Feb 10, 2010

Georgia to Build Black Sea Oil Port to Boost Caspian Flows

Feb. 9 (Bloomberg) -- Georgia plans to build another Black Sea port to boost transit fees from cargo shipments such as crude oil from the Caspian Sea region.

The Supsa port will cost “half a billion dollars” and take less than two years to build once the government gives the final okay, said Shalva Tsakadze, head of Black Sea Product Ltd., the developer of the project.

Georgia’s five-day war with neighboring Russia in August 2008 helped push the country’s $12.8 billion economy into recession and prompted the government to seek new sources of revenue. Georgia, which also borders Armenia, Azerbaijan and Turkey, won pledges of $4.55 in international aid in the wake of the war, including $1 billion from the U.S.

“A group of European investors are flying to Tbilisi tomorrow to finalize the agreement,” Tsakadze said in an interview in the capital Tbilisi today, declining to elaborate until the accord is signed.

President Mikheil Saakashvili granted Black Sea Product the rights to the land where the port will be built and the government has 60 days from Jan. 22, the date the project was officially submitted, to approve the deal, according to the Economic Development Ministry.

“This is a serious project,” Economic Development Minister Zurab Pololikashvili said by phone today. “It is being widely discussed at the highest levels of government.”

Tsakadze said Supsa is “the best natural deep place” on the Black Sea for oil tankers to dock. The port will be able to load as much as 40 million metric tons of oil and cargo a year once the 204-hectare facility is completed, he said.

BP, Baku

The government earns transit fees from two BP Plc-led pipelines that carry Azeri crude to world markets. One is the Baku-Supsa link to the Black Sea and the other is the Baku- Tbilisi-Ceyhan route to Turkey’s Mediterranean coast, both of which Georgia accused Russia of trying to bomb during the war.

Black Sea Product may also work with Georgia’s government to build a plant to supercool natural gas into liquefied form so it can be shipped by tanker to Europe, Tsakadze said. The plant would process as much as 30 billion cubic meters of gas from phase two of Azerbaijan’s Shah Deniz field, which is operated by London-based BP and marketed by Norway’s Statoil ASA.

Up the coast from Supsa is Poti, the port owned by the Gulf emirate of Ras al-Khaimah. Rakeen, the development company owned by the emirate, bought the half of Poti it didn’t already own in December for $65 million, after the government made the area the country’s first so-called special economic zone to lure foreign investment.

By Helena Bedwell