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LONDON, Oct. 19 (UPI) BP Amoco plc, leader of an international consortium drilling for oil in and around the Caspian Sea, said Tuesday it is backing a $2.5 billion pipeline to transport new crude oil from the region to a Turkish Mediterranean outlet, putting at rest industry speculation the project was at risk.
A BP Amoco spokesman told United Press International the company saw the pipeline as strategically important and would support its financing through governments, lenders and multilateral institutions.
He said that BP Amoco, the world's third-largest publicly traded oil company, believed a "much broader government and institutional involvement" would expedite the project.
"We have come to the conclusion that the Baku-Ceyhan pipeline is a strategic transportation route that should be built," said the spokesman.
"Our most important job is to convince governments and the international financial institutions who can make this project work to step forward."
BP Amoco, the company most actively involved with oil prospecting in the region, previously had shown reluctance over the project despite regional support and a U.S. administration preference for the route over alternative pipelines through Russia, Georgia or Iran proposed over the past few years. Industry sources told UPI, however, they believed the costs of building the pipeline from Baku, Azerbaijan, to the Turkish Mediterranean port of Ceyhan would escalate rapidly if the project dragged on due to poor funding or coordination among all parties involved.
So far, private and public sector negotiations have featured representatives trading responsibility for cost overruns, among other multilateral issues. The pipeline is expected to traverse about 1,196 miles (1,994 km) of territory from the Caucasus along eastern Turkey to its southern coast, near the Syrian border.
Industry sources said BP Amoco's comments cleared the way for fund raising to start in earnest, possibly with American blessing, as the U. S. administration has been most enthusiastic about the project.
The U.S. support for the Turkish route is based on the State Department argument that Turkey, as the easternmost member of the North Atlantic Treaty Organization, offers the most stable option.
Early reluctance stemmed from fears the region would not hold enough oil to justify the cost.
Exactly how much oil the region holds is yet to be proven, with State Department estimates of 200 billion barrels contrasting with conservative estimates putting the entire Caspian Sea oil wealth at about a seventh of that estimate.
The BP Amoco consortium, named Azerbaijani International Operating Co. (AIOC), includes Exxon Corp. and Unocal Corp. of the U.S., Statoil A.S. of Norway and OAO Lukoil Holding of Russia. BP Amoco holds more than 34 percent of AIOC.