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Conflict stems Georgia oil, gas pipeline flows

LONDON (Reuters) - BP BP.L closed a Caspian oil pipeline and stopped pumping gas through Georgia as fighting continued on Tuesday, forcing neighboring Turkey to look to Iran for gas.

The British oil major denied that either pipeline had been damaged in the fight between Georgia and Russia over South Ossetia but said it had decided to stop pumping until the conflict died down.

“We have checked those and there are no reports of any impact to any of the pipelines,” the BP spokesman said, adding that the pipelines would resume normal exports when it was safe to do so.

The closure of the Western Route Export Pipeline (WREP), which takes crude from the Caspian port of Baku in Azerbaijan to the Georgian port of Supsa on the Black Sea, further limits BP’s export options from the land-locked Caspian Sea after a fire damaged its key Baku-Tbilisi-Ceyhan (BTC) link to Turkey last week.

That export route closure forced offshore Azeri fields to cut output from 800,000 barrels per day to 250,000 bpd, according to trade sources. WREP could have been carrying up to 155,000 bpd until it was shut on Tuesday.

GAS EXPORTS

BP has also stopped pumping gas from the Shah Deniz field in the Caspian Sea into the South Caucasus Pipeline which takes it from Baku to Turkey through the Georgian capital Tbilisi.

“It is still exporting into Turkey, what has been suspended is the pumping at the Baku end. The Shah Deniz is pumping far less in at that end,” the BP spokesman said.

BP said there were several days worth of gas supplies already inside the 692-km long pipeline which could be sent to Turkey, while a senior source at Turkish pipeline operator Botas said it should be enough for at least a week.

If the conflict has still not died down enough for BP to turn the gas pumps in Baku back on, Turkey will need to make up for the lost supplies by turning to Iran.

“The resulting gas needs will be met from Iran,” the Botas source said. “There will not be any supply problems.”

Oil production continues at the Azeri-Chirag-Gunashli oilfields in the Caspian Sea despite the closure of the BTC pipeline they usually export through and its recent stand in, the 830-km WREP line to Supsa.

“The fields are still running but at reduced rates because of other routes for exports,” a BP spokeswoman said.

The closure leaves BP with a 100,000 bpd pipeline to Russia’s Black Sea port of Novorossiisk or a railway line that could export up to 50,000 bpd via Georgia’s Black Sea port of Batumi as the only available export options.

Additional reporting by Orhan Coskun and Alex Lawler

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