BAKU-TBILISI-CEYHAN (BTC) PIPELINE

Location:

Regional

Project number:

18806

Business sector:

Natural resources

Notice type:

Private

Environmental category:

A

Target board date:

11 Nov 2003

Status:

Completed

PSD disclosed:

07 Oct 2003

Project Description

The BTC Pipeline Project is developed by affiliates of eleven oil companies (the Sponsors):
  • Amerada Hess (USA);
  • BP (UK);
  • ConocoPhillips (USA);
  • ENI (Italy);
  • INPEX (Japan);
  • ITOCHU (Japan);
  • SOCAR and the republic of Azerbaijan (Azerbaijan);
  • Statoil (Norway);
  • TOTAL (France),
  • TPAO (Turkey);
  • UNOCAL (USA)
 
The proposed project will part-finance the construction of the US$3.6 billion BTC Pipeline (the Project). The pipeline will be the primary export route for oil produced in the Caspian region delivering hydro-carbons to the Mediterranean while avoiding the environmentally sensitive Turkish Straits. Tanker tariff in the Bosphorus is nearing its maximum capacity and because of the highly sensitive nature of the waterways, the Turkish government is reluctant to increase the environmentally-hazardous oil tanker traffic.
 
The BTC Pipeline is primarily constructed to provide an outlet for the oil produced during the full field development of the offshore Azeri Chirag and deepwater Gunashli fields in Azerbaijan (please see separate PSD) as well as to provide an alternative export route for other oil fields in the Caspian Sea region.
 
As Turkey is not one of the Bank's countries of operations, the Bank's funding will be directed to the Project's capital expenditure in Azerbaijan and Georgia.
 

Transition Impact

The Project is the most important infrastructure project in the south Caucasus region, with significant financial, environmental, political and social benefits for Azerbaijan and Georgia.
The BTC Project is fundamental to unlocking the potential benefits of existing hydro-carbon resources in the Caspian. Subject to appropriate management of the associated revenues, the project has the potential to boost economic growth and assist in reducing poverty, particularly in Azerbaijan, one of the region's poorest countries.
 
Aside from the anticipated monetary benefits, the construction of the BTC Pipeline will have substantial transition impact on the region including:
 
1. The application of the highest international environmental and technical standards, highest health and safety standards, international principles of good corporate governance and the respect for human rights.
 
2. The Project sets new standards of transparency through the disclosure of: (a) all payments made to the relevant Governments; (b) of project documents such as the Host Government Agreements, the Azeri Chirag and deepwater Gunashli Production Sharing Agreements in English (and shortly in local languages); and (c) by engaging independent review panels like the Caspian Development Advisory Panel, which recently published an interim report on BTC (www.caspsea.com).
 
3. The project will significantly boost economic cooperation between Azerbaijan, Georgia and Turkey. It will help to strengthen the economic ties between the Caspian region and its main markets in Europe.
 
4. To further enhance the sustainability of the economic benefits conferred by the Project, the Bank is working with the Sponsors to develop financing instruments in place for the duration of the project to support small and medium sized enterprises and local private investment.
 
5. Increased backward linkages through the inclusion of local suppliers and transfer of skills through the employment of local labour
 
6. The Project will open an alternative export route for Caspian oil producers and will help to reduce transportation costs from the region through increased competition, while at the same time avoiding the Turkish Straits.

The Client

BTC Finance BV (the Borrower) a limited liability company incorporated in the Netherlands indirectly and wholly owned by the Sponsors. The pipeline will be owned and operated by BTC Co., a company wholly owned by the Sponsors.

EBRD Finance

A 12 year A loan of up to US$125 million and a 10 year US$125 million B loan. The Project will be co-financed with IFC and various governmental agencies including US-Exim, JBIC, Nexi, Hermes, SACE, Coface, ECGD, OPIC and a number of commercial banks such as Societe Generale, ABN Amro, Citibank and Mizuho.

Project Cost

US$3.6 billion ($2.95 billion capital cost)

Environmental Impact

The project was screened A/0 requiring an EIA.
 
The Client has carried out an extensive Environmental and Social Impact Assessment.
 
The ESIA contains a detailed discussion of the development and evaluation of project alternatives, the process of route selection, design process and construction planning, identification of environmental and social impacts and selection of mitigation and management measures with respect to the Project's design, construction and operation.
 
The Bank has assessed a variety of environmental issues with regard to the Project. In conduction this review the Bank has assessed, inter alia, the routing options for the pipeline, the potential impact to wildlife habitats, surface and groundwater. In addition, the Bank has reviewed community-related issues including concerns over land required for the Project and the potential implications for farming assets and/or income for the local population, together with the compensation mechanisms for affected people.
 
The Client has completed a number of comprehensive environmental and social studies and produced various documents outlining commitments to eliminate or reduce key environmental and social impacts to acceptable levels (Environmental and Social Action Plan, Resettlement Action Plan, Contractors Control Plans, etc.).
 
There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

None.

Company Contact

Oliver Broad
BTC Co Ltd
Bechtel House
245 Hammersmith Road
London W6
Tel: +44 20 8846 5409
Email: broado@bp.com
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.