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Azerbaijan Halts Oil Exports

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Azerbaijan has halted oil exports via the Georgian ports of Batumi and Kulevi due to clashes between Russia and Georgia, the head of the state oil company said Saturday. "Since last night the import and export of oil through the Georgian ports of Kulevi and Batumi have been halted," said Rovnag Abdullayev, the head of the Azeri state oil company SOCAR.


"This is due to armed actions in the area of the Georgia-Ossetia conflict." He added that SOCAR was "looking into the possibility of exporting oil through the Baku-Novorossiysk pipeline, but the capacity of this pipeline is quite low," in a reference to a route that links the Azerbaijani capital to the Russian Black Sea Coast.


Earlier Saturday Russian planes staged a raid near the Baku-Tbilisi-Ceyhan (BTC) pipeline, a major international oil route that runs through Georgia, but did not damage it, Georgia's prime minister said.


In recent years Georgia has become an important transport route for oil from Azerbaijan and other Caspian Sea oil producers, allowing Western oil firms to bypass Russia's oil pipelines.

British oil giant BP said on Saturday it was unaware of Russian bombing near BTC pipeline. A BP spokesman told AFP: "We've seen reports attributed to a Georgian minister saying that the Russians have bombed the Baku-Tbilisi-Ceyhan pipeline." Georgian Prime Minister Lado Gurgenidze claimed earlier that the Baku-Tbilisi-Ceyhan pipeline had been bombed by Russian planes during escalating violence over South Ossetia, without causing any damage.

BP operates the key 1,774-kilometre (1,109-mile) pipeline -- the world's second largest -- that carries oil from Azerbaijan to Western markets via the Turkish Mediterranean port of Ceyhan. It is capable of transporting 1.2 million barrels a day.

Oil prices rose to $116.50 at the open Sunday night on the pipeline bombing news. Thirteen of 35 analysts surveyed by Bloomberg News, or 37 percent, said prices will drop through Aug. 15. Twelve of the respondents, or 34 percent, said oil will rise and 10 forecast little change. Last week 45 percent expected a decline.

Higher production and lower demand is given as the long term reason for a potential dip in prices. The Organization of Petroleum Exporting Countries increased oil production 0.7 percent in July, as Saudi Arabian output reached a three-year high and Nigerian production rose to the highest since March, a Bloomberg News survey showed.

Jim Brown

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