Kurds lay claim to oil pipeline blast
By Alex Barker in Ankara
Published: August 8 2008 03:00 | Last updated: August 8 2008 03:00
Kurdish separatists claimed responsibility yesterday for an explosion that has halted the flow of oil through the Baku-Tbilisi-Ceyhan pipeline, helping to push up oil prices amid uncertainty over the security of the supply route.
Firefighters were still attempting to control the blaze after an explosion near the town of Refahiye in eastern Turkey on Tuesday night. It was the first blast ever reported on the $4bn (2.6bn, £2.1bn) pipeline carrying more than 1 per cent of world oil supply from Azerbaijan to the Turkish Mediterranean coast.
A person working in the pipeline consortium said it was impossible to tell how long the route would be closed until the fire had been controlled and the damage assessed.
It was still unclear whether the fire was accidental or sabotage.
Reports that the route could be closed for up to two weeks together with a claim of responsibility by the Kurdistan Workers’ party, the PKK, a separatist group, added to supply concerns in the oil market.
Oil rebounded yesterday to break the $120 level with its first rise in four days.
The site of the explosion is outside the PKK’s usual area of operations in the south- east, where it has been fighting the Turkish military for more than 25 years.
However, the group claimed responsibility for a pipeline blast in March that halted gas exports from Iran to Turkey for five days. During the 1990s, the group attacked oil companies operating in the south-east.
Yesterday a mortar round was fired at municipal buildings in Istanbul.
Several Kurdish separatists have been arrested on suspicion of bombing an Istanbul neighbourhood last week, killing 17 people.
The attack in Istanbul, the worst in Turkey since 2003, led analysts to speculate that the PKK was shifting tactics and moving out of its south-east stronghold.
The 1,770km oil pipeline runs from Baku, the Azeri capital, via Tbilisi in Georgia, to the Turkish port of Ceyhan. It provides an alternative to the Russian transit network for Caspian crude.
Stocks at the Ceyhan depot have been severely depleted since the explosion and the pipeline’s operators yesterday ceased using reserves to load tankers at the port.
BP, a shareholder in the pipeline consortium, said the partners had declared force majeure on exports, freeing themselves from contractual obligations. The group has begun diverting some crude to other routes while the Ceyhan pipeline remains closed. Before pumping can resume, pipeline operators will have to wait for oil left in a contained section of the pipeline to burn off, bring the fire under control and then cool and excavate the damaged pipeline, which runs 2 metres underground.
Industry sources said once that had been completed, the section of pipeline could be replaced within days. However, the length of the delay before oil is flowing will depend on several other factors, including the size and duration of the fire.
Copyright The Financial Times Limited 2008