The financing documentation for the Baku-Tbilisi-Ceyhan (BTC) Pipeline Project has been signed. The BTC pipeline will transport 1mn barrels of oil per day over a 1,780km route from the Sangachal Terminal near Baku in Azerbaijan, through Georgia, to an export terminal to be developed at Ceyhan on the Mediterranean coast of Turkey.
The project is under construction and is expected to achieve commercial operation in 2005. The project is being developed by a consortium of international oil companies including BP, Socar, Unocal, Statoil ASA, TPAO, Total, ConocoPhillips, Eni, Inpex and Itochu, and Amerada Hess.
For the past 22 months, Taylor-DeJongh has served as financial advisor to seven export credit agencies providing around US$1bn of direct loans and cover for the financing of the US$3.6bn pipeline. In addition to this ECA group – comprising Coface, ECGD, Hermes, JBIC, Nexi, Sace, and US Ex-Im – IFC, EBRD, Opic, certain of the project sponsors, and a group of commercial banks are providing loans and political risk insurance, for a total of about US$2.6bn of senior debt commitments overall.
The BTC Project is one of the most challenging project financings in recent years, according to Taylor DeJongh, considering the multi-jurisdictional issues arising from the route through three countries; the size of undertaking (cost and scope); political risk considerations given the location of the pipeline; inter-linked commercial issues involving the pipeline, shared facilities and upstream/offshore production facilities; large and diverse sponsor group; complex funding structure; innovative pipeline tariff arrangements; and environmental challenges and visibility among a diverse group of stakeholders.