Oil majors seek Ceyhan pipeline deal

Lloyd’s List, June 26, 2006 Monday

By Martyn Wingrove

Lukoil, Chevron, Shell and Total are all interested in Eni’s $1.5bn Black Sea oil project

Companies are lining up to join Italian group Eni in building a $1.5bn oil pipeline across Turkey to Ceyhan, which is fast becoming a leading tanker
terminal for Caspian Sea producers. Russia’s biggest listed oil company Lukoil, Indian Oil Corporation, US major Chevron and Anglo-Dutch group Royal Dutch Shell have approached Eni to join a project that could be completed in 2010.
Eni and Turkish partner Calik Holdings plan to build a 550 km pipeline from Samsun on Turkey’s Black Sea coast to Ceyhan on the Mediterranean to by-pass the congested Turkish Straits.

« We are in contact with Lukoil, Chevron, Shell and others. Total is also interested, » said Ahmet Calik, chairman of the holding company. « We are aiming to have major companies joining us. We have had encouraging signs about participation, » he told Bloomberg.

Oil producers in the Caspian Sea that do not have capacity booked in existing pipelines are keen to secure equity in the Eni-built line which will carry 1.5m barrels per day to Ceyhan. Partners in Eni’s giant Kashagan project in the Caspian off Kazakhstan, including Shell and Chevron, will need to find a way of exporting crude to global markets without going through the Bosporus and Dardanelles.

Consumers such as Indian Oil Corporation are interested in securing capacity to bring Caspian crude to their refineries via the Suez Canal. « Samsun-Ceyhan is one of our priority projects and it will carry Kazakh and Russian oil which will reach the Black Sea starting from 2010, » said Turkish foreign ministry adviser Mithat Rende.
Ceyhan is becoming a leading tanker terminal for Caspian Sea oil producers as it is also the destination of a BP-led pipeline from Baku, which started loading operations in May.

Oil exports from the Iraqi northern fields through Ceyhan can resume this month with state marketer Somo offering 6m barrels of crude this week and promising to offer another batch before the end of June. Iraq resumed crude flows from the Kirkuk oilfields along the 600-mile northern
pipeline to the Mediterranean port in 400,000 barrel batches in May.