Baku-Supsa pipeline: Does it have a future? – ANALYTICS

By Seymur Mammadov and Sabina Alizade  

Georgia expresses hope for the resumption of transportation of oil through the Baku-Supsa pipeline in 2024, as emphasized by the country's Minister of Economy, Levan Davitashvili. The minister pointed out the need for agreements with Azerbaijan regarding the use of the pipeline, which had been actively functioning since 1999.

On the other hand, Kazakhstan considers this pipeline, running through Georgia, as a route for exporting its oil. The Chairman of the Board of Kazakhstan's state company KazMunayGas, Magzum Mirzagaliyev, reported that this issue has been under discussion for a long time: Azerbaijan proposed in 2022 that Kazakhstan use the Baku–Supsa pipeline with an annual capacity of up to 6 million tons for oil transportation. It is interesting whether the transportation of oil through the Baku-Supsa pipeline will be resumed?

From its inauguration on April 17, 1999, the pipeline marked a pivotal era in oil transport via boththe Baku-Supsa and Baku-Novorossiysk routes. The former initially handled 6 million tons annually, while the latter managed 2.5 million tons. Yet, Baku-Supsa underwent a nearly two-year hiatus starting November 2006 for refurbishment.

2008 posed challenges with a suspension in oil flows during Georgian military conflicts, particularly affecting a segment near South Ossetia. Post-conflict, British Petroleum's $150 million investment in 2016 significantly modernized the pipeline, enhancing its environmental compliance. By November 30, 2021, it had facilitated the shipment of 1,000 tankers, transporting a cumulative 700 million barrels of oil, peaking at 100,000 barrels per day. However, operations ceased again on March 15, 2022, and remained halted as of May 2023.

Georgian analyst Gela Vasadze regards the pipeline’s revival as economically and strategically beneficial for Azerbaijan, Kazakhstan, and Georgia. For Azerbaijan, it offers an export diversification avenue, reducing reliance on conventional routes and potentially enhancing revenue through transit fees. Kazakhstan could leverage it for direct European market access, diminishing dependence on Russian pathways and bolstering its regional standing.

Georgia, for its part, could see its economic and strategic importance as a Eurasian transit hub bolstered, thanks to additional transit revenues. This trilateral collaboration could redefine regional energy dynamics, underscoring the strategic significance of the Baku-Supsa pipeline in the broader geopolitical landscape.

Vugar Bayramly, an MP and economic specialist, underscored the renewed focus on the Baku-Supsa pipeline and Kazakhstan's drive to branch out its energy export paths globally. He highlighted Kazakhstan's crucial endeavor to reach international markets, particularly aiming to bypass Russia for oil exports to the European Union via routes like Baku-Supsa and Baku-Tbilisi-Ceyhan. This reflects Kazakhstan's strategy to diversify its energy resource exports.

Bayramly pointed to the significance of Baku-Supsa for Azerbaijan, noting its potential to boost state revenue and enhance its geopolitical stature. He elaborated on how the transit of strategic commodities, including Kazakh oil, through Azerbaijan not only amplifies the nation's global standing but also elevates transit-derived state revenues.

The dialogue between Kazakhstan and Azerbaijan, as evidenced by official leadership visits, indicates a strengthening bond and mutual eagerness for further collaboration. Bayramly voiced optimism about the Baku-Supsa pipeline's pivotal role in broadening Azerbaijan's geopolitical and geo-economic influence, emphasizing its contribution to regional stability and economic growth.

Kazakh economist Magbat Spanov highlighted the shift in global logistics since 2022, spurred by the Russia-Ukraine conflict, which disrupted international transport channels. Given Kazakhstan's landlocked geography, the country faces challenges in exporting its energy resources. Historically reliant on three primary corridors—two through Russia and one through China—the current geopolitical climate, particularly the Russia-Ukraine skirmish, threatens a crucial route via the Caspian Pipeline Consortium, critical to Kazakhstan's export volume.

Spanov underscored the increasing relevance of the Baku-Tbilisi-Ceyhan pipeline, foreseeing a surge in oil transit volumes. Despite this growth, he remarked that these figures still fall short of the Caspian Pipeline Consortium's capacity. With aspirations to extend export avenues, Kazakhstan contemplates utilizing the "Druzhba" pipeline for Eastern European deliveries, although this entails Russian transit.

In light of the prevailing Russia-Ukraine conflict, Spanov identified Baku-Supsa as a viable alternative, highlighting risks associated with Novorossiysk transit and the impracticality of Iranian routes due to political hurdles and Western oversight of major Kazakh oil projects.

He suggested that Russia's interest in facilitating additional transit routes for Kazakh oil presents a revenue and employment opportunity. Spanov urged Kazakhstan to evaluate alternative routes against national interests, emphasizing economic benefits and the necessity for competitive transit fees. The fortification of Kazakhstan-Azerbaijan relations, coupled with the introduction of more oil tankers, signals the feasibility of this route, promising to strengthen bilateral ties.

P.S. The issue of resuming operations of the Baku-Supsa oil pipeline, which connects the Caspian Sea fields with the Georgian Black Sea coast, is a matter of not only economic but also geopolitical interests of several countries. It is commonly believed that the initiative to resume the pipeline depends on three key regional states - Georgia, Azerbaijan, and Kazakhstan. However, the influence of external powerful players, especially Russia and the United Kingdom, cannot be underestimated.

Russia, which has significant interests in the region, plays a certain role in the fate of the pipeline's resumption. On one hand, the resumption of the Baku-Supsa pipeline could enhance the supply of Caspian oil to world markets, which, in turn, could affect the geopolitical balance in the region. On the other hand, Russia may view this project as a threat to its interests, especially considering its preference to control the main energy routes from the region. The United Kingdom, showing active interest in the resumption of the pipeline, sees this as an opportunity to strengthen energy security and diversify oil supply sources. 

Thus, analyzing the influence of major players on the resumption of the Baku-Supsa oil pipeline, it is necessary to consider a complex of international relations, economic interests, and strategic goals of various states. In this context, Russia and the United Kingdom act as key figures capable of both facilitating and blocking the project's implementation. Solving this issue requires coordinated efforts of all interested parties, consideration of their interests, and the search for compromises.

News.Az 



News.Az 

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