The Georgian International Oil Corporation and Russia's Transneft have agreed on setting up a working group to conduct a feasibility study for an oil pipeline that would transport Russian and Kazakh crude from Novorossiisk via Georgia's Black Sea coast to the terminal at Ceyhan on the Mediterranean coast of Turkey, Caucasus Press and Interfax reported on 3 June.

The estimated cost of the pipeline, which would have an annual throughput capacity of 50 million tons, would be $3.5 billion, but according to Interfax it would save the Russian side some $500 million to $700 million annually in transport costs.

It would also obviate the need to transport yet more oil through the congested Turkish straits at the mouth of the Black Sea.

Most important, the transit tariffs could prove an incentive to reach a mutually acceptable compromise to the conflict between the central Georgian leadership and Abkhazia.

(RFE/RL 04.vi.04)