in case closure lasted longer than expected.

The security of pipelines is a major concern even before they are completed

Separatist Kurdish rebels claimed responsibility for the explosion, despite no evidence of sabotage being found. The Kurdistan Workers’ Party (PKK) took up arms for Kurdish self-rule in Turkey's south-east in 1984, and has a history of sabotaging gas and oil pipelines. This sabotage of the BTC pipeline was thought to be a result of a recent intensified military crackdown against the PKK, as well as the army killing 240 PKK militants and destroying hideouts in February.

More recently the presence of craters in Southern Georgia suggested Russian involvement in the bombing of the pipeline. The nearest bomb exploded just 10 feet from the pipeline. It is unknown whether Russia intended to hit the pipeline directly or to give the West a scare about the security of energy supply.

Russia has denied bombing the pipeline, but the evidence of an air attack was extremely strong. The craters, some 60 feet across, are located in the hills. An area lacking military or human targets. The craters were concentrated in a region where the BTC pipeline and the Baku-Supsa pipeline intersect. Russia has also been accused of blowing up a railway bridge in Georgia, further limiting BP’s options in taking oil to the West.

With the BTC out of action due to fighting stopping Black Sea tankers loading up, leading to a stockpiling of crude at the terminal, BP began pumping all its Azerbaijan oil through the Baku-Supsa pipeline which has a much smaller capacity. However, BP also closed this pipeline which carries oil to Georgia’s Black Sea coast, as it is now blockaded by Russian warships. The only pipeline from Azerbaijan that was fully operational on the 14th August was the one running through Russian soil to the port of Novorossiisk.

A representative from BP claimed: “None of the various pipelines has been damaged by the conflict in Georgia - contrary to some media speculation. And of course the BTC pipeline was shut down the week before the Georgia conflict as a result of completely unrelated problems at an isolation valve well within Turkey.”

Nabucco gas pipeline under construction

The EU gets approximately 40% of its gas supply from Russia, but this will rise significantly as energy usage intensifies. To reduce this risky dependence on Russia, a US and EU controlled proposed pipeline called Nabucco is being designed to bypass Russia and ship gas to Europe by 2013. However, Russia is retaliating with a new pipeline of its own called South Stream. The South Stream gas pipeline will pass under the Black Sea to Bulgaria and then split into two onshore routes, to Italy and Central Europe.

Gazprom Deputy Chairman, Alexander Medvedev, said that the pipeline will ‘diversify Russian gas supply routes towards European countries and significantly contribute to Europe's energy security’. This pipeline is expected to cost $20 billion, significantly more than the Nabucco line. However, at present there is much controversy as to whether the Nabucco should go ahead as it has to run through Georgian territory, sparking fears among gas customers that the pipeline could possibly be interrupted as the tense situation with Russia continues. Additionally, the rise in steel prices has already added 60% to the cost.

Limited fuel supply and rising fuel costs are stressing the significance of a continuous supply of fuel, and a need for the West to reduce its reliance on Russian energy resources, either through the construction of the Nabucco pipeline or through the usage of renewable energy sources.

The security and safety of current pipelines need to be heightened so that any attacks are unlikely to have a significant effect on fuel supply. The BTC pipeline is buried throughout most of its length to make sabotage more difficult. Yet the recent eruptions of violence on the pipeline, and the obvious knock-on effects they are having could spur new attacks and perhaps greater safety precautions should be taken. A BP spokesman claimed: “In general the security of infrastructure such as these lines is the responsibility of governments, and the consortia of which BP is a member work with national agencies on pipeline design and security arrangements.”