Turkish, Azeri and Georgian heads of state were joined by ministers from around the world for a ceremony at the port of Ceyhan to mark the opening of the 1,770 km (1,106-mile) pipeline from Azerbaijan's Baku, which also goes to Georgia's Tbilisi.

The gathering comes only days before Russian President Vladimir Putin hosts a Group of Eight summit focusing on energy security.

"The BTC project is crucial to creating a reliable energy corridor between producer and consumer countries," Turkish Prime Minister Tayyip Erdogan told the opening ceremony.

Oil giant BP, the main partner in the consortium running the pipeline, expects its capacity to reach 1 million barrels per day (bpd) by 2008, mainly on Azeri shipments. Last month Kazakhstan officially joined the venture.

"This is a historic moment, it changes the energy map of the world," BP Chief Executive John Browne said. "This project is an achievement in overcoming doubts. We have a daily challenge of operating the pipeline safely for people and the environment."

Ceyhan, on the Mediterranean, is already the terminal for a pipeline from Iraq's Kirkuk fields and with a planned line from the Black Sea city of Samsun, it is expected to account for 8 percent of global crude trade at capacity.

It also bypasses the shipping bottlenecks at western Turkey's Bosphorus Straits where winter crude shipments can be held up for weeks by poor weather and congestion.

The pipeline loaded its first cargo in June, after delays to start-up of over a year, and trade sources said on Wednesday it will load 284,000 bpd in August, up from 213,000 bpd in July.

The light Azeri crude is of the type favoured by refiners to make high quality transport fuels. The rising Azeri flow is changing the balance of the Mediterranean crude market, until now dominated by the heavier Russian Urals crude blend.

FURTHER PIPELINE PROJECTS

The Baku-Ceyhan project is one of a series of oil and gas pipeline ventures which are set to increase Turkey's strategic importance to the European Union as an energy corridor over the next decade, as well as meeting domestic energy demand.

Europe has been especially keen to develop alternative supply sources since a dispute between Moscow and Kiev disrupted flows of Russian gas through Ukraine in January.

"The Baku-Tbilisi-Ceyhan pipeline will improve our security of supply and our diversification goals since it will bring oil from a different part of the world...through a different route," said EU Energy Commissioner Andris Piebalgs.

"Caspian crude oil will provide Europe with an alternative source outside the Middle East region, furthering EU efforts to diversify its supply sources and routes," Piebalgs said.

Turkey has attracted interest from foreign investors looking to benefit from its fast growing market, bolstered by the start of membership talks with the European Union.

NATO-member Turkey also plays an important role in security terms because of its borders with neighbours including Iraq, Iran and Syria.

Among other plans for the energy corridor are the pipeline from the Black Sea to Ceyhan and two gas pipelines from Russia, which wants to extend the Blue Stream pipeline to Israel.

Turkey also receives gas via a pipeline from Iran, while the Shakh-Deniz project will bring gas from the Caspian to Turkey from around the end of this year. In phase two of this project, this gas will also be transported to Europe.

Ankara envisages Ceyhan as an energy hub and fuel retailer Petrol Ofisi, in which Austria's OMV has a 34 percent stake, is planning to build a refinery there with a 10-million tonne (some 20,000 bpd) capacity.

Turkey is forecast to earn some US$300 million annually from the Baku-Ceyhan pipeline.