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. Last Updated: 07/27/2016

EBRD to Fund U.S.-Backed Caspian Oil Pipeline Project

LONDON -- The European Bank for Reconstruction and Development on Tuesday approved a $250 million loan for the BTC Caspian oil pipeline, removing the final hurdle in the path of the controversial U.S.-backed link.

The EBRD said in a statement it had approved financing of $125 million for the Baku-Tbilisi-Ceyhan pipeline with a further $125 million to be raised via syndication to commercial banks.

Total project costs are estimated at $3.6 billion for the pipeline, which will ship one million barrels per day from oil fields in the Azeri section of the Caspian Sea to Turkey's Mediterranean port of Ceyhan. Oil major BP is the project operator.

The EBRD also approved a $30 million loan to develop Azerbaijan's Azeri-Chirag-Gunashli Caspian oil field.

"The decision to finance BTC and ACG reflects the importance of both projects in unlocking the economic potential of the resource-rich Caspian," the EBRD said in a statement.

The bank's decision comes just a week after the World Bank's investment arm, the International Finance Corporation, approved a total of $310 million in funding for the 1,760-kilometer BTC.

The project has forged ahead of rival routes, partly due to support from Washington which favors the link as a means to cut Russian and Iranian influence in the oil-rich Caspian region.

The project's geopolitical and economic significance increased after Kazakhstan's section of the Caspian Sea yielded a giant oil field, making additional crude export routes from the region look more vital than before.