Except for the unusual heat, this day began as any other. But perhaps it was not quite an ordinary day after all. On that day there was no one in Georgia who did not know that an oil terminal was opening in Supsa. And there was no one who did not want to attend the opening ceremony.
From early morning that day, the completion of the Baku-Supsa early
oil pipeline and the official opening of the Supsa terminal was in the
spotlight of the Georgian and international media. During the day the air
was pregnant with expectation - live coverage, congratulations, and
welcoming of foreign guests. The feelings of gratitude, joy and pride
abounded - Georgia was again needed by the world, and was being restored
to its natural and historical place and function in the world.
Back in the 1890s, Ludvig Nobel, the first entrepreneur that had become interested in the Caspian oil, regarded the Azeri-Georgian route to be the most reliable and convenient, considering the territorial proximity of these two states and the centuries-old good-neighbourly relations between them. At the turn of the century, the Baku-Batumi oil pipeline was built. It was the first pipeline in Europe.
History has repeated itself as the Baku-Supsa pipeline initiated a new and important era in delivering Caspian crude to the world markets. This first step will be followed by a bigger pipeline around which the intensive negotiations are already underway.
All this marks the beginning of a global project known as the restoration of the Great Silk Road, which will foster economic ties between many states. The convergence of economic interests, for its part, will be a guarantor of political stability.
On that particular day, many foreign guests came to Georgia. They included the President of Azerbaijan Heidar Aliev, the President of Ukraine Leonid Kuchma, Special Advisor of the US President and Secretary of State on the Caspian Basin Energy Policy Ambassador Morningstar, a special delegation from the European Union; representatives of nearly all major oil companies and many others. Also among those present was the first president of the Azerbaijan International Operating Company, who is currently Executive Director of Monument Oil, Terry Adams. Mr. Adams was granted Georgia’s Honorary Citizenship in recognition of his special role in promoting the decision on the western route for the transportation of oil, and his personal contribution to the implementation of the project.
The guests and hosts of the inauguration ceremony shared many memories from the difficult period preceding the construction and bringing into operation of the Baku-Supsa pipeline and oil terminal - the first initiative and initial meetings, agreements and the success achieved step by step, the “deal of the century” and the launch of the “project of the century,” the parallel unresolved conflicts in Georgia and Azerbaijan, the coups and series of terrorist attempts, the support and assistance of the United States, international organisations, the European Union and foreign companies, not to mention the hard work and professionalism that actually built the pipeline and terminal.
On that day in Supsa the first tanker was loaded with the Azeri early oil and headed westward to Europe. In their emotionally charged speeches, those who spoke at the inauguration ceremony remembered the past and spoke of the future, exuding joy for what was already achieved and hope what is still to come.
President Aliev: “We are witnessing a historic event today, the hard and fruitful work on the construction of the Baku-Supsa pipeline has been completed and we are celebrating the setting sail of the first tanker loaded with the Azeri oil toward the world markets. All this work, specifically, the Baku-Supsa pipeline, is a major contribution to strengthening stability and peace in the Caucasus.”
President Kuchma: “I cordially congratulate everyone on this auspicious day. Oil is life. Oil, perhaps, is one of the strongest foundations for the development and prosperity of Azerbaijan and Georgia.”
President Shevardnadze: “Without exaggeration, the event that we are celebrating today will usher in a new epoch in the modern history of my country. We consider Supsa not only from the point of view of the economic benefit - although it means thousands of jobs and millions in investment, but as an example of broad regional co-operation manifested in the course of the implementation of the project.”
A message of congratulations from President Clinton was read: We would not have been able to arrive at this historic milestone without the leadership of President Shevardnadze and President Aliev, the patience and hard work of the peoples and governments of the two countries, as well as the skill and professionalism of the many companies participating in the project.
Turkish President Suleiman Demirel, Prime Minister Tony Blair, Kazakh President Nursultan Nazarbaev, President of Uzbekistan Islam Karimov, and the presidents of Bulgaria, Greece, Romania, Moldova and others sent messages of congratulation on the occasion.
President Shevardnadze also acknowledged the Georgian International Oil Corporation and its president Gia Chanturia and the devoted work of the Georgian specialists and staff to achieve their goal.
Of course, along with the foreign guests, there were many Georgians
at Supsa as well. Official guests and ordinary people who shared in the
The weather remained beautiful all day. Who knows, maybe we should indeed believe the predictions of the political weather forecasters. Maybe on April 17 the weather changed in Georgia.
The new pipeline is the first big caravan on the revived Silk Road.
KARAVAN 2 - GAS PIPELINE.
The construction of the early oil western pipeline was the first step in the grand plan of reviving the ancient Silk Road. The goal of reviving one section of this road, specifically the Caucasian corridor, has already given rise to many important new initiatives. Among these is the INNOGATE- the European Union sponsored interstate project involving oil and gas pipelines.
A long white corridor leads to the office of Mr. Aleko Gotsiridze, President
of the Georgian International Gas Corporation and Chairman of its Supervisory
Board. The reception room is quiet - except for the telephone, which
is ringing non-stop. The sound of a telephone ringing can be heard from
the President’s office too. Those attepting to call today are fortunate
because Mr. Gotsiridze is in town. He speaks in a calm and persuasive manner
in Georgian, Russian and English.
Those who are calling him have to wait a little this time while Mr. Gotsiridze share’s with us his outlook for future gas pipelines.
“The current activities of our corporation are related to the Silk Road and the restoration of its historic function.
Gas pipelines are part of this global project. A long time ago a project was proposed to supply Russian gas to Turkey. This project remained dormant though due to various circumstances. However, following a visit to Turkey by President Eduard Shevardnadze and his meeting with President Demirel, work on the project resumed. The project envisaged building a new Russia-Georgia-Turkey gas pipeline. This was how the Georgian International Oil Corporation came to be set up, which was then called the Georgian International Corporation for the Transportation of Natural Gas. The Corporation was authorised to conduct negotiations with the Turkish and Russian sides. Its initial capital was close to nothing. Two organisations of this type functioned in that period: Sakgazi and Saktransgazmretsvi, both dealing primarily with gas supply and transportation issues. At that time both were in dire financial straits, heavily indebted to Turkmenistan, Russia, and other creditors.
A clean, debt-free body was therefore required to deal with foreign companies and to attract investment.
The negotiations began. It took seven to eight months to advance the project. In this period, the Corporation acquired rights similar to those of the previously existing two bodies. A second presidential decree was issued transferring to the Corporation all existing high pressure pipelines for the period of thirty years or for the duration of time required for project implementation. Soon after, I was given the status of President’s Special Envoy in order to conduct negotiations. By than, we were the owners of all high pressure pipelines in Georgia and a negotiator on behalf of Georgia on issues pertaining to gas.
Shortly after this, Gazprom’s President Viakhirev came to Tbilisi and met with President Shevardnadze. They signed a protocol under which a joint venture SAKRUSTRANSPROM was to be established to rehabilitate the existing pipelines, supply gas to Georgia and simultaneously work on the gas transit via Georgia. Russia is exporting its gas to Armenia via Georgia. A working plan was then developed. By then, work on another project - transportation of gas from Turkmenistan across Azerbaijan and Georgia to Turkey - had started. The work is now vigorously under way. President of the American company ENRON, the world’s number two gas pipeline owner, visited Georgia to discuss matters pertaining to the project.
This project is of no less political significance than the first western oil pipeline for Caspian crude. It will allow Central Asian fuel to flow to the west via Georgia - not to the south via Iran or north via Russia. Understandably, the United States is interested in the project. Furthermore, it has declared that together with four other projects, the Trans-Caspian pipeline is in the vital national interests of the United States. Turkmenistan is interested, as well.
This project had a rather slow start because of the dispute between Turkmenistan and Azerbaijan over division of the Caspian. Therefore, the first and most difficult political decision was that the gas would flow to the west via the TCP (Trans-Caspian pipeline) and not to the south via Iran. On April 19 (the Day of the Declaration of Freedom by Turkmenistan), the Turkmen President announced that to him, the TCP had priority over the other options. New routes are appearing on the map of global distribution of hydrocarbons. Georgia is equally interested in developing its co-operation with Russia, the United States, and others.
Our principle is this: that we are a transit country and are open to and support any country willing to ship their resources across Georgian territory. President Shevardnadze personally has oversight of both these projects I described. They are being pursued, we are open to them both and want to see them materialise. I went to Moscow to negotiate with Gazprom. Shortly after that, a working group from Gazprom visited Georgia. They raised several issues and we resolved them all. Russia wants to ship 9-16 billion cubic metres of gas via Georgia to Turkey.
Russia has proposed another project - building an off-shore gas pipeline in the Black Sea, but this project is very expensive and requires some special technical and environmental expertise. But we will see....
In any case, Russia is determined to build a pipeline across Georgia. There are two options: Georgia-Armenia-Turkey and Georgia-Turkey. We still need to wait before we see which of these two is eventually chosen. The most important thing is that in both cases, the pipeline will cross Georgia and therefore generate revenues for the state budget.
As for the TCP, the United States has allocated around one million USD for the feasibility study. The presentation of the study was already held in Turkey and it convinced Turkmenistan that the project would be beneficial for the country. On April 19, the Turkmen Government announced a leading company to implement the project - the American PSG - a corporation of two major US companies.
The visit of the president of the PSG corporation was preceded by visits of several groups of experts who traveled along the route of the future pipeline. They studied the geology, ecology and prepared a packet of documents for signing.
Later the PSG president personally visited Georgia. President Shevardnadze
expressed his full support and interest in the implementation of the project.
This project will enable us not only to ship gas across Georgian territory, but this will also diversify Georgia’s internal supply arteries which will, in its turn, allow us to substantially reduce gas tariffs.
President Shevardnadze recommended that we move forward swiftly, and not waste much time on negotiations in light of the many competing offers and the fact that the rules of business do not admit delay.
As I said earlier, the US government actively participates in promoting the project. Ambassador Richard Morningstar plays a major role in advancing the TCP as well as the Baku-Cheykhan main export pipeline. During one of the meetings in Turkey, Ambassador Morningstar specifically requested that the Georgian President mediate the settlement of disputes between Turkmenistan and Azerbaijan. The Merkhev group came to Georgia to do the same. With the personal involvement and facilitation of President Shevardnadze, progress was achieved. Today, Azerbaijan strongly supports the project. This is one of the most important preconditions for success.
Now, as to where we stand today. The presidents of Turkmenistan and Turkey signed a gas sale and purchase agreement in Istanbul. This, of course, gave a strong impetus to the advancement of TCP project.
The Corporation has received strong financial assistance from the World Bank in the form of a grant for legal and technical assistance. Also, The United States Trade and Development Agency allocated over $200,000 in technical assistance. This has enabled us to form a strong team of lawyers, financial specialists and engineers from representatives of the world’s largest firms and banks. This group helps greatly in the proper conduct of negotiations for which we are very grateful to these organisations.
In our view, the issue of financing the TCP will be resolved by the end of this year and construction will commence.
Construction of this pipeline is very important for Georgia, politically
speaking. When Russia invests approximately 500 million USD in the project
so it can sell 16 billion cubic metres of gas annually, yielding 160 million
in annual revenues, then obviously Russia will be interested in assuring
its efficiency and reliability.
The Georgian section of the TCP will cost approximately the same. The American capital will make up the lion’s share. The pipeline will carry roughly the same amount of gas.
The project is of particular economic importance. It will solve many of our problems in gas and electricity supply.
We are working hard to be not merely a transit country, but a participant in the projects as well. Initially Russia was strongly against us having the right to use the pipeline. Russia did not want to give us our share in the Turkish market. But now that we are negotiating with the United States and the new project has gained momentum, they have adopted a softer stance. So we may begin to sell gas. We want to get the maximum benefit and that will be through the buying and selling of gas.
The pipelines will create jobs. We require from both sides that Georgian companies participate in the construction work that takes place on the Georgian territory. They agree to this, provided of course that their Georgian partners are adequately qualified. They will be selected through a tender and many local jobs will result. When the construction is completed, both pipelines will require maintenance, creating more permanent jobs. Today, nearly 900 people are employed in servicing the existing pipelines. I cannot say how many will be required in the future, but we will need modern technologies and a more qualified workforce. Therefore, training and retraining and raising their level of professionalism level will be necessary. More highly qualified personnel will be paid higher salaries, too.
The construction of the pipeline will foster many related activities. Cable communications, businesses related to the construction, and later maintenance. People will be able to work and receive timely and adequate salaries.
So many good and important developments are taking place thanks to the demand for gas.
At the end of June The Tale of the Three Seas conference was held by
the Cambridge Association of Energy Resources together with other sponsors.
The conference discussed the energy outlook for the Three Seas region.
Participants from Azerbaijan specially noted: “We declare for the whole
world to hear, that in several years Azerbaijan will be one of the largest
exporters of gas.” Their optimism is based on the results of geological
studies carried out by several major firms.
This was a very important statement, in fact representing a new wave and prospects in this sphere.
The telephone - local, international, mobile never stops ringing in
Mr. Gotsiridze’s white, well-lit room. They echo a busy atmosphere of work
and movement and indicate that another caravan is approaching.