Summary of the Baku-Ceyhan Pipeline

Topics: Morality, Petroleum, Globalization Pages: 9 (3623 words) Published: July 13, 2014
MBA 660
Summary of the Baku-Ceyhan Pipeline
Introduction
The intense negotiations between different nations and firms have been a major issue of the international oil industry. The key problem of this issue is the transportation of crude oil from the Caspian Sea. The author of this article discussed primary about a pipeline project cross Azerbaijan, Georgia, and Turkey. In his analysis, the complexity of this pipeline project is high because of its geography problems and political situations. The setting- The Oil Issue and the Geographic Context of the Caspian Sea Region Oil’s importance to this world economy is incredible, so the oil company must pay highly attention about the supply and demand for oil. The authors cited some statistics showing that “the three major areas of oil consumption are North America, Europe, and Asia Pacific and that the two major areas of production are North America and the Middle East” (The Baku-Ceyhan Pipeline, pg.5). Focusing more on the pipeline project, he also gave the fact that “the region appears to have one percent or slightly more of the world’s known oil reserves” (The Baku-Ceyhan Pipeline, pg.5). Then a question about the development of a pipeline project on the Caspian Sea region is raised, and the author answered in three parts. First, the pipeline project is a tactical solution for the transportation of oil from Caspian Sea to Europe and Asia Pacific markets. Second, the pipeline is a strategic plan for oil companies to increase the supply and secure their positions. Third, the pipeline is a way for the United States to put their influence in this region. In addition, the author considered and analyzed many alternatives about the route of the pipeline. After analyzing the difficult relationship between those nations in that region, he insisted that “the Azerbaijan-Georgia-Turkey route seems to be the most pacific” (The Baku-Ceyhan Pipeline, pg.8). However, the earthquake prone becomes another problem for the pipeline’s designers and constructors because the route goes through them. Given the fact that potential earthquake can elevate the cost of this project, any questioning or doubt about the agreement of this pipeline would be reasonable. The author illustrated that there is no alternative to avoid this issue because another possible transportation route through Bosporus is refused by the Turkish administration. Oil Routes and Actors with Interests

The author primary discussed four possible pipeline routes and concluded that the most viable route is the BCP one. First, the traditional route is the route through the Bosporus Strait. And it will go into Novorossiysk. However, it is a non-viable route because “since 1994, the Turkish government has placed restrictions, with threats of more in the near future, on tankers going through the straits. There is an economic efficiency argument in the near-term for having the oil from Baku pass through Novorossiysk” (The Baku-Ceyhan Pipeline, pg.11-12). Second, another traditional route is the one through the Georgian port of Supsa. The author argues that this route doesn’t have the capacity to handle the daily amount of oil production from Baku. And the overall cost of the Baku-Supsa line and other new lines will be challenged. Third, the Baku-Ceyhan Pipeline has a capacity of one million barrels per day. And the ending port is at Ceyhan, which remains open year-round with unimpeded passage. However, there is also uncertainty which may delay or terminate this pipeline. Forth, a pipeline route from northern Iran to the Persian Gulf was preferred by oil companies. After taking and analyzing all possible factors, the first and second routes were non-viable because of the ecological risks through the Bosporus Strait. The cheapest route which is through Iran cannot be taken into consideration due to the political challenges. In addition, the author mentions three other potential routes. However, due to a great number of...
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