BP said today that exports of Azeri oil by rail to Georgia had stopped after the line was damaged in Georgia, which accused Russian troops of blowing up a railway bridge.
The stoppage further limits BP's options in taking oil from the Caspian after a fire damaged its Baku-Tbilisi-Ceyhan (BTC) link to Turkey and a pipeline to Supsa in Georgia was shut due to security concerns.
"Rail exports have stopped from Azerbaijan to Georgia," BP spokesman Robert Wine said. "There's been some damage along the line in Georgia."
The disruption to Azeri supply has helped limit the decline in oil prices, which have fallen to below $114 a barrel from a record high of $147.27 last month on concern that slowing economic growth will limit demand.
Georgia at the weekend accused Russian troops of blowing up a railway bridge west of the capital Tbilisi, saying its main east-west train link had been severed. Russia strongly denied any involvement.
The railway line runs from Tbilisi, through the Georgian town of Gori, before splitting in three and running to the Black Sea ports of Poti and Batumi and southwest to just short of the Turkish border.
Georgian officials yesterday said they expected to reopen the bridge within 10 days. A spokesman for Azerbaijan's national railroad said a smaller, disused rail bridge was being prepared for use in the meantime.
The railway line can carry between 50,000 barrels per day and 70,000 bpd of Azeri oil to Batumi, Mr Wine said.
A shipping agent said oil tanker shipments from Batumi were unlikely to be delayed as supplies should resume along the railway line through Georgia before oil held in storage is used up.
"We do not expect delays," said Garsevan Jorbenadze of TeRo, which is based in Batumi. There is no loading at Supsa because the pipeline is shut down, he added.
Due to the disruption, the BP-led Azeri-Chirag-Gunashli oilfields in the Caspian have cut production to about 250,000 bpd from about 800,000 bpd before the BTC link was damaged, according to industry sources.
Supplies could resume sooner than expected. Flows through BTC should resume within a few days, Turkish Energy Minister Hilmi Guler told a news conference today.
An official from Botas, Turkey's pipeline company, initially said repairs, which began last Thursday, could take one to two weeks.
The closures leave BP with a pipeline to Russia's port of Novorossiisk to export crude from fields in the Azeri part of the Caspian Sea. About 100,000 bpd of Azeri oil can be exported that way, analysts say.
But analysts and traders say the Russian pipeline outlet is not an attractive option to export Azeri oil because it would have to mixed with lower-quality Russian Urals crude.
Reuters