Exxon and Azerbaijan-based AzPetrol have signed an agreement in November to take oil by rail from Baku to the Georgian port of Batumi. An Exxon spokesman said this move was based on cost issues, according to The Times of London.
"There was a cost issue and we signed with Azpetrol for competitive reasons," he said.
The US$3.3 billion BTC runs for 1,760km from Azerbaijan to Turkey via Georgia. It is due to begin operations next year and it will be capable of pumping up to 1 million bopd.
ExxonMobil plans to keep its options open by continuing negotiations with BTC. It is believed the energy giant’s decision to opt for rail was due to disagreements over transport tariffs. The high tariffs have also been attributed to Russia’s Lukoil decision to pull out of BTC.
Surging oil prices, delays on completing the Turkish part of the pipeline, theft of equipment and bad weather have caused cost blowouts, according to the president of Azerbaijan state firm SOCAR, Natik Aliyev.
The partners in the BTC consortium, which is backed by the US government, are BP Plc, SOCAR, Amerada Hess, ConocoPhillips, Eni, INPEX, Itochu, Statoil, TPAO and Unocal.
