(AFP) – Aug 12, 2008
PARIS (AFP) — Fighting in Georgia threatens a strategic energy hub, the IEA warned on Tuesday, shortly before Georgia said Russia had attacked a pipeline normally carrying up to a million barrels of oil a day westwards.
The International Energy Agency said that events in Georgia had not affected the price of oil, but stressed the significance of the region to energy supplies.
"Recent escalation in military engagement between Russia and Georgia poses a threat to certain key oil and gas pipelines which transit Georgia," the International Energy Agency said.
Two hours after the report was published, Georgia said that Russian aircraft had attacked the Baku-Tblisi-Ceyhan pipeline, the second such attack since Sunday, but said it did not know if the pipe had been damaged.
Russia denied it had made any deliberate attack.
At the IEA, supply analyst David Fyfe, speaking shortly before the Georgian claim, said: "There have been no deliberate attempts to damage that pipeline."
He said: "We think it (any attack) would be counter active... even though it can happen in a conflict."
The BTC pipeline usually carried 800,000-900,000 barrels per day, he said.
Events "demonstrate that it is a volatile region, it is a crucial region for getting Caspian oil to consumer markets."
The IEA said that the BTC pipeline was one of the strategic energy supply lines in Georgia.
It also listed the South Caucusus pipeline carrying up to 8.8 billion cubic metres of Azeri natural gas per year to Georgia and Turkey, and the Black Sea ports of Batumi, Supsa and Poti, and a new port at Kulevi, which "are also important export terminals."
More oil travelled westwards across Georgia by rail.
"With negligible domestic oil production, unlike some of its Caspian neighbours, Georgia's significance to global oil and gas markets is as a transit corridor," the IEA underlined.
The IEA said that while the "threat of an attack on the BTC (Baku-Tblisi-Ceyhan) pipeline poses the bigger risk to oil markets, it is clear that more generally, Georgia is a key energy transit hub in the Caucasus region and a country of significant strategic importance to energy markets.
The recent closure of the BTC pipeline through southern Georgia, because of an attack claimed by Turkish insurgents, and then the fighting between Georgia and Russia, had not "materially affected prices," the IEA reported.
But, "the outage on the BTC pipeline and recent hostilities in the Caucasus highlight the potentially precarious nature of pipeline energy supplies in the region," it said.
"With the BTC currently closed, disruption to Georgian energy infrastructure further limits the possibility of getting Caspian oil and gas to markets."
The IEA painted an overall picture of pressures easing in the global oil market, explaining a recent sharp drop in the oil price, and said the market was set to be cooler well into next year.
But it warned that this new improvement in the supply-demand balance could be thrown out at any moment by sudden disruptions. Various interruptions in July and August "have thrown up a number of warning signs."
The BTC pipeline carried up to a million barrels per day of mostly Azeri crude oil to the Turkish port of Ceyhan, the agency said.
"Renewed flows through Georgia, expected from September, could be further delayed if the line is damaged during the Russia-Georgia conflict," the IEA said.
"Along the same corridor runs the South Caucasus gas pipeline... A branch of this pipeline continues through to the Russian port of Tuapse, transiting the region of Abkhazia, another Georgian area affected by separatist action where Russian troops are reportedly also being mobilised," the IEA said.
The agency also said that up to 150,000 barrels per day of crude oil from Azerbaijan plus some products were pumped by pipeline to the ports on the Black Sea.
The oil was then exported either by tanker ship, mostly to southern Europe, or as product from Batumi or Poti, or was refined in Batumi and then exported as product.
Rail exports of up to 50,000 barrels per day followed the same route from Azerbaijan to the ports.
"Total product exports leaving Georgian ports typically average 50,000-70,000 barrels per day," the IEA said.
"Latest reports suggest that oil exports from Poti have ceased, while only partial operations are currently possible from Supsa and Batumi."
The IEA was created as an offshoot of the Organization for Economic Cooperation and Development, after the first oil shock connected to the Arab-Israeli war in 1973. It monitors global energy trends and oversees OECD strategic energy reserves for use in times of crisis.
Copyright © 2014 AFP. All rights reserved. More »