Breaking NewsLaw.com and associated brands will be offline for scheduled maintenance Friday Feb. 26 9 PM US EST to Saturday Feb. 27 6 AM EST. We apologize for the inconvenience.

 
X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The BTC pipeline long seemed a daunting project, rife with legal, political and financial complications. The problems began with choosing the route. To take oil out of the land-locked Caspian, the pipeline needed to cross several countries and avoid Iran, where America and some European companies are prohibited from doing business. There were also reasons to avoid Russia, because its state monopoly controls all pipelines traversing the country and because the United States wouldn’t support another Russian route. Strategically, the United States wants a new pipeline to bypass Russia so that if U.S.-Russian relations turn sour, the Russian government can’t completely halt the flow of Caspian oil to the United States; the U.S. also wants to help its ally, Turkey, where we have key military bases. But from the oil companies’ perspective, the circuitous route — from Baku, through Georgia, and ending at Turkey’s port of Ceyhan (thus the project’s name, Baku-Tbilisi-Ceyhan, or BTC) — was a gamble. It was far less efficient than crossing Iran or Russia, and ongoing unrest from Chechen fighters in Georgia added a high security cost. Russia, eager to maintain its monopoly on Caspian oil transport, opposed the deal, creating potential for more conflict in Georgia. And it’s never been clear that Azerbaijan’s oil supply is large enough to make these costs worthwhile. For years, then, the oil companies resisted this route as too great a risk. But the United States could make it worth their while. The U.S. holds the purse strings for key lenders, provides political risk insurance through its Overseas Private Investment Corporation (OPIC), and is one of the largest shareholders in the World Bank. By providing low-interest loans, these public institutions could lend the project what the oil companies wouldn’t. Indeed, BP’s president has said the consortium will need up to 70 percent of such “free public money” for the BTC pipeline to happen. The oil companies, with the help of Baker Botts, are now in the process of trying to get it.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.