February 3, 2004
Project Finance Agreements Signed
for the Construction of Baku-Tbilisi-Ceyhan (BTC) Pipeline.
On February 3, 2004, at the Gulustan Palace in Baku, Azerbaijan, project financeagreements concerning the construction of the Baku-Tbilisi-Ceyhan (BTC) crude oilpipeline were signed in the presence of the President of the Azerbaijan Republic, H.E.
Ilham Aliyev, by representatives of the Azerbaijan Republic, Georgia, the Republic ofTurkey, the Baku-Tbilisi-Ceyhan Pipeline Company (BTC Co.), and an international
lender group. The BTC pipeline is being developed by BTC Co., which comprises elevencompanies from eight countries, including INPEX Corporation, and is operated by theBritish company BP p.l.c.
Through these agreements, capital will be procured for the construction of the BTC
crudeoilpipeline.

Thepipelinewilltransport

oil

from

Azerbaijan’s

Azeri-Chirag-Gunashli (ACG) oil field, which is currently in production and in which
INPEX owns a 10 percent interest, and other oil fields in and around the Caspian Sea.
The total length of the pipeline will be 1,760km running from Baku, Azerbaijan,through Tbilisi, Georgia, to Ceyhan, Turkey on the Mediterranean Sea.
The pipeline will cost approximately US$2.9 billion to construct, with the total project
cost, including loan interest during construction and other costs, estimated at
approximately US$3.6 billion. Of that amount, US$1 billion (approximately 30 percent)has already been procured from stakeholders through BTC Co., and the remaining
US$2.6 billion (approximately 70 percent) will be procured through these agreementsfrom an international group of financial institutions, including the InternationalFinance Corporation (IFC), the European Bank for Reconstruction and Development(EBRD), various export credit agencies, and private banks.
Financing provided by private financial institutions is guaranteed by public financecorporations in the six countries of Japan, United States, United Kingdom, France,
Germany, and Italy in accordance with the amount of capital, equipment, and material
procured from each country. From Japan, the Japan Bank for International Cooperation(JBIC) is participating in coordinated international financing (managed by Mizuho
Corporate Bank), and the Nippon Export and Investment Insurance (NEXI) is providing1insurance.
The BTC pipeline will begin transporting oil in 2005, with an anticipated peak capacityof approximately one million barrels per day beginning in 2008. Currently, more than
12,000 people are working on laying the pipeline at 17 construction sites in the three
countries of Azerbaijan, Georgia, and Turkey. The overall project is going smoothly,with over 50 percent already completed.
The construction of the BTC pipeline is being carried out by BTC Co., which is itself aninternational consortium comprising 11 companies from eight countries, and is taking
place in three countries. The large, international scale of this project can be glimpsedfrom the signing ceremony, which involved a total of 208 contracts that required morethan 17,000 signatures from 78 contracting parties. As a project that will connect theCaspian Sea and Mediterranean Sea with a crude oil pipeline, it has become the objectof high expectations throughout the world.

2