The conflict erupting in the Caucasus has set alarm bells ringing for many reasons, not least Georgia’s pivotal role in the supply of Central Asian oil to the West.

While it has no significant oil or gas reserves of its own, Georgia is a key transit point for oil from the Caspian region destined for Europe and the United States. Crucially, it is the only practical route from this increasingly important producer region that avoids both Russia and Iran.

The 1,770-kilometre (1,100mile) Baku-Tbilisi-Ceyhan (BTC) pipeline, which cost $3 billion (£1.55 billion) to build and was partly underwritten by British taxpayers, entered full service last year. It is the world’s second-longest oil pipeline and pumps about a million barrels a day from Baku, on the coast of the Caspian Sea in Azerbaijan, to Yumurtalik, on Turkey’s Mediterranean coast, where it is loaded on to supertankers. The route also avoids the congested Bosphorus shipping lane.

About 250 kilometres of the route passes through Georgia, with parts of it running only 55 kilometres from South Ossetia. It also runs close to another secessionist Georgian region, Abkhazia.

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The security of the BTC pipeline has been a concern since well before it was built. The first big attack on the pipeline took place last week in Turkey, where part of it was destroyed by Kurdish separatists.

Output from the pipeline, which carries more than 1 per cent of the global supply, has been cut and is likely to be on hold for several weeks while a fire is extinguished and the damage repaired.

The threat of another attack by separatists in Georgia is very real. Georgian rebels in the breakaway regions have threatened to sabotage the pipeline in the past. The BTC pipeline, which is 30 per cent owned by BP, is buried throughout its length to make attacks more difficult.

It was first conceived in the 1990s as a way of cutting the West’s dependence on energy supplies from the Middle East and Russia, and was always a politically charged project. Russia, which views the Caucasus as its own sphere of influence, wants Central Asian oil to be exported through its own territory and always opposed the pipeline’s construction.

The BTC pipeline was one of the largest private construction projects in the world and is controlled by a consortium that includes BP and the American groups Chevron and ConocoPhilips, Total of France and the state oil company of Azerbaijan.

BP said it was confident that the BTC pipeline was secure and was not under threat from the current fighting in South Ossetia. It said that the fire in Turkey meant that current supplies of oil were being diverted through other pipelines and by rail to ports on Georgia’s Black Sea coast.

BATTLE FOR INDEPENDENCE

Where the region is located

South Ossetia is a mountainous area about one and a half times the size of Luxembourg that is in northern Georgia, on the border with the Russian region of North Ossetia.

What its people want

South Ossetia has sought recognition of its independence from Georgia since 1990, when the Soviet Union collapsed. The region’s Ossetian population wants to unite with their ethnic kin in North Ossetia.

How the events have unfolded

When Georgia’s President then, Zviad Gamsakhurdia, abolished the region’s autonomous status, it triggered a war in 1991 that killed more than 1,000 people and forced thousands to flee their homes. The conflict ended in 1992 with South Ossetia’s separatist government in control of most of the region. A fragile ceasefire had held for 16 years, policed by peacekeepers from Russia, Georgia and Ossetia.

Why the latest violence?

Efforts to negotiate a peaceful resolution have floundered consistently. South Ossetia insists that it will never return to rule from Tbilisi, but it remains unrecognised by the international community, including Russia, which considers it part of Georgia.

However, Moscow has given most of the region’s 70,000 residents Russian passports and argues that it has a duty to defend its citizens. Vladimir Putin, Russia’s former President, infuriated Georgia in April by ordering the Government to strengthen economic and legal relations with South Ossetia and Georgia’s other breakaway region of Abkhazia. Georgia accused the Kremlin of attempting to annex its territory. Tensions have spiralled ever since.

About 14,000 ethnic Georgians live in villages in South Ossetia, guarded by forces from Tbilisi. Georgia’s military has sparred continuously with South Ossetian rebels across the ceasefire line, as each side seeks to gain control of strategically important hills.

Who is involved?

President Saakashvili of Georgia, above, came to power in 2003 pledging to win back control of the breakaway regions. But South Ossetia’s separatist rulers responded to his offer of broad autonomy by holding a referendum on independence in 2006 that won overwhelming support. A parallel referendum among ethnic Georgians in the region voted equally as strongly to remain with Georgia.

Mr Saakashvili appears to have decided that the argument of force should now replace the force of argument in settling the issue.

Tony Halpin

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