WASHINGTON (AP) – The World Bank agreed Tuesday to provide $250 million in financing for a $3.6 billion pipeline that would bring oil from the Caspian Sea region through Turkey to Western markets.

While the loan is only a small fraction of the cost of the planned Baku-Ceyhan pipeline, the financing has been viewed as crucial for the project to attract private financial support.

The executive board of the International Finance Corp., the World Bank’s private investment arm, approved the financing despite requests by some environmentalists and human rights groups that a decision be postponed until some issues, including the pipeline route, can be further examined.

The pipeline and a separate deep-water oil field project off Azerbaijan in the Caspian Sea, which also was approved, “are sound projects” that have extensive environmental and social safeguards and community involvement, said Rashad Kaldany, director of the World Bank’s oil, gas, mining and chemical department.

The 1,095-mile oil pipeline will carry up to 1 million barrels a day from Azerbaijan through Georgia and Turkey to the Turkish port of Ceyhan on the Mediterranean Sea.

A consortium of oil companies, headed by Britain’s BP, is building the pipeline, which is already 15 percent completed and could begin operation in 2005.

Half of the IFC financing will come directly from the international agency and the other half from commercial syndication, IFC officials said.

The European Bank for Reconstruction and Development is expected to approve another $250 million in financing, possibly next week.

While the IFC financing amounts to less than 10 percent of the current phase of financing requests, its approval gives the project the international financing community’s stamp of approval.

Anticipating the IFC decision, Mike Townshend, vice president for BP’s Azerbaijan Unit, said Tuesday in Baku that the pipeline consortium’s shareholders are ready to provide up to $800 million in credit to push the project forward.

including about $500 million from BP.

The IFC said in a statement that the pipeline project and the flow of oil through Georgia and Turkey are expected to have broad economic benefits. The pipeline will create 10,000 construction jobs and 850 jobs to keep it operating.

Over 20 years, $29 billion worth of oil is expected to flow through the line, providing $1.5 billion in transit revenue to Turkey and another $500 million to the Republic of Georgia.

Shahbaz Mavaddat, associate director of IFC’s small and medium enterprise department, said the pipeline will help local communities along its route. “It is clear that local people want the pipeline built, but they want it built in a safe, sustainable and environmentally sound way,” he said.

Environmentalists and human rights groups have urged that decisions to be delayed, contending that the pipeline endangers villages and wildlife in its path, and could spark conflict in a region already known for its ethnic strife.

The London-based Baku Ceyhan Campaign, an umbrella group for pipeline critics, contends that BP has misled the IFC’s executive board about the project’s impact on the environment and human rights, and has overstated the degree of consultation with local communities.

The pipeline consortium, BTC Co., says it has consulted all 450 communities and 30,000 landowners along the planned route.

“We’ve taken enormous care to make sure we’ve not disadvantaged anyone.” BTC spokeswoman Clare Bebbington said last week.

AP-ES-11-04-03 1431EST