Azernews,
29, August - 4, September 2007
By Elman Babayev
AzerNEWS Contributor

Russia has reiterated it was opposed to the West-backed trans-Caspian pipelines that will export Caspian energy resources to world markets by-passing its territory.

"The gas pipeline project will ocomplicate efforts to create the optimal scheme of energy supplies in the region. Moreover, building it will cost billions of dollars," Deputy Foreign Minister Andrey Denisov told journalists.

The diplomat downplayed prospects for laying a sub-sea gas pipe, saying there were natural complications involved. He noted that the relief of the Caspian seabed was complex and the area through which the conduit would be laid was seismically active.

He maintained that even if the pipe is laid, filling it would turn into a problem, citing some bitter experience in this respect.

The deputy minister added that increasing the number of pipelines to export Caspian hydrocarbons to world markets was "a waste of money".

"What is the need for the trans-Caspian project when there are cheaper routes to take oil from Central Asia to Europe?" Denisov queried.

Azerbaijan and the United States signed a grant agreement in Baku on August 16 to develop a feasibility study for building the trans-Caspian pipelines. Under the deal inked by SOCAR and US Trade and Development Agency (USTDA), the U.S. will allocate $1.7 million to Azerbaijan to conduct relevant research. One of the pipelines will transport Kazakh oil through the Baku-Tbilisi-Ceyhan main export pipeline, while the other one is earmarked for exports of gas from Kazakhstan and other Central Asian states to European and world markets through the Caspian seabed.

According to preliminary estimates, it will cost about SI 1.5 billion to build a sub-sea gas pipe. Its annual throughput capacity could amount to 22bn cubic meters. Analysts say the project is more viable than the Russia-backed Blue Stream project. The pipe could be further connected to the South Caucasus Pipeline (SCP), which is pumping gas produced from Azerbaijan's major Shadaniz field to world markets. Gas from the Caspian region will be exported to Italy through Greece and Bulgaria in the coming years.

The trans-Caspian pipeline is expected to meet Europe's demand. The project will help European countries diversify supplies of energy resources and reduce dependence on Russian gas, as repeatedly stated by US officials.

The project is of great importance for Azerbaijan as well. Although the country has its own pipeline - Baku-Tbilisi-Erzurum, the alternate route will bring it considerable transit revenues.