Blast causes disruption in oil pipeline

An explosion on the Baku-Tbilisi-Ceyhan (BTC) pipeline on Tuesday night in eastern Turkey has halted the oil flow along the one million barrels per day pipeline, a senior Turkish Energy Ministry official said.

The disruption at the pipeline, which pumps the equivalent of more than one per cent of world supply from fields in the Azeri sector of the Caspian Sea to Ceyhan on the Turkish Mediterranean coast, boosted oil prices.

"The fire is under control but we need 24 hours from now to extinguish it. After the fire is put out, we can look at the damage and say when it will be possible to reopen the line," the Turkish source said, speaking on condition of anonymity.

British oil company BP Plc, a pipeline shareholder, said yesterday the BTC partners warned they may not be able to meet all of their oil export commitments from Ceyhan, and that Azeri production was being reduced.

BP had said earlier yesterday that oil flows were halted after a fire damaged a valve on a section in eastern Turkey, but exports from Ceyhan continued from storage.

The cause of the explosion was not immediately known.

"Whether it is sabotage or some other reason, we still don't have that information. At this point all our efforts have been focused on putting out the fire completely," said the Energy Ministry official.

Benchmark Brent crude rose more than $1 to $118.77 a barrel after the stoppage, but later eased.

The BTC partners declared force majeure on exports, freeing themselves from contractual obligations, BP said.