Pipeline parallels

Soaring oil prices, abrupt changes to forecasts in crude output and possibility of supplies running out have been making news headlines for a while now. Interest in the U.S. led war against Iraq, infamously called the "war against oil" is still drawing media's attention, but while the world is focusing its view on the Middle East and U.S. relations in terms of oil, something sinister is going on in Eastern Europe.

The recent clash between Georgia and Russia has experts wondering what is the real reason behind the war. It may have been controversial from the beginning, but even now Georgia's President Mikheil Saakashvili claims that Georgia's section of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline was the key reason for the Russian offensive.

Conceived in the 1990s, the pipeline was backed by the US and Britain as a way to reduce Western dependence on Russian and Middle-Eastern oil. Most countries in Central and Eastern Europe are dependant on Russia's supply of oil and gas, so when a temporary problem in the supply occurs, it is enough to send waves of panic.

At current oil prices, the BTC pipeline, which is owned by BP, delivers more than $1 billion worth of crude oil every ten days.

Supply shut down

When the battle broke out, the BTC pipeline was closed because it runs through central parts of Georgia, close to the capital Tbilisi, and there have been no reports from the company whether the pipeline was attacked by the Russians. However, the Georgian Embassy in Azerbaijan reported that the Russian military used the Iskandar rocket system to bomb the BTC pipeline. 

British oil concern, BP also later closed a second pipeline, Baku-Tbilisi-Erzurum (BTE), citing the move as preventive. The system runs from Sangachal terminal near Baku to Georgian terminal Supsa on the Black Sea with a capacity of near 150,000 barrels of oil per day.

However, BP announced on August 14 that it resumed pumping gas into the South Caucasus pipeline in Georgia, but the Baku-Supsa oil link still remains closed. "The Baku-Supsa pipeline remains suspended for the time being. It goes through the middle of the country," said BP spokesperson. "It's a different route from SCP so we're still assessing the security implications and that remains suspended."

More to worry about

The BTC pipeline is a much bigger system than the BTE pipeline, covering over 1,700 kilometers from Baku, Azerbaijan, to the Mediterranean coast of Turkey. It is the second longest pipeline in the world and operations have ceased since August 5 when a fire broke out in the Turkish section. Kurdish rebels later claimed responsibility, but no final statements about the cause have been released.

"There is no problem regarding the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum oil pipelines. And there is no problem in the Georgian section," said Turkish President Abdullah Gul in a press conference in Ankara as a response to whether the two pipelines were damaged during clashes in Georgia.

So far, oil markets have not reacted to the news that Russians tried to bomb the pipeline. The market remains focused on the signs that global oil consumption is slowing down and the world economy has weakened.

However, Robin Pagnamenta, energy and environment editor at The Times pointed out that oil prices are influenced by shorter-term factors and the prospects of direct Russian control of the BTC pipeline would be unwelcome in the West, strengthening Russia's control of Europe's energy future. According to Pagnamenta, this is one key reason why the current Russian-Georgian conflict is worrying the West.