World Bank backs Caspian pipeline

Over the bitter objections of international non-governmental organizations (NGOs), the World Bank's private funding arm has okayed millions dollars of investment in a massive, controversial US$3.6 billion oilfield and pipeline development stretching across much of Central Asia. The investment by the International Finance Corporation (IFC) provides the impetus for a 1,760 kilometer pipeline, the world’s longest, snaking from Baku in Azerbaijan through Georgia to a new terminal at Ceyhan on the Mediterranean coast of Turkey. It also includes funding for the Aeri-Chirag-Deepwater Gunashli Phase 1 oilfield. The bank's imprimatur means the two projects will almost certainly go ahead, according to spokeswoman Corrie Shanahan in an interview with Asia Times Online. The pipeline, known as the Baku-Tbilisi-Ceyhan project (BTC), has the potential to deliver a million barrels of crude a day to the Ceyhan terminal over the next 20 years, then to be shipped to global users via supertanker. The IFC expects to loan $30 million for the oilfield project and to syndicate loans for another $30 million, according to Shanahan. It is to loan $125 million from its own account on the pipeline and syndicate commercial loans for another $125 million. Although the IFC's loans are modest compared to the overall funding required, the presence of the World Bank, which uses public money from its member states, often has a catalytic effect, encouraging other multilateral and commercial lenders to invest in project. The consortium building the pipeline, led by the British oil giant BP and including Italy’s Eni, Statoil of Norway, the US-based Unocal and France’s Total, is seeking around 70 percent of the total cost in loans. The European Bank of Reconstruction and Development and the German development bank, KFW Bank, are also prospective lenders.