The BTC Project: An Export Route for Caspian Oil - Essay Sample

Introduction

The Baku-Tbilisi-Ceyhan (BTC) project was proposed by multiple oil companies such as BP (UK). Amerada Hess (U.S.), INPEX (Japan), TPAO (Turkey), and TOTAL (France) among others. The project, whose expenditure was approximately $4 billion, was primarily aimed at providing an export route for the production of oil undertaken in the Caspian region. The project would play a central role in the delivery of hydrocarbons to the Mediterranean region without compromising the quality of the environment in Turkey. With Turkish waterways proving to be tremendously sensitive, the government of Turkey was not prepared to oversee increased the oil tanker traffic that is environmentally hazardous. To a greater extent, the construction of the BTC pipeline would focus on providing outlets to oil products produced in deep-water Gunashli and Azeri Chirag fields in Azerbaijan while also providing an alternative route for export for other Caspian Sea region's oil fields. It is of great importance to discuss the significance of the BTC project.

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Undoubtedly, the BTC project may be considered as the most significant infrastructure across the entire region of South Caucasus due to its huge social, political, environmental, and financial benefits for Georgia and Azerbaijan. In addition, the project has been instrumental in terms of unlocking the possible benefits for the existing resources in the hydrocarbon industry in the region (Balat and Gulyeter 33). With effective management of the revenue proceeds from the project, it is evident that the project has been associated with a tremendous boost in the economic growth of the region while also helping in the reduction of poverty, especially in Azerbaijan. Apart from the obvious financial benefits, the BTC project has contributed to significant transition effects across the region.

BTC pipeline has utilized the highest international technical and environmental standards, greatest safety and health standards, respect for human rights, as well as effective utilization of international principles related to corporate governance. Moreover, the project has played a central role in setting new transparency standards via disclosing all government payments, documents of the project like the production sharing agreements for deep-water Gunashli and Azeri Chirag, and engagement in panels of independent reviews. The BTC project has also been vital in enhancing the economic cooperation among Turkey, Georgia, as well as Azerbaijan. In this regard, the project has significantly strengthened the economic relations between the European main markets and the Caspian region.

Towards furthering the enhancement of economic benefits sustainability, numerous sponsors have been keen on developing financing instruments in order to effectively support tens of thousands of small and medium-sized enterprises (SMEs) as well as local private investments. The BTC project has been pivotal in increasing backward linkages via ensuring that local suppliers are included and skills transferred through leveraging on the available local labor (Papava 92). More importantly, the project has opened an alternative route for exporting Caspian producers of oil while also helping in reducing transportation costs in the region via an increase in competition and preventing the Turkish Straits. The corporate policy regarding the BTC project has clearly portrayed that the project has been associated with tremendous economic opportunities and benefits, which have the capacity of significantly enhancing the quality of life in the region (Papava 93).

Generally, the BTC project has led to an increase in incomes and economic opportunities, development, and improvement of the agricultural sector, enhancement of quality of lives through the revitalization of social infrastructure, as well as improvement of the ability of communities towards organizing and managing social development and taking independent initiatives. Economically, the BTC project has had both macroeconomic and microeconomic effects (Pinar 4). The microeconomic level impact is evidenced through the maximum net profit index while the macroeconomic level impact is evidenced through investment costs multiplier. Undoubtedly, implementing the BTC pipeline has the capacity of contributing to the growth of the entire region. However, it should be noted that the successful execution of the functions of the project is largely dependent on the irreversibility of democratic transformations as well as consistently pursuing integration strategy with Transatlantic and European organizations (Pinar 11).

Chapter Three Question: Development of the Tengiz Oil Field in Kazakhstan

The Tengiz field was identified in 1979 for the first time. The field has more than 8 billion barrels of oil reserves that may be recovered. In 1993, various organizations jointed towards ensuring that the reserve was effectively exploited. These organizations include LUKArco, U.S. ExxonMobil, KazMunaiGaz, and Chevron Texaco. The production of oil in Tengiz fields was approximately 13 million tons in 2004 (Grebby 39). The field's production capacity of crude oil has been raised by at least 80 percent, which has reached natural gas liquids of 760 million feet, 46,000 natural gas barrels, and 540,000 crude oil barrels. Generally, the Tengiz field project led to the creation of more than 7,000 jobs in Kazakhstan while also helping in the economic growth and development in the country. The oil venture of the Tengiz field has taken more than 40 years, with a total investment of over $20 billion (Grebby 39).

Tengiz Field is undoubtedly the largest existing reservoir in terms of single trap and deepest supergiant oil field producer across the globe. Chevron has played a central role in the exploitation of the highly valuable resource in the Tengiz field. Currently, the annual output of the is capable of satisfying the yearly oil demand of the entire region (Grebby 41). In 2018, the average share of Chevron's net daily production was more than 260 crude oil, over 380 million cubic feet of natural gas, and in excess of 19 barrels of liquids of natural gas. The integration of Future Growth Project-Wellhead Pressure Management Project (FGP-WPMP) is aimed at further increasing the total quantity of oil produced daily from the field while also maximizing the ultimate resources recovery (Grebby 42). The project relies on state-of-the-art technologies of oil extraction.

Chevron plays a central role in the Tengiz oil field by investing significant capital in the project aimed at expanding the exploitation efforts. According to Chevron, the expansion efforts would be critical in ensuring that the production of crude oil would be increased by approximately 260,000 barrels daily (Kokh 82). This will increase the total production by TengizChevrOil (TCO) by about one million oil barrels daily. Chevron has been engaged in extensive construction and engineering reviews, which seeks to leverage on the lower costs of services and goods in the oil industry. In addition, Chevron has been keen on considering efforts towards preserving the environment in relation to the project expansion and work extraction in the region (Todd n.p.).

Numerous achievements by Chevron on the Tengiz Field's expansion project is an indication that it has been central to the success of the oil extraction processes in the region. Following the first expansion in 2008, the oil production doubled. The accomplishments demonstrate how Chevron has significantly contributed to the energy industry in terms of selecting and executing major capital projects while also ensuring that the value for their partners and countries is increased (Kokh 85). More importantly, the successful expansion of the project is a true testimony of the effective and long-term partnership of Chevron with Kazakhstan. Through its support in the energy industry, Chevron seeks to realize enhancement in diverse benefits in Kazakhstan and its citizens.

Works Cited

Balat, Mustafa, and Gulyeter Ersoy. "Baku-tbilisi ceyhan oil pipeline (BTC) project and Turkey: Investments, future developments and environmental impacts." Energy exploration & exploitation 23.1 (2005): 31-39. Retrieved from https://doi.org/10.1260%2F0144-5987.23.1.31

Grebby, Stephen, et al. "Delineating ground deformation over the Tengiz oil field, Kazakhstan, using the Intermittent SBAS (ISBAS) DInSAR algorithm." International Journal of Applied Earth Observation and Geoinformation 81 (2019): 37-46. Retrieved https://doi.org/10.1016/j.jag.2019.05.001

Kokh, Svetlana, et al. "Numerical simulation of an oil-gas fire: A case study of a technological accident at Tengiz oilfield, Kazakhstan (June 1985-July 1986)." Energy Exploration & Exploitation 34.1 (2016): 77-98. Retrieved from https://doi.org/10.1177%2F0144598715623670

Papava, Vladimer. "The Baku-Tbilisi-Ceyhan Pipeline: Implications for Georgia." The Baku-Tbilisi-Ceyhan Pipeline: Oil Window to the West 1 (2005). 85 -102.

Pinar, I. P. E. K. "The aftermath of Baku-Tbilisi-Ceyhan pipeline: challenges ahead for Turkey." Perceptions: Journal of International Affairs 11.1 (2006): 1-17. Retrieved from https://dergipark.org.tr/en/pub/perception/issue/49001/625131

Todd, Felix." Unpacking Chevron's Tengiz expansion project: Will it go live by 2022? NS Energy. Retrieved from https://www.nsenergybusiness.com/features/chevron-tengiz-expansion-project-2022/