Business

BAKU-TBILISI-CEYHAN MARCHES FORWARD

The Baku-Tbilisi-Ceyhan Pipeline Project (BTC) shareholders held their final Project Management Committee (PMC) meeting of the Basic Engineering phase Tuesday in Baku at which they reviewed the results from the first phase of this significant project. Substantial and encouraging progress has been made with regard to both the technical and commercial development of the BTC project. On the basis of Tuesday 's meeting, the eight current BTC shareholders are set to undertake the next stage of the project. This decision will be confirmed on June 10th upon receipt of the final reports, enabling the 12-month Detailed Engineering phase to commence towards the end of June.

Subject to approval from their respective boards, the BTC shareholders have stated that they will undertake Detailed Engineering with the same ownership interests as during the Basic Engineering phase. Additionally, discussions with respect to the assignment of certain portions of SOCAR's interest to potential new shareholders are ongoing with a number of companies and are expected to be finalized early in the 3rd quarter of this year.

As a result of the extensive work that has been accomplished during the Basic Engineering phase of the project, an acceptable cost estimate for the BTC project has been specified based on detailed route selection, hydraulic modeling and engineering studies and sample quotes from suppliers. The estimate is well within the range of accuracy required by the shareholders and in line with order of magnitude cost estimates from the start of Basic Engineering. Predictably, variances are largely due to significant optimization during Basic Engineering resulting in a reduction of the number of pump stations, worldwide increases in steel and pipe coating prices, additional geo-technical stabilization, and right of way clearance and construction of access roads in Georgia due to the challenging mountainous terrain. The level of technical and cost definition will be further improved during the Detailed Engineering phase.

The combination of project costs and anticipated transportation volumes is sufficiently attractive for the BTC shareholders to undertake the next phase of the project.

Preliminary discussions with international financial institutions and export credit agencies regarding finance for the project have also been encouraging. Early indications are that, based on these costs and volumes, the project will attract sufficient finance.

The next stage of the BTC project will be completed in mid 2002 and cost some $150m, including the cost of pursuing financing. The key results will be a finalized construction corridor; construction and major equipment contracts ready for award; confirmation of project costs and final pipeline design; and environmental impact assessments completed and in the final approval process with the transit Governments.

A pipeline project company will be formed towards the end of this year, incorporating any new participants in the project in addition to the current participants. All the necessary agreements for project implementation and operation, including owners and transportation agreements will be completed prior to the close of the next phase. Finally, the lenders term sheets required for external financing are scheduled to be in place in the Detailed Engineering phase.

A 32-month Land Acquisition and Construction phase will follow Detailed Engineering, such that the pipeline is ready for testing by 4Q2004, with a view to accepting the first volumes from Full Field Development Phase 1 of ACG at the beginning of 2005.

According to Valekh Aleskerov, Chairman of the PMC and General Manager of SOCAR's Foreign Investment Division, "Azerbaijan is delighted with the way that the BTC project - one of the key elements of the oil strategy of the President of the Azerbaijan Republic Mr Heydar Aliyev - has progressed so far and is looking forward to the successful completion of the Detailed Engineering and Land Acquisition and Construction phases. "

"A tremendous team effort has been expended by all those involved in the BTC Basic Engineering phase such that we now have a well defined, credible project and business proposition to take forward. But there is still much more to do in the next 12 months. We together with our partners and contractors look forward with confidence to undertaking the next stage of the BTC project," says Wref Digings, Vice President for Oil Export Development, in BP's Azerbaijan Office.

BTC project is owned in the following percentages: SOCAR 50%; BP 25.41% and operator; Unocal 7.65%; Statoil 6.37%; TPAO 5.02%; Itochu 2.92%; Delta Hess 2.03% and Devon Energy 0.60%.

CASPIAN SHORT OF DRILLING RIGS

By Anar Jabrayilli Azernews Staff Writer

Drilling operations under Production Sharing Agreements in the Azeri sector of the Caspian are currently carried out using three floating semi-submersible drilling rigs: Istiglal, Dada Gorgud and Gurtulush.

Specialists say one of the substantive reasons for the delay in drilling of appraisal wells on some projects is the busy schedule of drilling rigs.

For instance, BP is waiting for the Istiglal rig to complete work on "Absheron" field and be made available for drilling of the first appraisal well on "Inam" prospect. Or, having completed the EIA on "Kurdashi" field early this year, "Agip" had to wait for Dada Gorgud rig for over three months. ExxonMobil originally scheduled the drilling of the first well on "Oguz" field for late March, but could only embark on the work in May due to delaying drilling work on "Talysh Daniz" field.

A "Chevron" spokesman John O'Connor has told journalists that the company would start drilling of the second well on "Absheron" no earlier than 2004.

Istiglal is currently used in drilling on "Absheron", Gurtulush on "Oguz" and the Dada Gorgud is expected to start drilling on "Kurdashi" shortly. The schedule of drilling rigs is being defined by the SOCAR foreign investment section.

Taking into account the shortage of rigs, ExxonMobil has allotted funds for construction of a new DSS-20 one. A corresponding agreement has been signed with Danish "Maersk" and "Caspian Drilling Company" JV. Under the agreement, construction of the rig will complete in 2003.

EBRD PRESIDENT PLEASED WITH VISIT TO AZERBAIJAN

Improving the investment climate, particularly beyond the oil and gas sector, discussing with the Azerbaijan Government the issue of financing a number of technical projects, and investment in the second stage of privatization were among key objectives of a two-day official visit to Azerbaijan by the EBRD president Jean Lemierre.

In his final news conference, Mr. Lemierre said he had also studied the condition of the financial sector in the country and pointed out a need to set up a major private bank with considerable crediting capabilities.

EBRD has approved a new strategy for Azerbaijan, which envisions promoting micro and SMEs through financing. "We are interested in working more actively in Azerbaijan and investing in your economy", he said.

Last year the EBRD banked a record Euro82 million in new business. Current commitments in Azerbaijan are Euro389 million. Mr. Lemierre used first visit to Azerbaijan since taking office in July, 2000 to reaffirm the EBRD's commitment to the country.

EBRD OFFERS TO ESTABLISH MICRO-FINANCIAL BANK

One of the issues high on agenda in the talks between the EBRD president Jean Lemierre in Azerbaijan was the establishment of a micro-financial bank, which is intended to facilitate small business development in the country.

EBRD proposes to set up the micro-financial bank in cooperation with other partners. The so far under-funded projects could be financed via the bank. Credit lines to be opened by the bank will run in parallel with those of other financial entities.

Interested in oil sector ...

EBRD will take part in financing the Main Export Pipeline Baku-Tbilisi-Ceyhan, Mr. Jean Lemierre said in Baku. He indicated that due to the high cost of the project, the participation of other major financial institutions is also necessary.

The EBRD president said the Bank is also financing the interest stake of "Moncrief Oil" in the "Padar-Kharami" prospect, but declined to spell out any figures and crediting terms. According to him, the Bank may take part in other projects in the future, "everything depends on the conditions".

According to a source from "Moncrief Oil", the information concerning EBRD's funding the company's stake in the mentioned contract is being withheld.

... uninterested in taking over IBA

The EBRD president brushed off rumors that his bank is interested in taking over 51% of the IBA stock. According to him, EBRD has and will never take over a 51% stake in any projects, as the Bank looks on 20%.

The EBRD will certainly take part in the privatization of the International Bank of Azerbaijan (IBA) with negotiations underway, the EBRD President Jean Lemierre told journalists Saturday.

"We would like to have more partners in privatization of the IBA", he said.

Asked about the timing of privatization, the EBRD president said it depends on the shareholders, implying the government which currently holds the controlling stock in the IBA.

RESTORATION OF OLD CITY VERY SLOW

Reconstruction operations in the wake of the November 25 earthquake in Baku are still underway in 42 buildings of the Old City, with only 7-8 buildings having undergone the revamp work. 7 construction brigades are involved in the work. Only 30 of 160 people who left their homes have returned, says general director of the state historical and architectural preserve "Old City" Vali Valiyev.

According to him, the temporarily displaced population is voicing a fair discontent with the delaying restoration work, which he believes stems from the lack of the frugal financial resources.

WB, ADB HELP POVERTY ERADICATION IN AZERBAIJAN

WB representatives Aishe Kudat and Nilufer Ekanberdi arrived in Baku Friday to conduct monitoring of the WB-operated poverty eradication program in Azerbaijan. According to the President of the NGO Forum Azay Guliyev, in addition to government agencies, 150 from a total of 265 NGOs members of the Forum are involved in the program. In his view, the progress is rather slow.

WB intends to allot around $300 million for poverty eradication in Azerbaijan.

Mr. Guliyev added that as part of the poverty eradication program an Asia Development Bank (ADB) delegation had visited Azerbaijan lately. The Bank is also planning on measures to revitalize the standstill enterprises in Mingachevir.

AZERI MANAGERS STUDYING WESTERN BUSINESS EXPERIENCE

40 Azeri managers are studying western business experience through one-, two- and three-month courses as part of the TACIS manager training program in the first half of 2001. The program is implemented by the Azerbaijan Entrepreneurship Confederation. Three program participants are expected to leave for Europe in late May.

The AEC honorary chairman, deputy foreign minister MP Mahmud Mammadguliyev underscored the important role the program has played in entrepreneurial development in Azerbaijan.

The objective of the EU-funded program is to support the economic development in Russia, Azerbaijan, Ukraine, and Uzbekistan. The program is operated by a consortium of 8 European countries: Germany, Finland, Spain, Italy, France, Denmark, Austria, and Great Britain.

IRANIAN GOODS TO BE EXHIBITED IN BAKU

An exhibition of goods produced in Iran's Isfagan City will be opened in Baku shortly. This was the talking point of Friday's meeting in Baku of the visiting deputy mayor of Isfagan Murteza Tehrani with the chairman of the state customs committee Kamaladdin Heydarov.

The parties pointed to the popularity of Iranian goods in Azerbaijan and emphasized the importance of direct trade relations. Mr. Tehrani said he had also been to Sumgayit and voiced an interest in implementing a number of projects in the city, in particular, targeting purification of sewer water. Mr. Tehrani said his city boasts of advanced technologies in this sphere.

TOOTH GELS

(Continued from previous issue)

Tooth gels are a relatively new medical form in dentistry. It combines the qualities of a solid substance and liquid and, is therefore, is very effective when applied. Besides, thanks to the formation of watery structure, gels represent harmonious combinations of chemically incompatible substances, because the watery membrane blocks any chemical reaction from within. Gels are rarely applied in tooth-brushing, because they do not have abrasive qualities. It is for this reason that their cleaning properties are less distinct than those of tooth-pastes. Gels should not be confused with pastes: teeth should be brushed with pastes, while gels should be used for applications.

Re-mineralizing effect is based on the diffusion of gel substances into the saliva, further into the enamel and, to a lesser degree, directly into the tooth tissue. Typical gels are Fluodent, Fluoocal, Elmex, and Blend-a-med.

Gel-like pastes foam easily and have a pleasant taste and nine appearance. Gels contain 0.1-1.5% of active fluoride, which makes the recommendable in treating and preventing caries at its white-spot stage. Once a day in the evening, rational hygiene of the mouth cavity is completed with rubbing the fluoride-bearing gel in solid tooth tissues for 2-3 minutes. Gels do not contain abrasive substances, which makes them useful for once-a-day mouth cavity hygiene to those suffering with pathological abrasion of solid tooth tissue and high sensitivity. Children should not apply gels more than twice a week.

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