press release

IFC and EBRD approve Baku-Tbilisi-Ceyhan pipeline loans

The following news release was issued by Baku-Tbilisi-Ceyhan Pipeline Company (BTC Co).

The board of the European Bank for Reconstruction and Development (EBRD) today approved up to $250 million in loans to the Baku-Tbilisi-Ceyhan (BTC) pipeline. This follows the decision by the International Finance Corporation (IFC) to approve a similar financial package on November 4.

Agreement on the two loans comes after over two years of extensive monitoring and scrutiny of the project's environmental and social impact, as well as a thorough public consultation process. The loans, which attract commercial rates of interest, are conditional on the project continuing to meet its stringent public commitments - which will be subject to formal quarterly audits by the lenders.

The Baku-Tbilisi-Ceyhan pipeline will cost $2.95 billion to construct ($3.6 billion total project cost), with the balance of the finance being provided by equity investment, export credit agencies and commercial banks. Financial close is due by the end of the year.

"The involvement of both the IFC and EBRD will help ensure that this investment results in real benefits for those most directly affected - from the 450 villages along the pipeline route, to the citizens of Azerbaijan, Georgia and Turkey," said BTC chief executive Michael Townshend. "We are especially looking forward to working with both institutions on regional development initiatives and developing plans for civil society involvement in the monitoring of the project."

The 1760-kilometer pipeline will allow one million barrels of oil a day to be exported safely and responsibly from the Caspian without increasing tanker traffic through the Turkish Straits. It is buried for its entire length and, once constructed, land will be fully re-instated above a narrow eight-meter right of way. Landowners and land users have been generously compensated for disruption during the construction phase and will be able to use their land after construction, subject to a small number of restrictions imposed for safety reasons.

First oil from the pipeline, which is already around 40% complete, will be exported from the Mediterranean port of Ceyhan in 2005.

Updated: November 2003